Down day – blame the news!
by Peter Switzer
A lot went wrong and so traders reacted in a natural way, but don’t think this is necessarily a sign of things to come. Why? That’s simple. Good news could arrive tomorrow!
Mind you, my greatest fear is that leadership in Europe is so abysmal we might need another market meltdown to shake the leadership of the EU out of their complacency and stupidity.
Negative news overnight
The numbers experts say it was the second worst day for stocks this year and the causes were:
- Bad economic news — the Philadelphia Fed index came in at -16.6 and that suggests economic contraction for a critical industrial region for the USA. This added to disappointing weekly jobless news and manufacturing purchasing numbers.
- Europe — the usual debt and bank solvency concerns did not help investor confidence.
- A Goldman Sachs warning that the S&P 500 was set to fall five per cent from current levels, but these guys haven’t got a great record, though they do have market influence.
- China — the HSBC Flash Purchasing Managers Index showed China's factory production contracted in June for the eighth month in a row with exports down and this goes back to Europe’s problems.
- The failure of the Fed to give QE3 has affected traders’ sunny dispositions and has encouraged a sell off.
- And the fact that negativity is simply outpointing positivity.
The Dow lost 250.82 points or 1.96 per cent to end at 12,573.57 while the S&P 500 ended at 1325.51 — that’s down 30.18 points or 2.23 per cent.
We need good news that suggests Europe has a meaningful solution to its problems. When that happens, stocks will soar. It’s a waiting game, though it will happen — you just have to be patient and stick to your plan to buy good companies.
Remember Warren Buffett’s words: “Be greedy when others are fearful…”
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
Published on: Friday, June 22, 2012
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