Loading ...Happy Labor Day!
Labor Day, the first Monday in September, celebrates the social and economic achievements of American workers by giving them a day of rest. It commemorates the much unappreciated contributions workers have made to the prosperity, strength, and well-being of our country (and therefor the world). It is our favorite Holiday.
Recapping last week, the stock market started last week green when the economic data came in weaker than expected. It seemed that bad news was bullish again by keeping interest rates low. In fact, the market remained green for most of the day on Monday. Then, with an hour left of trading, John Kerry discussed the possibility of an attack on Syria. This resulted in the Dow Jones, S&P 500, and Nasdaq all dropped over 1% to end the day red.
By Tuesday’s morning, it was clear that the mood had changed. Throughout the session, broad-based selling resulted in the major averages settling on their lows for the day. The probability of U.S. military involvement in Syria became definite. This realization was the jolt required to move the market lower. Oil, treasuries, and precious metals benefited from the fear of war and became as expected the safe haven investment. The session was the most active in days. There was a possibility for war as early as Thursday.
On Wednesday, the bipolar markets once again changed its sentiment. The reduction of QE was less of a certainty for September because of the looming war. Ironically, the war itself (or it no longer appearing eminent) gave the market a light rebound. The market realized that there is nowhere else to invest and went back to risk on mode. Throughout the session, cautious broad-based market melt up continued. World War III with Syria was downgraded to tomahawk missile-ing airfields and turning Syria into a no fly zone.
Thursday, good news in the morning shocked and owed the markets. The second quarter GDP was revised up to 2.5% from 1.7%. Realizing that good news (GDP growth) was in fact not so good news, a late day reversal canceled much of the days gain.
Last week ended with a selloff on weak volume. No one wanted to be long (or short) during the weekend for fear of a volatile opening on Tuesday. The Dow Jones finished the week at 14,810.31, or -30.64 (-0.21%). The S&P 500 ended at 1,632.97, a decline of 5.20 (-0.32%) and the Nasdaq ended at 3,589.87, a decline of 30.43 (-0.84%).
Today the US markets are closed for the Holiday. However, throughout the globe, life goes on. Productive people are still producing. From ATX to TSEC, global equity markets are raging green on solid volume. We are just glad not to be short this market. If tomorrow opens like today did around the world, we might see some massive short squeezes.
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