After Market Fails Follow Through, We're Revisiting Some Positions
A massive retreat from Wednesday's rally should be a wakeup call for investors.
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Stocks were hammered hard on Thursday and gave back all of the gains from Wednesday's super rally. While that day was strong, we often say a followthrough day is most important. That did not happen and now sellers are starting to take control of the action. August just got underway and could be seeing the worst two days to start a month in years.
The July non-farm payroll was released on Friday morning and it was a disappointment. While jobs are still growing, the 114,000 figure was far less than expected, the jobless rate jumped to 4.3% last month and U6 unemployment also rose to 7.8%. Government payrolls grew, but by much less than in June (17,000 versus 43,000). On the plus side, wage inflation continues to slow down, average hourly earnings were higher by 3.6%.
We shared that we would revisit some of our consumer facing positions, including Mastercard MA shares, if we saw a sharp decline in the jobs market. Friday's July employment report, while still positive, is leading us to start that process.
One thing to note overnight was the action in the Nikkei. Japan's index was down 5.8% on Thursday night on very heavy volume, the largest drop for that index since March 2020. Hong Kong was down sharply but not as much, off 2.3%. Gold is higher by 1.4% but crude is down sharply, threatening to extend its fourth-straight weekly decline on worries over demand.
Earnings out last night from Apple AAPL and Amazon AMZN were a mixed bag, there will be recaps later today on our site. On Friday morning, a miss by big oil names Chevron CVX but a beat by ExxonMobil XOM are not helping these names move higher, but crude being down is likely the reason. These two names are the biggest holdings in the XLE, an ETF we hold in TheStreet Pro portfolio.
One thing that we have learned over the years in managing TheStreet Pro portfolio is not to panic when others are in a panic mode. More money has been lost by pulling the trigger at precisely the wrong time. So, we will choose to watch, wait, be patient and hold steady until we see opportunity open up. We have plenty of cash to buy new positions or add to existing ones. The fear we feel today shall pass, but the opportunities to create wealth never does.
At the time of publication, TheStreet Pro Portfolio was long MA, AAPL, AMZN and XLE.
