Hurricane Sandy is going to be the spotlight this week even for investors, which will mean lighter-than-usual trading and likely overreactions to any data that comes out. In addition, with the presidential election so close, the markets will be in a state of suspended animation.
Hurricane Sandy is going to be the spotlight this week even for the stock markets, which were closed Monday and could potentially be closed on Tuesday. Even after markets open, power outages may mean lighter-than-usual trading, so you should beware of overreactions in trades to any news coming out.
Marek called last week’s trading “a clown parade” with disappointing news from Catepillar, Apple and Amazon. However, Merck’s earnings report was uplifting as the company benefitted from some one-time items. But more than that, Merck looks good going forward because of its yield and its drug pipeline.
Last week also saw some economic numbers that heartened investors, but Marek is being more cautious about the supposed good news they represent. The gross domestic product (GDP) number revealed a 2% growth, but there are still two more drafts of that number, and it isn’t uncommon for GDP to be revised upward of 50%. And while consumer confidence is up, so is household debt, which implies the current spending isn’t sustainable.
Overall, though, the market should be quiet, because coupled with the hurricane is the fact that the election is just eight days away. Traders will hesitate to commit until they know what is going to happen, which means the market will be in a state of suspended animation until after the election.
If you have any questions for Marek, he can be contacted through Twitter at @MarekFuchs.
Watch past Wall Street Wrap Up videos here.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers before becoming a journalist who wrote The New York Times' "County Lines" column for six years. Marek speaks regularly on business and journalism issues at venues ranging from annual meetings of the Society of American Business Editors and Writers to PBS to National Public Radio. His last book, A Cold-Blooded Business, was called "riveting" by Kirkus Reviews and next book, Local Heroes: Portraits of American Volunteer Firefighters is due out in 2012. He is on the writing faculty at Sarah Lawrence College. When Marek is not writing, teaching or filming videos, he serves as a volunteer firefighter.