On the final day of July, U.S. stocks saw an over 300-point selloff on the Dow, a turn that dramatically halted a winning streak that has been going on for five months. Traders seem to believe that there is no one catalyst for the downward move, although the selloff begun early and kept gong right up to the closing bell, bringing the Dow down for 2014 by 0.1%. Some investors say they are heavily concerned that the Federal Reserve may raise interest rates sooner than anticipated. Other seem to think the selloff was as a result of reports on U.S. companies disappointing earnings. What do you think? Will there be a continuing downward trend for the Dow for the rest of the year?
I'm far more of a bottom-up investor. I realize the need for the odd pullback or correction, and even the occasional bear market. Trying to predict these things can be very difficult and haphazard, even foolhardy. I used yesterday's big selloff as a buying opportunity - I bought a few grand each in US Steel (which I have owned in the past) and Hologic (HOLX). I am always a little defensive, however. I still have about a dozen or so active fairly longrange put positions, a pretty big short on JCP, and an ETF S&P 500 broad short position, along with a good ~ 20% diversified commodities position and plenty of cash.
Ever since 1998, I noticed the stock market drops at the end of July. Does anybody remember end of summer 2002? What happened this time? Who cares about Argentina defaulting. They do not have a giant market economy such as Italy or Spain. How would their default affect our economy?
If the Federal Reserves raises the interest rates then the investors might step back a bit. I don't know if some of them would invest less money into the stocks due to the downfall or if people would put more than call. I just need to see some figures before jumping to conclusions.
I don't think there is any major reason. The stock market can't just go up like crazy everyday. A few major players could easily start a small sell off it they want to pull in some profits.
From the position of the Fed up until very recently, I don't think that they are planning to up interest rates at all anytime soon - they made that clear. That said, with numbers seemingly moving up, who knows what is going to happen with the numbers.