After touring the nation for three-straight days, the Fat Boys sang, they needed a vacation. The Dow Jones Industrials, however, needed vacation to end to break its four-week losing streak. And with all hands on deck now, the Dow climbed back above 15,000 for the first time since Aug. 23.
Getty Images The Dow Jones Industrial Average rose 0.9% to 15,063.12 today, its biggest percentage gain in two months, while the S&P 500 rose 1% to 1,671.71. The Nasdaq Composite advanced 1.3% to 3,706.18.
Why the advance? Why not? Data out of China was good, Japan’s stock market is running with the bulls again after winning the 2020 Olympics and Australia has a new government.
Investors shouldn’t get too complacent, however. Whether or not the Fed will begin tapering next week is still an open question, while the bombs may or may not fall on Syria. On the former, Janney’s Mark Luschini argues that it’s time to “rip the Band-Aid off.” He writes:
Many expect the Fed to use that meeting to announce its tapering process. We hold the same opinion. But, at the same time, each weaker-than-expected economic data point along the way seems to embolden those who think the Fed is unlikely to start the tapering process until later in the year if at all.
It is this disconnect in expectations that may lead to increased volatility in the markets as the meeting date approaches. We believe that the Fed should use this upcoming date to start reducing its bond-buying program, even if it startles the market. We think the turbulence will be short-lived, as investors come to see that the economy doesn't require the Fed's assistance quite the same way now as it did before.
As for Syria, the issue could remain unresolved for some time, even if the Russians have mooted a plan for Syria to give up all its chemical weapons. And that, too, could remain a source of volatility for financial markets, says CRT Capital Group’s Ian Lyngen. He writes:
Leaving aside the discussion about the wisdom of seeking buy-in from the Senate and House, we're more inclined to interpret the current breakdown of Congress' voting bias as a volatility enhancing event – rather than an opportunity to step away from the conflict. Said differently, the approval process looks poised to drag on beyond the 4-5 day initial estimate. Clearly the longer the voting takes and the more conflicting headlines emerge, the more choppy the price action becomes.
In other words, enjoy the fun while it lasts.
Earnings season may be over, but companies keep reporting. The latest: Pep Boys (PBY). The chain of auto-repair shops reported a profit of 10 cents a shares, well below forecasts for a 19 cent profit. Its shares have plunged 4.5% to $11.00 in after-hours trading.
PVH (PVH) has fallen 3.4% to $127.60 after the clothing retailer said it earned $1.39 a share, beating forecasts by 1 cent, but offered below-consensus earnings guidance.
Five Below (FIVE) has gained 12% to $45.90 after the teen retailer said it earned 11 cents a share, above forecasts for 9 cents.
Flow International (FLOW) has gained 9.6% to $3.99 after it reported a loss of 2 cents a share, below forecasts for a 1 cent profit. Profits were hit by currency fluctuations and a $1.6 million charge.
Casey’s General Stores (CASY) has dropped 1.6% to $67.73 after reporting a profit of $1.43 a share, above estimates for a $1.26 profit.
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