Markets Struggled into the Long Weekend
What is it?
Markets had a brief rally Wednesday before those gains were taken back from trading on Thursday.
“The S&P 500 (^GSPC) closed down 1.4% after dropping as much as 2.8% in afternoon trading, while the Dow Jones Industrial Average (^DJI) shed 350 points, or 1%. The technology-heavy Nasdaq Composite (^IXIC) tumbled 2.2%.”*
Markets struggled to find a clear direction Friday as trading volume decreased into the weekend.
Why does it matter?
The news matters more when it has an impact on stock prices. Sometimes the stock performance determines the narratives and not the other way around.
“Losses picked up after veteran hedge fund manager David Tepper said in a televised interview with CNBC that he is “leaning short on the equity markets” over concerns rising interest rates will further batter stocks.”*
This was not only seen in the benchmarks above but in some of the actively traded companies such as Tesla.
“Tesla’s stock (TSLA) cratered 8.9%, deepening steep declines for the electric vehicle giant, which is now down more than 68% this year. Selling pressures have intensified for Tesla this month, with investors concerned that CEO Elon Musk’s management of Twitter was distracting him from leadership responsibilities at the electric carmaker.”*
With a pessimistic view from investors, we will see if things start to change in the new year or if we end up seeing more of the same. As the markets evolve we will make changes to portfolios. Currently, stocks are suffering while some other investments have shown signs of positive momentum.
Traders Scrutinize New Economic Data
What is it?
“The US Dollar recovered its shine on Thursday, and despite still trading within familiar levels against most of its major rivals, it currently stands near weekly highs. The Greenback got boosted by an upbeat US Gross Domestic Product report, as the Q3 GDP was upwardly revised from 2.9% to 3.2%.”**
While that data is not forward-looking, it can provide some insight into the decision-making process of the Fed and investors in the next quarter.
Why does it matter?
“Wall Street posted substantial losses, trimming all of its weekly gains.”**
While GDP was revised upward, this did not help stock performance. That news, while positive in some regards, was met with the realization that the Fed may need to keep interest rates higher for longer. While many investors were more optimistic at the beginning of this year, it may be a while until stock benchmarks recover their losses.
Other articles we found interesting this week:
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Our last portfolio reallocation: 5/19/2022.
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The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Alexandra Semenova. “Stocks close higher to cap final full trading week of 2022”. 12/23/2022. Yahoo Finance. https://finance.yahoo.com/news/stock-market-news-live-updates-december-22-2022-124242344.html
**Valeria Bednarik. “US Dollar demand resurges amid upbeat US growth data”. 12/23/2022. FX Street. https://www.fxstreet.com/news/forex-today-us-dollar-demand-resurges-amid-upbeat-us-growth-data-202212222015
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