This week has been tough on markets. On Thursday the DOW (^DJI) dropped 335 points, its biggest fall since June 2013—this drop was a serious shock after the stock jumped 275 points just the day before. Markets ended the week in the red as well—The Dow was down another 115 points giving up all of its 2014 gains and the S&P 500 (^GSPC) tumbled as well. So will markets remain manic next week? Yahoo Finance’s Aaron Task, Jeff Macke Rick Newman and Michael Santoli discuss in their weekly roundtable.
“Sell-offs are emotional,” says Jeff Macke, “and we’ve got some emotion kicking up here.” He’s watching the 200-day moving average of the S&P 500. “At 1,900 on the S&P 500 is critical support—if we break that we have air pocket risk all the way down to 1,800.” That would be about a 10% correction and take back all of the gains from the year. The S&P ended the week at 1,906.13.
Retail sales and the state of the consumer
September retail sales are out Wednesday at 8:30am. The August report was good, but the July report was terrible so September’s read will let us know where we’ve landed and guide us into the holiday shopping season.
“I think it could be disappointing,” says Rick Newman. “A big part of this is car sales and we’re starting to see some jitters there on account of subprime loans that may have gone a little too far.” Newman also points to a lack of income gains, which would prevent further spending.
The large banks like JP Morgan (JPM) and Goldman Sachs (GS) will report earnings next week. “That hasn’t really been the epicenter of the selloff at all,” says Michael Santoli, “but I do think you want to hear what they have to say about the trading environment because I think one element of a lot of these market moves has been these big, crowded global trades with currencies moving all over the place.”
Santoli will also be looking at transport stocks like CSX, “you want to hear about how the stuff economy is doing, if they’re moving stuff around the country as much,” he says.