Market Wrap-Up for July 1 (AAPL, INTU, CSCO, more)
Kicking off the third quarter, markets across the globe surged today. On the back of better-than-expected economic data in Japan and Europe, just about every major stock index closed in positive territory as we began the holiday-shortened trading week. The U.S. markets were able to close in the green as well, despite a pull back from the highs late in the day’s session.
It seemed as though U.S. investors more-or-less ignored a mixed bag of domestic manufacturing data that was released early this morning:
- The June Markit PMI came in 51.9, missing the consensus estimate of 52.3
- Construction spending rose 0.5% compared to the expected 0.6% increase.
- The June ISM Manufacturing index rose to 50.9, beating the expected 50.5
- June ISM employment data contracted to 48.7, the lowest level since September 2009
Despite this mostly disappointing economic data, it did not reign in investors’ bullish sentiment during morning trading.
Among the major stocks that added to today’s rally was Apple (AAPL), whose shares paved their way into the green on news that it may be releasing its newest iPhone in September and a subsequent upgrade by Raymond James analysts.
Also heading higher today on some welcomed news was Intuit (INTU), after it announced that it will be taking some steps to restructure its operations to maximize future growth.
Wall Street analysts’ upgrades of Cisco Systems (CSCO), Tyco International (TYC), and EOG Resources (EOG) helped those shares head into positive territory. Meanwhile, downgrades of Broadcom (BRCM) and Valero Energy (VLO) dragged those stocks into the red.
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Avoid the Scare Tactics
I continue to see articles by various analysts and pundits calling for the next big stock market crash, perhaps later this year or at the very latest, sometime in 2014. These commentators warn of once-in-a-lifetime bubbles, central bank recklessness, political instability, and a number of other potential hazards that will drag the economy down to levels akin to the Great Depression. But rather than provide reasonable, pragmatic commentary on the state of the markets, these commentators push nothing but doom and gloom, potentially scaring the average investor out of the markets. All the while, large, institutional investor stay in the markets, capitalizing on the benefits of share price appreciation and especially dividend payouts, while mom and pop investors miss out because of the unnecessary scare tactics.
As we begin the third quarter, and thus the second half of the year, investors should remain aware of the potential downsides in the economy and financial markets going forward. However, this does not mean that investors should get out of the markets altogether like the doomsday commentators suggest. Investing in the stock market continues to be the best way to build long-term wealth through share price appreciation and dividend payouts. By investing intelligently, investors will be able to minimize losses or even capitalize in the event of a pullback or a downturn. There is no need to leave the market for good.
It is just unfortunate that these sorts of commentators put fear into small-time investors just for the sake of page views or TV airtime. Most of the time, these commentators do have constructive opinions and insights into the state of the markets that should not be ignored. But rather than utilize these views to educate the average investor, they do whatever they can to put fear into investors, which leads to mismanaged investing decisions. It’s best for investors to ignore this noise, avoid the scare tactics, and stay on the intelligent course toward building wealth.
Thank for reading! Don’t forget to follow me on Twitter @mtflannelly. We’ll see you tomorrow.
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