Today was quite a day… Call it profit taking, call it the markets finally reflecting the economy, call it whatever you want, but today was crummy.
Below are the bad, bad numbers from the day; note that the Nasdaq was down more than 5%.
Apple, Tesla and Microsoft were all down more than 6% on the day, leading the Nasdaq carnage. As you might guess from the performance of the above stocks, Momentum and Growth stocks massively lagged the broader market today.
The performance gap between factors was much more pronounced today than it has been in weeks. Given that Small Value stocks were some of the best performers leads me to believe that this sell-off is more likely a case of taking profits after a great rally, than a harbinger of market disaster. Generally, small caps will get hit hard when the concern is about economic health since they are likely less able to stay afloat in poor conditions compared to their larger peers.
Now, the bond market may be sending a different signal as lower quality issues lagged on a relatively flat day in fixed income. Concerns over economic conditions falling here and abroad would lead to pressure on lower quality bond funds.
What to read
We could see a long term spike in permanent unemployment
The US is approaching a dubious debt milestone
The trade deficit continues to grow
There are more school cops than nurses in Florida now… Huh?
Thanks,
Nathan