Will markets recover next week?
Oil prices plunged to fresh five-year lows on Friday and stocks took it on the chin. How low oil go and what effect does the price free fall have on investors next week?
Yahoo Finance Editor-in-Chief Aaron Task sat down with Yahoo Finance’s Jeff Macke and Michael Santoli and Nicole Sinclair, senior stock analyst at TheStreet.com to discuss.
Darden reports
Thestreet.com's Nicole Sinclair is eyeing Darden (DRI) next week, which reports its quarterly earnings on Tuesday. Consumers have more cash in their pockets thanks to the drop in gas prices, but they aren’t necessarily eating more at traditional sit down restaurants like Darden’s Olive Garden. Activist hedge fund Starboard Value took control of Darden’s board in October and released a plan to turn around the beleaguered flagship brand. “Activism has been a big theme for 2014 and Darden continues to be one those targeted names,” says Sinclair. “So we’ll want to be updated on how they are progressing with their plan.”
Markets lose grip
Jeff Macke will continue to look at how stocks are reacting to tumbling oil (OIL) prices. Macke says oil is holding the entire market hostage. “As long as crude is going to go down 3 or 4 % a day, that is a violation of the natural order of things,” he says. Pressure will grow on equities as long as oil continues falling at its current pace.
The junk bond indicator
Michael Santoli will be watching the junk bond market next week. “The junk bond market is and has been the battlefront where macro stuff manifests itself on stocks,” says Santoli. “It’s kind of the nearest asset class to stocks.” The energy portion of the junk bond market has been battered and the question now is whether that’s going pose greater and broader risks. “I think if there is a good news inference you can take out of there, it’s that it really is only energy junk that’s having a bad time, so the rest of high yield is kind of holding in.” But, he says, “it’s not as strong as it was several months ago.” Prices on high-yield bonds have declined 2.4% already this month and 5.7% since the end of August, according to Bloomberg.
