If a scandal breaks out in Washington, and the market doesn’t react, did it really happen?
The scandal, of course, was the abrupt firing of FBI Director James Comey last week, which provoked an outcry from Democrats—and even a few Republicans—but was dismissed by President Donald Trump as the removal of a “showboat.” The headlines continued throughout the week—some even drew comparisons to Richard Nixon—but stocks couldn’t be bothered to respond one way or the other. “The market is telling you it’s background noise,” says TD Ameritrade strategist JJ Kinahan.
It certainly was another yawner despite the pyrotechnics in Washington. The Dow Jones Industrial Average fell 110.33 points, or 0.5%, to 20,896.61 last week, while the Standard & Poor’s 500 index declined to 2390.90. The Nasdaq Composite rose 0.3% to 6121.23. The CBOE Volatility Index, or VIX, closed at 10.41 after falling into the single digits earlier in the week.
It wasn’t all quiet. Retailers such as Macy’s (ticker: M), Nordstrom (JWN), and J.C. Penney (JCP) suffered double-digit losses after releasing earnings, but warns Daniel Chung, CEO of asset manager Alger, don’t blame their disappointing sales on consumer weakness. “It’s the internet, not [a lack of] consumer strength,” he says. As if to serve as confirmation, retail sales grew at a 0.4% clip last month, weaker than the 0.6% that economists had predicted, but not low enough to worry.
(Source: Barrons Online)