Stock prices fell more than 1% last week, but the slide seemed less alarming than the string of bad news accompanying it.
As the week opened, the election of a socialist president in France and a vote in Greece that weakened support for its bailout seemed a likely good right hook to the market. Then a surprise left uppercut arrived Thursday in the form of an “at least $2 billion” trading loss revealed by JPMorgan Chase (ticker: JPM).
Despite the market’s drop, small stocks still did better than big stocks. That runs counter to the previous week’s bigger “risk off” move to the downside, and suggests that investors didn’t take the news as badly as was feared.
Though stocks slid, there seemed to be no influential theme last week, and trading still felt generally directionless, says Andre Jude Bakhos, director of market analytics at Lek Securities. The market is biding its time, waiting for a theme or a driver, he adds.
The Dow fell 1.7%, or 218 points, to 12,820.60, a second consecutive drop. The Nasdaq Composite declined by 23 points, or 0.8%, to 2933.82. Meanwhile, the Russell 2000 small-cap index did the best, dropping only 0.22%, to 790.06.
The bearish developments in Europe were offset by continuing good first-quarter earnings news, observes Kate Warne, investment strategist at Edward Jones, resulting in a mostly churning and confused market. As for JPMorgan, investors took the loss as specific to the bank itself rather than an indication of systemic problems, she says.
Warne expects continued market churning as the tension between worries abroad and a better domestic economic situation plays out. The market backdrop remains unsupportive of either a big gain or loss from here. A likely worsening of the situation in Greece could prove a nasty summer hiccough, but the driver the market is awaiting still looks to be our own November elections (Source: Barrons Online).