September 26th, 2014 | Miller Advisors

Stocks sour on a number of factors

The media will have us believe that when Apple stumbles, so do the markets. The tech giant  garnered attention when issues arose after the launch of its latest phone and new operating system. While Apple (down 3.8%) wasn’t the only stock to decline, it is big enough to pull down the Standard & Poor’s 500 tech sector. Thursday’s 1.6% decline in the S&P 500 was the largest since July 31st, and investors took the opportunity to realize gains by selling some of the bull market’s biggest winners. Of course, a dip also may offer those same investors a chance to add new positions to their portfolios.

All three of the major domestic stock indices turned in their worst performances in months. The point drops may have caught your eye, but the actual percentages should be kept in perspective. The Dow Jones Industrial Average dipped 1.5% and the Nasdaq fell 1.9%. All three are still up year to date, with the Nasdaq and S&P up more than 7%, while the Dow is up 4%.

 To be sure, the iPhone didn’t ring in today’s skittish market on its own. You can take your pick of possible reasons, but we may not ever land on the true answer. Geopolitical concerns cropped up again on rumors that Russia may confiscate foreign assets. In addition, data showed fewer people applied for unemployment benefits than expected. Economists also predicted – correctly – that GDP would be revised upward to a 4.6% annualized growth rate for the second quarter. The good news prompted some to worry that economic improvements will drive the Federal Reserve to raise rates sooner than expected.

On the other hand, another report showed that demand for durable goods was slightly weaker than anticipated. It appears a combination of economic, psychological and geopolitical factors (e.g., Ebola risks, Middle East conflicts, Russian sanctions) were at play in this week’s market volatility.

While it’s important to keep tabs on short-term data like this, we want to point out that long-term upward trends appear intact. “Long-term trends are not yet broken in any of the major indices, by my judgment,” said Andrew Adams, chartered market technician on the Raymond James Investment Strategy team. “Although these dips can be agonizing on a day-to-day basis, it is important to remember the context in which they occur,” he noted in Friday’s “Morning Tack” commentary. And Chief Investment Strategist Jeffrey Saut maintains his belief that we’re in a long-term, secular bull market that has years left to run.

So, our focus remains on long-term gains both for the economy as well as your financial plan. We hope yours will, too. Of course, we’ll continue to monitor market movements for enduring trends and make adjustments accordingly.

 

Source: Raymond James

Image: Krisztian Bosci/Bloomberg

This information is general in nature, is not a complete statement for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Investments and strategies mentioned may not be suitable for all investors. Past performance may not be indicative of future results.