(As of 7:25 am PST)
Markets are mixed this morning as investors continue to
sort out global equity conditions after last week’s selloff. Indexes fell sharply last week after
disappointing data from China spurred a selloff in emerging markets and a
flight to safety caused a liquidation of stocks around the world. This morning’s tone is cautious. After dropping 550 points or 3.25% on the Dow
in the past 5 days, some analysts are saying the correction is just getting
started and that we could see another 5%-10% drop. Upbeat results from Caterpillar have kept the
Dow afloat this morning as the “bellwether” company beat earnings estimates for
the 4th quarter. New home
sales for December fell 7%, but 2013 was the best year for sales in 5
years. Earnings continue to trickle in
this week, but the main focus will be on the Federal Reserve which is expected
to announce its next step in its taper program later this week. Economists are calling for an additional $10
billion per month reduction in the Fed’s bond purchase program, bringing the
monthly total to $65 billion. In other
markets, Asia finished deeply in the red following Friday’s selloff on Wall
Street. European markets are mixed. Gold is lower and oil higher while the dollar
has regained slightly. Interest rates
are flat but are noticeably lower from last week’s flight to safety which pushed
treasuries higher. Expect market volatility to persist as we move into the thick of earnings season and investors sort out mixed data to find direction.
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