It was a difficult day for stocks, as even companies with good earnings reports like Boeing saw selling pressure. The uptick in interest rates seems to be spooking the markets, as at least one well known bond guru is predicting that the end of the decades long bull market in bonds in finally dead. Back to Boeing for a second. The reaction of Boeing’s shares indicates what we were curious/concerned about. After a stellar report, the shares dropped more than 3%. But remember, Boeing shares have nearly doubled in the last 52 weeks, so it appears the shares were already priced for perfection. What will be interesting to see is how quickly the shares recover and if Boeing shares actually push to new highs. That is what we have seen for the past couple of quarters. Any weakness in shares has been bought and prices have risen even higher. If that pattern ends then things will have changed.
As for the market, by the close the Dow Jones Industrial Average was down 112 points to finish the day at 23,329. The S&P 500 was down 11 points to close at 2,557. Gold was up a fraction to trade at $1,279 per ounce, while oil was down $.28 to trade at $52.19 per barrel WTI.
Yes, stocks can go down. Complacency has become so prevalent that it almost seems like no one has any fear anymore. As we’ve talked about, we don’t see any irrational exuberance, but we also don’t see fear either. A little price disruption just might be what the doctor ordered. The good news is that despite whether shares of certain companies are priced correctly, corporate earnings appear to be just fine.
Have a nice evening everyone.
Stay Strong Houston