Tuesday, April 24, 2018

Equity market has distinct sell-off

There are sell-offs that seem completely broad based and there are those that are focused.  Today's equity market was distinguished by major declines in large tech names.  High P/E Amazon, Facebook, Adobe, and Netflix fell significantly.  Low P/E Apple and the Alphabets did so as well.  Valuation was not the issue, the sector was.  Recent volatile highfliers like Freeport McMoran tanked, while the once reliably rising 3M did as well.  Defense related stocks like Lockheed Martin and Boeing jammed on reverse.  Those stocks that did well seemed to be ones that had been showing weakness, like Kimberly Clark, Hexcel, Trinity, and Insteel.  It is presumed that any portfolio will have stocks like these that were only randomly connected on a day like this.

Not having tuned in to any pundits today, what a relief, it can only be said that tomorrow will be a day to be watched.  For a reasonably well performing market, this one has had an unusual edge of uncertainty around it.  The techs have been bellweathers, and questions about consumer replacement cycles are out there with Apple.  Questions about higher capital expenditures surround Google, aka Alphabet, but the thought here is most investors do not have a good understanding of what this company is working on, and Google has always preferred it that way.

The question here is whether the consumer can keep up with the technology.  That consumer includes yours truly.  With wage growth still modest and wealth disparity still widening, with the efficacy of the education system broadly being an open question, is there a growing knowledge disparity as well.  Those are big questions which may be part of the market overhang.  And then there's Trump.


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