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Stock market commentary June 20, 2020

Stock market commentary

Interesting stock market commentary, stock market opinion about where the US stock market and stocks may be headed. Investing in stocks is challenging and risky, the valuation of stocks is a top important factor never to ignore.

‘La la land?’ The stock market is ‘insanely disconnected’ and due for a ‘reckoning,’ Warren Buffett buff warns

“That is Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., offering up a stark warning to speculators driving the stock market to new heights amid the greatest pandemic of the past century.

“This is really the real McCoy, this is crazy stuff,” said Grantham during a Wednesday afternoon interview on CNBC that appeared to knock some of the stuffing out of a market that had been drifting along listlessly on Wednesday.

Gratham painted a very dire picture of the investment landscape in the U.S., suggesting that rampant trading by out-of-work investors and speculative fervor around bankrupt companies, including car-rental company Hertz Global Holdings Inc. HTZ, -3.88%, reflects a market that may be the most bubblicious he’s seen in his storied career.”

Source: https://www.marketwatch.com/story/the-markets-in-la-la-land-and-one-warren-buffett-buff-warns-of-an-imminent-reckoning-for-oblivious-investors-2020-06-18?siteid=yhoof2&yptr=yahoo

Stock-market legend who called 3 financial bubbles says this one is the ‘Real McCoy,’ this is ‘crazy stuff’

“My confidence is rising quite rapidly that this is, in fact, becoming the fourth, real McCoy, bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain but at least I think we know now that we’re in one. And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.’
That is Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co., offering up a stark warning to speculators driving the stock market to new heights amid the greatest pandemic of the past century.

“This is really the real McCoy, this is crazy stuff,” said Grantham during a Wednesday afternoon interview on CNBC that appeared to knock some of the stuffing out of a market that had been drifting along listlessly on Wednesday.

Gratham painted a very dire picture of the investment landscape in the U.S., suggesting that rampant trading by out-of-work investors and speculative fervor around bankrupt companies, including car-rental company Hertz Global Holdings Inc. HTZ, -3.88%, reflects a market that may be the most bubblicious he’s seen in his storied career.”

Source: https://www.marketwatch.com/story/stock-market-legend-who-called-3-stock-market-bubbles-says-this-one-is-the-real-mccoy-this-is-crazy-stuff-2020-06-17?mod=mw_more_headlines

Investing

Both of these investing opinions warn about a potential bubble for US stocks, and the dangers of stocks to buy now. However, even in bubbles, not all stocks are defined as stocks to sell. Stocks that have poor fundamentals, and their stock price has moved to higher levels based on the FOMO effect have more chances of being subject to a selloff. Stock investing, stock trading, stock picking will be challenging as we are waiting for important economic news to be released such as the real number for the second-quarter GDP, and the extend of the US economic recession.


Stock market commentary for June 15, 2020

At 4:40 AM today, Monday, June 15, 2020, Eastern Time (ET) the US stock futures fall more than 1.5% for the major stock indices.

Stock futures

S&P Futures: 2,968.50,-66.25(-2.18%)
Dow Futures: 24,857.00,-679.00(-2.66%)
Nasdaq Futures: 9,475.75,-169.25(-1.75%)
Russell 2000 Futures: 1,345.60,-37.60(-2.72%)

Stock market today may open lower

The latest stock futures data point to lower open for the stock market today. The main reasons for this lower open today for the stock market could be due to the following reasons:

“Stock futures sank Sunday evening as investor jitters over rising coronavirus cases in key parts of the country stirred up an extension of last week’s pullback in equities.

Last week, stocks posted their first weekly loss in a month, with a steep selloff on Thursday comprising much of the weekly decline. The plunge, which came on the heels of a more than 40% run-up in the S&P 500 since March, came after new data showed rising coronavirus case and hospitalization counts in states that were among the first to reopen businesses, and after the Federal Reserve delivered a grim forecast for economic activity in the near-term.

Market participants continued to eye coronavirus cases across the country for signs of resurgences.”

Source: https://finance.yahoo.com/news/stock-market-news-live-june-15-2020-222141593.html

Important economic news this week

The US retail sales and industrial production figures are important economic indicators about the state of the US economy. As the US stock market made an impressive rebound off the lows in March 2020 in a period of uncertainty, fear, bad economic news, ignoring an almost certain economic recession, the fact that there is now profit-taking is justified. Investing in stocks is about knowing when to make money and book profits. Stock market volatility may be a dominant theme during summer, expecting further important economic news such as the GDP growth rate.


Stock market commentary for June 5, 2020

Stock market is rallying today, forecasts were wrong about the US jobs report

At 12:40 PM, ET time today June 5, 2020, the US stock market is rallying. All major stock indices are up more than 2%. The small-cap stocks outperform again, a trend that is evident for quite some time now. The latest stock market update is as follows:

S&P 500: 3,201.76,+89.41(+2.87%)
Dow 30: 27,222.01,+940.19(+3.58%)
Nasdaq: 9,831.30,+215.49(+2.24%)
Russell 2000: 1,518.05,+65.99(+4.54%)

The US stock market has defied bad news

Today the very positive news about jobs report and the unemployment justify the stock market rally. Yet forecasts always have the risk of being wrong. Today the actual numbers were much better than the forecasts. So in economic forecasting, the figures today for non-far payrolls and the US unemployment were totally out of sync with the actual numbers. This uncertainty makes stock market analysis both challenging and interesting. Our stock market commentary today is that the US stock market has rallied during the past two months and has defied previously bad news, such as abnormal numbers of initial jobless claims, the number of unemployed persons, a very weak GDP figure. The latest market news is positive but breaking business news such as today’s surprise related to the jobs report puts again the valuation and fundamentals into place. Some stock ideas for today are to apply due diligence to small-cap stocks, they have rallied significantly lately. We wrote today about the investing irrational exuberance. Prudence is required at these stock market levels.


Stock market commentary for April 14, 2020

US stock market

A stock market rally today for the first hour of the trading session. At 10:20 AM
Tuesday, April 14, 2020, Eastern Time (ET) the US stock market is up:

S&P 500: 2,842.52,+80.89(+2.93%)
Dow 30: 24,027.32,+636.55(+2.72%)
Nasdaq: 8,470.90,+278.47(+3.40%)
Russell 2000: 1,246.96,+34.92(+2.88%)

US stock market earnings season has started, results are supposed to be very bad, yet stocks rally

This is not justified from a fundamental analysis.

JPMorgan warns of ‘fairly severe recession,’ increases credit reserves by $6.8 billion

“JPMorgan Chase (JPM), the largest U.S. bank by assets, kicked off earnings season for the big banks on Tuesday by announcing that it set aside billions in anticipation of loan losses.

“In the first quarter, the underlying results of the company were extremely good, however given the likelihood of a fairly severe recession, it was necessary to build credit reserves of $6.8B, resulting in total credit costs of $8.3B for the quarter,” CEO Jamie Dimon said in his commentary.

Here were the key figures versus the expectations for the first quarter, according to analysts polled by Bloomberg.

Revenue (adjusted): $29.07 billion vs $29.52 billion expected

Earnings per share (adjusted): $0.78 vs $2.14 per share expected

The market isn’t putting much weight into how the actual results performed against analysts’ expectations as the impact of coronavirus pandemic has been extremely difficult to measure. To be sure, a key reason EPS was much lower than a year ago is because of the bank building its credit reserves.”

At 10:25 AM today JPMorgan Chase & Co. (JPM) stock price it at 97.29-0.90 (-0.92%).

Wells Fargo (WFC) stock news

“(Bloomberg) — Wells Fargo & Co.’s credit costs surged in the first quarter, previewing a tough year at the helm for new Chief Executive Officer Charlie Scharf as the coronavirus pandemic brings the U.S. economy to a virtual standstill.

The firm set aside $4 billion in loan-loss provisions in the first quarter, almost five times what it allocated a year ago and the most in a decade. That contributed to an 89% drop in net income. “

Source: https://finance.yahoo.com/news/wells-fargo-sets-aside-most-122957001.html

Stock market news

For now poor or bad economic news and economic outlook, as we are in the earnings season seem to be ignored by investors. This does not make sense. But we have to wait for more companies to release their quarterly earnings to get a more precise picture of the coronavirus effects on the earnings.

Trading and Investing

Check this link if you are interested in trading.


Stock market commentary April 8, 2020

A stock market rally today, Dow today is up more than 600 points

All three major stock indexes have gains of more than 2%, as of 3:27 PM
Wednesday, April 8, 2020, Eastern Time (ET). What is the reason for today’s stock market rally?

“U.S. stocks were rising on Wednesday with investors hoping that the U.S. could roll back containment measures put in place to fight the COVID-19 pandemic sooner than expected.

The buoyant sentiment in stocks also may have reflected the announcement that Bernie Sanders had suspended his campaign for the U.S. presidency, leaving former vice-president Joe Biden to compete with President Trump in November’s elections.”

Source: https://www.marketwatch.com/story/dow-futures-aim-for-a-subdued-open-a-day-after-the-most-dramatic-u-turn-for-stocks-in-12-years-2020-04-08?siteid=yhoof2&yptr=yahoo

Why a stock market bottom is yet to be confirmed

Stocks rise today. But for all stocks now this is just irrational exuberance. We wrote yesterday about Boeing stock. Shares of Boeing continue to rise today, half an hour before the close of the trading session. We will soon have the quarterly earnings reports to evaluate the negative effect of the coronavirus outbreak.

Tomorrow we will have the weekly numbers for the US initial jobless claims and continuing claims. A better than expected figure is considered positive for the US economy. But any negative surprise may lead to profit-taking for stock trading, stock investing.

I think that the momo effect (momentum trading) is now responsible for the recent bounce in the stock market. But I am not sure that the stock market has fully discounted the negative results in profitability, cash flows and valuation for stocks yet.