Dow has worst week of year on rate hike fears
It appears the market reacted late to the moderately hawkish Fed announcement earlier this week, with stocks falling more than 1% a few days later than expected. The market has also been down for the entire week as investors accept rising inflation and uncertainty over the central bank’s next move.
On Wednesday, the Fed raised its inflation projections and said rates would likely be hiked several times in 2023, instead of 2024. Despite all the fears surrounding potential policy changes, the market has handled the situation fairly well with only insignificant losses. So maybe investors are finally coming to the idea that rising inflation isn’t a big deal.
Or maybe not.
Stocks experienced their worst sell-off of the month on Friday, as the Dow fell 1.58% (or about 533 points) to 33,290.08. The index now has a five-day losing streak in a row and is down 3.6% for the week after recoveries came under pressure amid rising inflation and a resurgence in technology.
The S&P lost 1.31% to 4,166.45 and the NASDAQ plunged 0.92% (or about 130 points) to 14,030.38. These indices hit all-time highs as recently as last Monday, but ended the week down 1.9% and 0.3%, respectively.
The sale received some help today, however. St. Louis Federal Reserve Chairman James Bullard told CNBC there could be an interest rate hike as early as next year. Skeptical investors can’t help but feel that a bullish is getting closer and closer, just as they feared. Meanwhile, today was the Quadruple Witch, stirring volatility as stock index futures, stock index options, stock options, and single stock futures expire.
We are also just one day away from a disappointing unemployment claim result, which ended six weeks of improvements. There were 412,000 claims last week, which was more than expected and 375,000 the week before.
Highlights of today’s portfolio:
ETF Investor: The portfolio trades one position on Friday, but it remains in the biotech hot space. Neena has decided to sell iShares Nasdaq Biotechnology ETF (IBB) for a profit of almost 29% and replace it with Invesco Nasdaq Biotechnology ETF (IBBQ). Both of these funds are market capitalization weighted indices with similar exposures to biotech giants like Amgen (AMGN), Gilead (GILD), Moderna (MRNA) and Biogen (BIIB). However, IBBQ is the new kid on the block (which debuted last week) that has no fees and will only charge 19 basis points after December 17. In other words, the service gets the same exposure at a lower price. Neena suggests using a limit order. Read the full article for more details on this change.
Counter Strike: With the market feeling weak outside of individual tech names, Jeremy figured it was a good time to sell part of Shopify (SHOP) after the cloud-based commerce platform hit its targets. The publisher sold half of SHOP on Friday for a return of 26.8% in one month.
Home investor: Smith & Wesson Brands (SWBI) shares jumped 17.2% today to become the best performing of all ZU names. The gun company just posted a strong fiscal fourth quarter, which included a positive surprise of nearly 60% and sales of $ 322.9 million which improved more than 67% year-on-year. the other. The stock is now up more than 16% in the portfolio since its addition on May 26. This portfolio also recorded the best performance over the last 30 days with Cutera (CUTR, + 45.9%).
Value investor: “Finally, the incredible rally in vaccine news for November 2020 was going to come to an end. There was going to be a setback, a sell-off or even a correction. We already saw one last year.
“But now that the Fed is talking about the cut, we might see another cut here. There is just too much uncertainty right now.
“Volatility is back.
“I hope you have some spare cash to deploy to get these equity trades. Don’t be afraid of selling stocks. We saw that with growth stocks a few weeks ago and there is had some good deals in our wallet. “–Tracey Ryniec
Have a good week-end!
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