It’s been a volatile two weeks for the stock market. Last week, leading up to the Federal Reserve’s open market meeting, stocks rallied over 2%. However, after the Fed held interest rates, the market began to fall and dropped over 3% through Wednesday.
So on Thursday, Janet Yellen tried to reverse course by stating, “Most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime this year.” The market didn’t like that either, dropping further on Friday.
Political uncertainties also spooked the market this week:
- Hillary Clinton’s comment about drug price gouging, resulted in the pharmaceutical indexes being down over 7% for the week.
- Speaker of the House John Boehner’s resignation has Wall Street worried that Republicans might shut down the government in October.
On Friday, the markets attempted to break out on Nike’s stellar earnings; however, things deteriorated into a negative reversal. Speaking of negative reversals, Apple ended the week on a sour note with a negative reversal on the day it launched the new iPhone 6s…I don’t recall Apple ever closing down on the day a new iPhone was launched.
Bottom line, the market correction continues and in my opinion will get worse. The S&P500 spent most of the year vacillating around 2100. The new baseline is now a much lower 1950. If the market doesn’t rally on Q3 earnings, expect lows in the 1700 range.
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