Not Just Stocks to Watch
Plunging oil prices have stabilized, for now, below $40 a barrel. That's a price level that some industry analysts think could help sop up the extra crude supply sitting around. Stability there could help the energy-heavy S&P 500 (SPX) after it closed Monday down nearly 4% (figure 2). FIGURE 2: RED RULES LATELY. The S&P 500 (SPX) shed another nearly 4% Monday, its fifth straight down day. The drop returned the broad index to a level last seen in October. Resistance sits at 1950. Data source: Standard & Poor's. Chart source: TD Ameritrade's thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.China Story May Not End Soon
China's government had been pumping up stock returns with pro-growth initiatives for much of the year. But cracks started to show. Chinese factory activity contracted at its fastest pace in almost 6 1/2 years, data issued earlier this month showed. China's central bank unexpectedly devalued its yuan currency earlier this month, a move meant to goose its export economy but that did little to seal shut the trap door in the stock market. Japanese Finance Minister Taro Aso said this week that Chinese stocks, which had more than doubled in the six months to May, had been a bubble that was now bursting. And, he said, there's "suspicion on whether China's official GDP figures reflect the real state of the economy," according to Reuters. Officials from around the globe are quick to dismiss comparisons with the 2008 Global Financial Crisis or the 1997/98 currency crisis in Asia. Companies chimed in over the past few days, which may be helping to restore some calm. Apple AAPL CEO Tim Cook took the rare step of commenting on the tech giant's business midway through a financial quarter. Reuters says Cook emailed that iPhone activations in China had accelerated over the past few weeks. "Obviously I can't predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe China represents an unprecedented opportunity over the long term," Cook wrote, according to the news report.Interest Rate Scenario
Of course, there's more to this story than just China. Also front of mind: a commodities price plunge, although that too hinged in large part on Chinese demand; high stock valuations mired in a sideways trade; and the gully across the big boys' interest rate policies. All this market noise packs an extra challenge for a Federal Reserve that many thought was ready to push the button on the first U.S. interest rate hike since 2006 next month. Now? No one's so sure. At least temporarily, global demand for U.S. Treasuries as a perceived short haven drives up prices and holds back interest rates. But big Treasury customer China could divert resources back home. If so, the U.S. bond market loses one of the props that had held down rates.Micro News, Too
It's hard to notice within the broad-market news, but there are company-specific headlines circulating. One of them, Best Buy BBY early Tuesday reported a better-than-expected 12% increase in Q2 profit. Strong sales of large-screen TVs, appliances, and phones offset weakness in tablets, the company said. Troubled Best Buy's cost-cutting has started to pay off but investors may also cheer this sign of consumer spending. There are many moving parts to the market these days. Stay alert for obstacles and opportunities. Good trading, JJ @TDAJJKinahan This article was originally posted here by JJ Kinahan on August 25, 2015.TD Ameritrade, Inc., member FINRA/SIPC. Commentary provided for educational purposes only. Past performance of a security, strategy, or index is no guarantee of future results or investment success. Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.
Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before investing. Supporting documentation for any claims, comparison, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.