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WSJ Your Money Briefing
Investors Exiting Tech, Playing Defense
00:06:15
It was a tough week for technology shares, with rising fears of a slowdown in sales. The Wall Street Journal's Mike Wursthorn says investors are getting out of growth stocks and getting more defensive with sectors such as consumer staples.
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- [00:01]
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- [00:36]
Charlie Turner
With your money briefing. I'm Charlie Turner in New York for the Wall Street Journal. Friday was another volatile day for the US Stock market and it ended with a mixed showing for the major averages. The Dow Jones industrials closed up 123points at 25,413. The Nasdaq Composite lost 11points and the S&P 500 gained 6. However, it was a tough week for the markets. Both the Dow and NASDAQ lost 2.2% and the S&P lost 1.6%. Here to help us recap the week is Wall Street Journal markets reporter Mike Wurstt. Mike, were there a lot of growth concerns this week? It seemed like the forecasts were for slow growth or contraction overseas, while it's generally more upbeat in the US In
- [01:21]
Mike Wurst
China and Germany specifically, there were data points that freaked investors out, making them more concerned that obviously as we think about the storyline last year in 2017 that all these global economies are grow. That's all unraveled and we're getting further and further evidence as the data catches up to where things are now In China. You did see business activity overall mix in October and that just overall contributed to this very negative sentiment. Germany as well, its economy shrank for the first time in three and a half years, adding to that concern that over in Europe they're not expanding nearly at the rate as they should be. In the US On Friday there was even some economic data that shows that we're still growing, but industrial output came in below analysts expectations. Household debt is at an all time high, continues to climb since the financial crisis and it's really just giving investors a reason to pause again.
- [02:16]
Charlie Turner
I imagine that Brexit is a big problem for the Eurozone and by extension people here in the us.
- [02:22]
Mike Wurst
There was a lot of volatility all throughout European stocks throughout the week as the news about the deal came out and then the resignations. For a lot of investors, there's still a lot of questions over what this final Brexit deal will look like. For the time being. They're just bracing themselves for further volat volatility, especially if there's Any signs as to whether or not Theresa May's government is going to enter some sort of crisis over all this?
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Charlie Turner
There doesn't seem like there was very much impact from a statement, I guess President Trump made to reporters indicating that there were hopeful signs on the trade front between the US And China.
- [02:55]
Mike Wurst
It was interesting because right when that statement first came out on Friday, it was around 12:30 in the afternoon. You saw the Dow Jones Industrial Average, the s and P500. All of them pulled themselves out of negative territory. They rose. The S and P, I believe, was up as much as 0.6%. But the gains were very much short lived. That was just because the market was way more fixated on some of the weak earnings that had come out before the open. While trade optimism is something that's going to really be needed for the markets to move higher, the market's pretty doubtful of anything that's just said off the cuff or to reporters without a firm deal in their hands around trade.
- [03:34]
Charlie Turner
Lest we bury the lead here, what about technology stocks we had on Friday? Nvidia pulling the chip makers down. Also there was news regarding Facebook.
- [03:44]
Mike Wurst
Facebook's had a particularly painful week, a lot of it having to do with the New York Times story that came out. But they deepened their losses for tech overall, it's been another punishing week and it's really continued a sell off that started in early October as investors really rethink the valuations of these very high growth, lofty companies. For a lot of them, they totally understand that companies like Facebook, Alphabet, Netflix, they'll continue to grow, but the question is how fast can they really now the earnings that have come out and Nvidia is the latest one to say this, show that at least in the fourth quarter of this year, sales across the board are slowing, that growth is coming down. You still have double digit growth, but just not as high as what those expectations were. For a lot of investors, this is a rotation out of technology into more defensive names if their fears are actually correct, that the economy is heading for a slowdown. So they're moving into things like consumer staples and utility firms. Utility firms saw a big rise on Friday, but for the most part this is all just a investors saying that we need to see a little more conviction on where technology goes from here before we're ready to go right back into it. So you still see the Nasdaq in correction territory through Friday's close.
- [04:55]
Charlie Turner
What do you think sentiment is among investors as we enter the holiday shortened Thanksgiving week?
- [05:01]
Mike Wurst
Investors are hoping that things are fairly quiet, which would mean to them that indexes don't move all that much. There's not a lot of enthusiasm that stocks will have a significant move higher. Although that said, just because Thanksgiving week tends to be a less active in terms of volume, you could see some outsized moves really jar the market back and forth. That said, for the most part, nobody's really expecting anything phenomenal between now and the end of the year. The expectation is we just have at least we stay where we are, we protect where the small gains that the Dow, the S and P still hold on to through this year.
- [05:39]
Charlie Turner
Wall Street Journal markets reporter Mike Wurstt Thanks, Mike.
- [05:42]
Mike Wurst
Thank you.
- [05:49]
Charlie Turner
It'll be a short Thanksgiving week with Thanksgiving on Thursday and the markets closing at 1pm Eastern on Friday. But the market will be stuffed with retail earnings this upcoming week highlighted by Target, Lowes, Kohl's and Urban Outfitters. Also, we'll get numbers from Burlington Stores, Guess, Gap, tjx, Footlocker, Barnes and Noble, L Brands, and Dollar Tree. We'll get a fairly full plate of economic reports considering it's a holiday. The housing market has been in a slump and there will be several data points in that sector. We'll find out how homebuilders feel about the market when we get the November Housing Market index from the national association of Home Builders. The Commerce Department will tally up October housing starts and the national association of Realtors reports on October existing home sales. Also due in the new week are reports on consumer sentiment, durable goods orders and leading economic indicators. And that's your money briefing. I'm Charlie Turner in New York for
- [06:45]
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