Click here for the Weekly Wrap by Briefing.com.
Bottom Line: The S&P 500 declined for a third straight week and is off to the worst January since 2000. Economically sensitive stocks, especially technology shares, fared the worst and the advance/decline line weakened further. Economic and earnings reports were mixed on the week, however most good news went unrewarded. There were some positives last week. Small-caps outperformed, interest rates fell, the US dollar rose, energy prices stabilized and measures of investor anxiety finally begin to increase in a meaningful way. In my opinion, the markets' recent weakness is a result of worries over the ability of the Bush administration to pass meaningful reforms, the possibility the Fed is hiking rates too much, profit-taking, slowing growth in Asia and Europe, continuing overcapacity from the 90's bubble and persistently high energy prices. I continue to expect worries over these problems to peak in the first half of the year, making for a very positive second half.
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