Published: Aug 1, 2016 8:54 a.m. ET Yahoo! MarketWatch
The dog days of summer enter the August phase on Monday, but don’t expect much lethargy over the next few sessions as heavy doses of corporate data and earnings color trade.
There’s plenty of gloom in both our call and chart (see below), including one bond guru’s latest take, paired with an earnings trend that’s sounding some serious bear-market alarms.
August, of course, has a rather treacherous track record. According to Bespoke Investment Group, August has been the worst month for blue chips over the past 20 years, averaging a 1.3% loss. January is the only month that comes close, with a 1.15% drop.
Still, some positive news on the employment front at the end of the week might help keep this aging bull alive, while the next batch of earnings — more than 100 S&P companies, led by the likes of Tesla Motors TSLA, -2.72% and Procter & Gamble PG, +0.49% — also come into view.
Key market gauges
If bearish winds are blowing, you wouldn’t know it from the premarket action. DowYMU6, -0.57% and the S&P ESU6, -0.76% futures are higher heading toward the opening bell. Gold GCU6, +1.03% is down a bit, but silver SIU6, +0.95% is up nicely. CrudeCLU6, +0.12% is pulling south.
Asia markets ADOW, -0.19% notched a mostly positive day, outside of a 0.9% drop for the Shanghai Composite Index SHCOMP, +0.61% . Europe SXXP, -1.24% is mostly easing back, with banks lower even as EU stress tests weren’t so stressful for the sector.
Unless it’s got something to do with gold, get rid of it. That’s the gist of what Jeff Gundlach, who’s in charge of more than $100 billion at DoubleLine, recently told Reuters in an interview.
“The artist Christopher Wool has a word painting, ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good,” he said. “The stock markets should be down massively, but investors seem to have been hypnotized that nothing can go wrong.”
Earnings have been caught in a downward spiral ever since profits peaked a year ago, and Jesse Felder uses this chart to illustrate an ominous trend that traders might want to keep in mind in the coming weeks and months.
“Over the past half-century, we have never seen a decline in earnings of this magnitude without at least a 20% fall in stock prices, a hurdle many use to define a bear market,” he wrote on his Felder Report blog.
The monthly jobs report will hang over the market all week, but things get started this morning with the ISM manufacturing index at 10 a.m. Eastern. Construction spending hits at the same time. In the coming days, we’ll also get July car sales as well as some unemployment data. Read:Businesses slash spending. Are jobs next?
The battle continues to rage on the list of leading market caps, with both AmazonAMZN, -1.21% and Facebook FB, -1.30% surpassing Exxon Mobil XOM, +0.12% early Friday, only to fall back by the close. Apple AAPL, -1.37% and Alphabet GOOG, -0.22% still hold a pretty big lead at the top, with Microsoft MSFT, -0.27% holding strong in third.
Uber Technologies will combine its China business with Didi Chuxing, the dominant ride-hailing service in the country, in a massive deal that will create a $35 billion company.
51% — That’s the percentage of people who, according to a recent survey, believe a diversified bundle of 10 investments is more volatile than a portfolio consisting of only a single stock. Jeez.