Posts by Michael Santoli

  • Here's the upside of a sideways stock market

    Michael Santoli at Yahoo Finance 15 hrs ago

    Wall St­­reet bulls and bears have been stuck in a Cold War-style standoff this year. You might even call it a regime of “mutually assured frustration.” 

    These camps have fiercely differing worldviews and are vocal in trying to convert the uncommitted. But neither the market optimists nor the doomsday prophets have been bold enough to make a deep incursion beyond neutral territory.

    The result has been the stultifying sideways shuffle in the U.S. stock indexes. The Dow Jones Industrial Average has been stuck between 17,500 and 18,300 for three months. The Standard & Poor’s 500 index is within 1% of where it closed on Dec. 30.

    In fact, despite being up against its all-time high, the U.S. market has not penalized investors at all for having sat out the equity game for more than half a year now. Since last summer’s high set on Sept. 19, the S&P 500 is up 5%. From that same date, long-term government bonds, as reflected in the iShares 20+ Year Treasury ETF (TLT), have gained 7.5%.

    -It shows the market has metabolized some huge and potentially destabilizing moves in global asset markets without much damage.

  • Best bond bets for inevitable rate hike

    Michael Santoli at Yahoo Finance 1 day ago

    Americans’ paychecks are growing, and this has some on Wall Street shrinking in fear of the Fed. The employment cost index, a measure of wages and benefits, climbed more than expected last quarter.

    Within the ECI report, released last week, private-sector wages climbed at a 2.8% annual rate, the fastest pace since late 2008. Steve Huber, portfolio manager of the T. Rowe Price Strategic Income Fund (PRSNX), believes this helps set the stage for the Federal Reserve to nudge short-term interest rates from near zero within several months.

    “We did get an uptick in wage pressure, which means we’re getting closer to full employment,” Huber says in the attached video. “The inflation data is where the Fed wants it to be; oil prices have stabilized and the dollar has stopped appreciating.” This means that the next couple of months’ worth of employment and economic-growth data will determine when the Fed will begin what it calls the “normalization” process for interest rates.

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  • Daily fantasy sports boom spawns virtual stock-picking games. But why?

    Michael Santoli at Yahoo Finance 4 days ago

    If it works for jocks, how about stocks?

    Daily fantasy sports leagues are booming because they allow fans to “day trade” athletes as if they were stocks. So then why -- when there’s actual day trading of stocks -- would the world need a make-believe stock-trading game that mimics daily fantasy sports?

    Whether necessary or not, daily-fantasy stock market contests are here.

    Stock Battle is a new site that allows players to compete for cash prizes based on the one-day returns of a virtual stock portfolio. Competitors pay a small entry fee and then select a group of stocks they believe will outperform those of other players on a given day.

    A few years ago, a site called Invoost began offering similar games and got some notice for the novelty of it.

    “The space is certainly gaining attention,” says Tom Peterson, CEO of Social Leverage, the venture capital-firm that backed Invoost. He says Invoost still owns the technology used for the contests, and it may restart operations before long.

    [Get the Latest Market Data and News with the Yahoo Finance App]

    It’s not for nothing that investing has long been known as the money game.

     

     

  • Stocks face leadership crisis as May begins

    Michael Santoli at Yahoo Finance 4 days ago

    The stock market (^GSPC) is struggling with a sudden leadership crisis. Thursday’s 1% drop in stocks and slight lift in Treasury yields was largely just a gentle re-pricing of markets to account for a Fed rate hike coming into view and pressured corporate earnings.

    As a new month now gets underway, U.S. investors will lack the usual clues about market direction that come from European stocks – the leaders of the global rally so far this year, which have pulled back sharply of late. That’s because markets on the Continent are closed for May Day.

    But even back home, the makeup of the sectors selling off shows the flagging of once-reliable leaders. We spoke yesterday of the retreat after earnings of growth leaders such as Facebook Inc. (FB), Twitter Inc. (TWTR), Under Armour Inc. (UA) and Buffalo Wild Wings Inc. (BWLD).

    Here are four to keep on the screen today.

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  • Can Visa,Tesla spark stalled market?

    Michael Santoli at Yahoo Finance 5 days ago

    The best way to make a stalled car seem dramatic is to put it on some railroad tracks. Otherwise there’s not much to keep anyone’s interest. That’s why, whenever the stock market gets stuck for a while unable to get a spark, investors start thinking they hear the alarming whistle of an oncoming train.

    While there is nothing like panic in the market right now, the months the stock market has spent stuck in a narrowing range has fed anxiety and confusion about what might go wrong. A no-growth quarter for the economy and earnings and wild moves in macro markets globally are hard to decipher when stocks themselves fail to render a verdict on whether everything’s still OK.

    Of course, earnings season has been weathered pretty well – since the day Alcoa Inc. (AA) began the reporting parade, the S&P (^GSPC) has eked out a 1% gain. But I’ll suggest that the tape “feels” worse than it’s been, mostly because some popular investment positions that traders thought could see them through a slow-growth patch have reversed pretty hard recently.

  • Fed might remind forgetful investors that rate cycles can hurt

    Michael Santoli at Yahoo Finance 6 days ago

    New research finds that the agony of running a marathon fades from memory quite a bit over time. That, I guess, is why so many people sign up for the same painful 26-mile ordeal over and over again.

    Investors might be experiencing a similar effect when it comes to running the course of Federal Reserve interest rate cycles. For more than two years, the market has been on alert for the Fed to tighten up monetary policy, ever since Ben Bernanke touched off the “taper tantrum” with hints of an eventual end to its bond-buying plan.

    The pain of that bond-market tantrum has apparently faded, though, and since then it has consistently paid to bet on the Fed to push off into the indeterminate future the date when it might begin truly cinching up its easy-money policies.

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    Stealth signs of consumer strength emerges amid earnings

  • Biotech breakdown, retail retreat weaken market leadership

    Michael Santoli at Yahoo Finance 7 days ago

    Today will nicely prove the point that Apple Inc. (AAPL), for all its power, is not a driver of the whole stock market (^GSPC). As discussed here Monday, the smartphone maker is mostly a bellwether of its own remarkable earning power and not an indicator of the technology business or consumer health.

    Apple hogs more than its share of economic oxygen in the consumer technology area, just as Amazon Inc. (AMZN) commands an outsized portion of the retail business, making them more category killers than representative examples of their industries.

    So Apple’s unsurprisingly strong quarter reported last night looks to boost Apple shares, but leaves the overall market back on its heels a bit and hunting for leadership after the indexes retreated from their record highs yesterday.

    As it turns out, some of the potential leaders are showing signs of fatigue, which bear watching today.

     

  • Apple is no bellwether for the market

    Michael Santoli at Yahoo Finance 8 days ago

    It’s the biggest stock in the world, but don’t call it a bellwether. Apple (AAPL) is worth more than any company in history, at more than $750 billion. It is followed by more analysts and showered with more hype than all the Republican presidential contenders combined.

    Yet when Apple reports its hotly anticipated results for its fiscal second quarter, the numbers will tell us almost nothing about the state of the economy, and its stock reaction will deliver no clues about the broad market’s prospects. That’s because the Apple economy is a singular thing, operating within the global market for goods and services but only marginally dependent on them.

    And Apple shares have shown a stark tendency to remain out of step with the stock market as a whole. Which means that when the company reports what are almost certain to be powerfully strong profits after the close today, it won’t tell us much at all about the condition of the tech industry or the rest of the business world.

  • Nasdaq all-time high comes with lack of resolve

    Michael Santoli at Yahoo Finance 11 days ago

    The key thing to watch today is how the markets deal with a lack of resolution, across several fronts.

    We’re seeing some pent-up celebration of the Nasdaq Composite’s (^IXIC) first new all-time high in 15 years, a noteworthy but lagging indicator of how far the market has come.

    Yet more significant for serious investors is the continued bashfulness of the broader S&P 500 index in its chase for a new high. The S&P (^GSPC) spent a small bit of time Thursday at a fresh record, but by the close the benchmark slipped back just a touch beneath the top end of its enduring, narrow three-month range.

    Perhaps the grinding, halting character of the recent rally is fitting. This entire bull market has often appeared as a grudging, measured climb rather than a burst of upside energy. This has kept investor sentiment in check and, so far, has prevented equity prices from advancing too far beyond what the corporate and economic fundamentals merit.

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  • Is this the 'stock picker's market' you've been asking for?

    Michael Santoli at Yahoo Finance 12 days ago

    You wanted a “stock picker’s market.” Maybe you were even among those predicting at the start of the year that we’d finally get a “stock picker’s market.” Well, we’ve got one. And now all anyone can talk about is how frustrating it is to watch the indexes stuck in a range.

    A stock picker’s market isn’t one where investors can somehow make easy money focusing on individual company performance. It doesn’t mean that fund managers can readily beat the benchmark indexes. It’s simply a market where a greater number of individual stocks and sectors go their own way, rather than track the broad market.

    And so coming into the week we saw retail stocks (XRT) up almost 10% for the year and transportation names (^DJT) down about as much. The bond market has been strong but stocks like utilities that typically track bonds have been losers.

    On the whole, companies are beating severely reduced earnings forecasts while falling short on revenue growth and blaming the strong dollar with predictable frequency.