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With one month down, investors may want to get a case of Pepto-Bismol for the remaining 11 months of 2016. Volatility remains high and the first week of February hasn’t shown any sign of easing that turmoil. It’s the same story that’s basically been going on since October of last year. Each week, it seems that a different cast of players is pulling stocks in either direction, all the time.
This week, the data was all over the place. Key economic metrics like manufacturing numbers and unemployment data were skewed towards the negative. Meanwhile, some consumer figures were actually showing that many consumers didn’t mind the dour economic news, though the ever-present price of crude oil seemed to have a profound effect on the direction of the markets.
As far as earnings go, the numbers reported this week haven’t been exactly bad. However, less-than-ideal guidance projections from several big name firms, especially in the energy sector, helped the volatility grow.
All in all, the story remains the same: the market’s direction is 100% dependent on the current minute’s biggest news story.
Monday started things off with a fizzle following Friday’s huge 400-point gain in the Dow. Both personal income and personal spending came in flat for the last month and showed no gain or loss. The real downer for the day was the latest Institute for Supply Management (ISM), Purchasing Managers’ Index (PMI) number. The measure of manufacturing activity came in at 48.1. This was the fourth month in a row of contracting industrial growth. Construction spending also decreased.
Add these down reports to fresh concerns about growth in China and it’s easy to see how the Dow fought for direction all day. Eventually, the Dow Jones Industrial Average dipped 17.12 points to reach 16,449.18. The S&P 500 was essentially flat, while the Nasdaq gave up 6.41 points.
Data was light on Tuesday. Total vehicle sales were the only significant figures released. The metric, which looks at all cars and light trucks sold, managed to come in slightly ahead of estimates. However, the positive number had zero effect on the market’s mood.
That’s because falling oil prices, as well as several bearish energy stock earnings reports, took the floor out of stocks. The nearly 6% drop in crude oil prices caused the Dow Jones Industrial Average to fall triple digits, or 295.64 points, to land at 16,153.54. The S&P 500 fell 36.35 points, while the Nasdaq Composite lost a whopping 103.42.
Wednesday met the markets in another volatile session. However, this time the bulls won on the back of several good pieces of data. For starters, the number of newly employed people went up for the month. The latest ADP employment numbers continued the trend of surprising higher, coming in at 205,000. Also adding to the day’s good news was the Institute for Supply Management’s (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI). The reading dipped, still in the expansion side of things.
These bullish numbers helped the Dow correct another triple-digit loss and end up way positive on the day. The Dow Jones Industrial Average added 183.12 points and the S&P 500 rose 9.5 points. However, the Nasdaq managed to finish in the red after dropping 12 points.
Unemployment day brought more gloom to the markets on Thursday. The Labor Department’s weekly look at initial jobless claims rose to 285,000. This was more than forecasted and was the third week in a row of higher numbers. That continued climb has some analysts wondering if the job market, and overall economy, is beginning to decline. The decline in factory orders for the previous month didn’t help either.
Even with the poor data, the Dow still managed a gain after whipsawing back and forth all day. The Dow Jones Industrial Average gained 79.92 points to land at 16,416.58. The S&P 500 and Nasdaq increased by 2.92 and 5.32, respectively.
Friday is one important piece of data after another. The Bureau of Labor Statistics will release two major metrics: month-over-month average wage growth and nonfarm payrolls. Both numbers haven’t exactly been stellar over the last few readings. The overall unemployment rate will also be released today; we’ve been holding at 5%. However, the continued uptick in job losses and manufacturing declines could finally move the figure down.
And the market agrees. Premarket trading data has the Dow falling 22 points at the open. Both the S&P and Nasdaq are scheduled to drop by double digits as well.
Going into next week, investors do get somewhat of a break from economic data, except on the consumer side of things. Consumer sentiment and retail sales will be released, and those numbers can and will move the markets. Two days of speeches by Fed chairwomen Janet Yellen will also take place; any negativity from Yellen will cause more volatility.
All in all, it should prove to be another volatile week.