Stocks sold off Friday as some geopolitical friction returned to the headlines. The United States and four European allies agreed that Russia had not lived up to the terms of the Ukraine peace accord, with the White House vowing a coordinated response to “impose costs” on Russia. So coming into this week we had a short term sharp rally from very oversold conditions – and that continued early this week – at which point we said the market could use a rest short term. We had 2 days of solid quiet action up and down which was fine, but today was a bit more harsh, especially in the NASDAQ. Until we get a more calm market it is difficult to call for a bottom. The S&P 500 fell 0.81% and the NASDAQ 1.75%.
With the indexes while the S&P 500 remains fine we have been noting this week we want to see the NASDAQ make a new higher high versus its last high in early April. It has thus far failed to do so. As for the S&P 500 it stalled exactly at the uptrend line we have created connecting the lows of summer 2013.
We don’t chart the small cap oriented Russell 2000 but it has looked the weakest of the bunch and you generally want to see small cap stocks leading the pack or at least near the top among the indexes; the S&P 500 is a far more conservative index.
Meanwhile we continue to see “safety” stocks roar – Altria (MO) for example:
And look at these utilities go! We pointed out this move to ‘safety sectors’ a month ago and until money moves away from them and into more growth oriented sectors we would view this market as focused on being in conservative sectors.
Amazon.com (AMZN) really hurt the mood today – after being up in after hours yesterday the stock plunged today in normal trading. For a long time investors have looked past this company’s lack of profitability but some of the spike in their spending in yesterday’s earnings seemed to spook people today.
Ford Motor (F) fell after first-quarter earnings missed expectations, hurt by higher warranty costs in North America.
On the plus side, Microsoft’s (MSFT) earnings topped analyst forecasts, while investors were cheered by the software giant’s new emphasis on mobile and cloud computing.
Have a good weekend and we’ll see you back here Monday.