Sharpest One-Day Decline in 2012
The past week has been a tough one for the market, and today stocks posted their steepest one-day decline so far this year. Naturally, I know many of you are wondering, "What’s the cause of today’s market turbulence?"
Well, the root cause was a three-headed monster, and so I want to update you with what’s going on in a quick podcast.
First, there’s a bit of a panic in Europe over some additional developments in the European debt saga. Yields on Spanish and Italian debt have popped and Portugal is borrowing more from the European Central Bank. And this panic has carried over to our market, as we saw today.
Of course, investors also got spooked over Friday’s payroll report that was a big miss from analyst expectations. However, the folks at ADP and the household survey from the Bureau of Labor Statistics were both much, much better than the payroll report, so I’m not too worried about the payroll data.
Finally, there’s quite a bit of anxiety over the coming earnings season. That’s understandable considering that the fourth-quarter earnings surprises were literally the worst in 12 years. But the good news is that first quarter earnings expectations are now so low that some stock market strategists believe that earnings surprises may be more common than not.
Case in point, take today’s announcement from Alcoa (AA), the aluminum producer that marks the unofficial start of earnings season. Expectations were low for the company, but Alcoa managed to post a profit of $0.10 per share—compared with expectations of a $0.03 loss per share.
So don’t panic, today is chock full of opportunity if you know where to look. The market has given us a buying opportunity right before earnings season. For more, please give my podcast a listen.
Until next time!