On a day when one of the most famous traders of the past 50 years passed away, investors briefly lost confidence in the market, sending the Dow Jones industrials into the red for the week and back under 17,000.
Economic news and earnings reports mostly have painted a sunny picture for the market in the past few sessions, but earnings reports from Visa (ticker: V) and Amazon.com (AMZN) put investors in a sour mood on Friday. The Dow fell 123 points, or 0.7%, on the day.
Alan “Ace” Greenberg, who rose from the literal stock room to the top of Bear Stearns, died at 86 on Friday, six years after his firm succumbed to the credit crisis and was sold to JPMorgan Chase (JPM). Greenberg was the quintessential trader—after he stepped down as CEO in 1993, he continued trading equities for the firm.
If Greenberg typified the old hustle and bustle of the trading floor, this week’s market action had all the pulse-pounding thrills of cruise-ship shuffleboard. Volume remained low, and stocks mostly traded in a tight range.
For the week, the Dow fell 140 points, or 0.8%, to 16,960.57. The Standard &Poor’s 500 index rose 0.1 points to 1978.34. The Nasdaq Composite index rose 17 points, or 0.4%, to 4449.56.
A few pieces of good news stood out last week, says Keith Lerner, chief market strategist at SunTrust Private Wealth Management.
Weekly jobless claims fell to 284,000, the lowest level since 2006.
And China’s manufacturing activity rose to an 18-month high in July, according to a gauge put out by HSBC. The good news out of China helped boost stocks there and “eased some of the angst” that China is in for a prolonged slowdown, Lerner says. The Shanghai Composite Index rose 3.3% on the week. Emerging-market stocks have been outperforming U.S. counterparts, as investors have searched for better values, he adds.
The iShares MSCI Emerging Markets (EEM) exchange-traded fund has outperformed the S&P 500 by about 10 percentage points since mid-March, and rose 1.9% last week. “People are really searching for assets that look cheap,” Lerner says. “Emerging markets are the latest beneficiary of that trend.”
On the negative side, government data on housing starts showed a 9.3% decline in June, and builder DR Horton (DHI) posted disappointing earnings, causing more consternation about the housing market.
(Source: Barrons Online)