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Market Recap: Oil Prices Can’t Save Markets

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This week, we saw that oil prices aren’t the only thing weighing on the stock market. Retail sales and financial uncertainty in the Euro zone played a role in this week’s decline, as the market fell 1.3% for the week.

Monday stocks fell at the opening bell based on a drop that took oil prices below $46 dollars per barrel. The Dow just barely missed a sixth straight day of a
100+ point swing, as it finished down 96 points for the day.

Tuesday the final numbers looked stable, but intra-day volatility was as bad as ever. The market jumped 280 points in the morning thanks to some positive
4th quarter earnings figures, but was down by 150 points in the afternoon once oil prices fell below $45 dollars a barrel for the first time in six years. When the smoke cleared at the end of the day, the Dow was down 27 points.

Wednesday stocks continued their downturn as December retail sales came in at a disappointing level—down almost 1% in a month’s time, the biggest drop in a year. Even though oil prices went UP almost 5% on the day, it was another market disaster—and it was the 4th consecutive losing day for the Dow. That’s the longest losing streak since October. The Dow tumbled 186 points.

Thursday saw a slight panic in the morning, after a sudden, unexpected change in monetary policy by the Swiss National Bank. European indexes fell as much as 11 percent, and the fallout was felt here in the States. Bank of America posted disappointing 4th quarter earnings, and the market continued its losing streak for a 5th day. The Dow fell 102 points.

Friday the market ended its losing streak because of another positive day for oil—prices went up 5%, and closed near $49 dollars a barrel. This was the first time in eight weeks that oil did not lose ground. Preliminary consumer sentiment numbers also rose from December. This news was good enough for investors to salvage the last day of the week, as the Dow went up 190 points.

Market Watch: Will The Losses Continue?

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Experts described the U.S. stock market as ‘under pressure’ Friday morning, coming off a fifth consecutive losing session Thursday.

The Swiss National Bank shocked everyone Thursday by announcing they would discontinue a three-year cap on their own currency—the Swiss franc—against the Euro. With the possibility of quantitative easing-type programs beginning throughout Europe later this month, the Swiss bank’s decision just adds another ingredient of uncertainty to the mix.

Back here at home, U.S. markets suffered yesterday off of disappointing jobless claims numbers. The S&P 500 closed under 2,000 for the first time in a month. Today marks Wall Street’s last chance this week to stop the bleeding.

The University of Michigan consumer sentiment index was up four points from December’s reading, but the market reaction was muted. Oil rose in early trading to almost $48 per barrel.

As of 10:45 a.m. Friday, here are the Wall Street numbers:

Dow Jones Industrial Average: 17,326.23 (+5.52)

NASDAQ: 4,585.16 (+14.34)

S&P 500: 1,997.77 (+5.10)    

Market Watch: Wall Street Continues Losing Streak

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U.S. stocks declined in Thursday trading, as investors considered the effect on lower wholesale prices against some discouraging job figures.

The Labor Department issued a weekly number of 315,000 Americans filing for jobless benefits last week—a number that was 6% higher than last week, and represented the largest total since the summer.

Earnings figures continued to roll out in the financial sector, showing that Bank of America took a beating at the end of 2014. The financial giant reported a 14 percent drop in quarterly profit. Citigroup reported a marginal 4th-quarter profit.

In the end, the Dow lost ground for the fifth day in a row—its longest losing streak since October. The S&P 500 closed below 2,000 for the first time since December 16.

After gaining 5% on Wednesday, oil futures were back down again on Thursday. U.S. and Brent crude both closed just over $46 per barrel.

Here were the final numbers from Thursday on Wall Street:

Dow Jones Industrial Average: 17,322.51 (-104.58)

NASDAQ: 4,570.82 (-68.50)

S&P 500: 1,992.68 (-18.59)    

Dodd-Frank Act Under Attack

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In less than two weeks on the job, the 114th United States Congress has taken major steps towards undoing one of the most important pieces of financial legislation this decade.

Rep. Mike Fitzpatrick (R-PA) is a member of the House Financial Services Committee. Last week, Rep. Fitzpatrick introduced a bill called the Promoting Job Creation and Reducing Small Business Burdens Act., or H.R. 37. The bill narrowly missed ratification through a fast-track vote last week, meaning it would have to go through typical legislative procedure before being enacted into law.

Only then was the public able to see this proposed law—presented as a boost to the job market—for what it really was. If approved, H.R. 37 would permit and extend the same risky Wall Street behavior that sent this country spiraling into the Great Recession seven years ago. It would accomplish this by repealing or restricting important provisions of the Dodd-Frank Act, which brought sweeping changes to financial regulation back in 2010.

H.R. 37 would undo the following Dodd-Frank rulings:

Banks Dealing in Risky Securities: The Volcker Rule was one of the crowning achievements of the Dodd-Frank Act. Among other provisions, the Volcker Rule mandated that federally-insured banks would be unable to participate in risky, speculative trades.

When Dodd-Frank was initially signed into law, it was agreed that banks had five years—until the year 2015—to free themselves from these risky investments. Last spring, the Federal Reserve agreed to extend that deadline to 2017.

Now, H.R. 37 proposes adding another two years to that deadline. If approved, that would mean major investment banks could potentially hold onto these risky investments for a full decade after being ordered to sell.

Private Equity Firms: A second condition of H.R. 37 deals with the loosely-regulated private equity industry. It states that certain private equity firms would not be required to register with the Securities and Exchange Commission (SEC) as brokerage firms.

Securities law dictates that institutions who receive fees for investment banking activities must be formally registered as brokerage firms. Brokerage firms are subject to more frequent, more stringent examinations from regulatory bodies. Brokers and their firms, of course, would love to avoid any added scrutiny if possible—even though experts believe such inspections could aid in avoiding conflicts of interest that can impact investors’ portfolios.

Derivatives Trading: Maybe the most frightening condition of H.R. 37—for those worried about another financial collapse—is the item that would allow Wall Street firms to resume trading derivatives privately. This was the very activity that received considerable blame for the 2007-2008 recession.

Transparent trading—performed through clearinghouses—allows for proper risk management and elicits accurate price information on derivative swaps. This makes it easier for regulators to evaluate a bank’s exposure to risk via derivatives. If H.R. 37 goes through, banks will be able to resume their preferred method of trading away from the watchful eyes of regulatory officials.

In 2011, I invited Rep. Fitzpatrick to be a guest on the Crash Proof Retirement Show, which is a production of Retirement Media, Inc. Here is part of that exclusive interview:

Unfortunately, that offer was a hollow one because we never participated in such a hearing. As the face of H.R. 37, it seems that Fitzpatrick’s tune has changed. And that sickens me.

December’s well-publicized Cromnibus spending bill was a small victory for Wall Street brokers opposed to increased regulation. Should H.R. 37 pass, they’ll be celebrating an even bigger triumph. For the American taxpayer, however, H.R. 37 represents a significant setback in the quest for transparency.

Market Watch: Low Sales Figures Extend Wall Street’s Slide

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Wall Street finished down yet again on Wednesday, as poor earnings figures compounded the worst retail sales number in a year.

Earnings season is in full swing. The first taste of bad news came in the form of JP Morgan Chase reported a 6.6% drop in quarterly profits. This difference can be attributed to the $1 billion the firm spent in legal costs at the end of 2014 to defend themselves during government investigations.

This morning featured the release of December retail sales numbers, and the results were disappointing. Sales figures dropped 0.9% during December, the largest one-month drop since late 2013.

Lastly, the World Bank has lowered its 2015 and 2016 global growth forecasts as of this morning. A spokesman indicated the change was due to disappointing figures from the Euro zone, Japan and other emerging world economies. When asked, the spokesperson added that lower oil prices alone would not be enough to offset these downturns.

Even an upturn in oil prices of almost 5% weren’t enough to prevent another losing day.

Here were Wednesday’s final numbers on Wall Street:

Dow Jones Industrial Average: 17,426.83 (-186.85)

NASDAQ: 4,639.32 (-22.18)

S&P 500: 2,011.27 (-11.76)

Market Watch: Volatility Continues on Wall Street

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Volatility was the story yet again on Wall Street Tuesday. The stock market roared out of the gates this morning, jumping more than 200 points in the first half-hour of trading. By noon, the gains had slowed but the market was still well ahead for the day. But by mid-afternoon, oil prices took center stage yet again, as stocks lost all their morning gains and fell well into the red for the day.

Throughout the day, the Dow Jones Average experienced a swing of 425 points—up more than 280 points by 10 a.m. this morning, then down almost 150 by mid-afternoon.

Tuesday saw U.S. crude prices lose another 2.5 percent, falling below $45 per barrel for the first time in almost six years. Experts now believe that $33 per barrel—the commodity’s low point in 2009—is very much in play. Meanwhile, an OPEC oil minister reiterated the group is sticking to its current production strategy.

Experts attributed further losses to German bankers vocalizing their opposition to any quantitative easing measures by the European Central Bank.

The fourth-quarter earnings season got started yesterday, with Alcoa posting higher-than-expected results. It remains to be seen whether oil’s decline will affect the bottom line of major corporations.

As for earnings season, the financial giants get started on their results tomorrow when JPMorgan Chase and Wells Fargo report. Bank of America, Citigroup and Charles Schwab will follow later in the week.

Here were Tuesday’s final numbers on Wall Street:

Dow Jones Industrial Average: 17,613.68 (-27.16)

NASDAQ: 4,661.50 (-3.21)

S&P 500: 2,023.03 (-5.23)    

Market Watch: Stocks Drop With Oil

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Following a week of turbulence and volatility, Wall Street got off to another slow start Monday thanks to the continued decline of oil prices.

As of 2 p.m., the Dow was down almost 100 points, as crude oil prices continued their decline—as low as $45.90 a barrel at one point.

Goldman Sachs cut its outlook for benchmark oil prices, another sign this crisis isn’t over yet.

The Chicago Board Options Exchange (CBOE) Volatility Index saw a jump of about 10 percent with the continued bad news out of the energy sector.

At the close of business today, Alcoa will issue its fourth-quarter earnings report—marking the unofficial kickoff of earnings season. Investors are wary of these reports—especially from the energy sector—in light of oil’s continued decline.

Here are Monday’s Wall Street numbers as of 3 p.m.:

Dow Jones Industrial Average: 17,644.67 (-92.70)

NASDAQ: 4,665.89 (-38.17)

S&P 500: 2,028.90 (-16.07) 

Market Watch: Stocks Rally As Seesaw Week Continues

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After a long losing streak, Wall Street enjoyed a second consecutive positive finish on Thursday as markets rallied behind continued steadiness in oil prices.

Oil prices have been slashed by more than half in the past six months. So two consecutive days without further dips in prices was welcome news to Wall Street investors, who started 2015 desperate for some good news. The Dow fell nearly 500 points in the campaign’s first four trading sessions, but regained those losses in the last two days of trading.

Experts were further encouraged by comments from Federal Reserve President Charles Evans, who said he felt continued patience was warranted in regards to raising interest rates.

The week has been a volatile one on Wall Street—two days of big losses due to falling oil prices, followed by a two-day rally off stabilization in those same prices. It’s likely that Friday will break the tie, so to speak, when the market reacts to the latest jobs and unemployment numbers.

Here were the numbers from Wall Street on Thursday:

Dow Jones Industrial Average: 17,907.87 (+323.35)

NASDAQ: 4,736.19 (+85.72)

S&P 500: 2,062.13 (+36.23) 

Market Watch: Oil Prices Stabilize

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Oil prices stayed stable on Wednesday, allowing Wall Street a chance to recover a portion of the losses they sustained Monday and Tuesday.

The market rallied early this morning off stabilizing prices, plus optimism stemming from early fourth-quarter earnings reports. Experts were quick to note, however, that not a single energy company has yet to report earnings.

According to Nick Raich, CEO at the Earnings Scout, “the drop in energy-sector earnings estimates over the last 1-2 months is the worst deterioration we have measured in any sector since the financial sector earnings fell off a cliff in 2008.”

It will be interesting to see if the good feelings—and market rally–can survive the low expectations for earnings from the beleaguered energy sector.

The Federal Reserve released the minutes of their December meeting, in which they remained non-committal over the timeline for raising interest rates.

Here were the Wednesday numbers from Wall Street:

Dow Jones Industrial Average: 17,584.52 (+212.88)

NASDAQ: 4,650.47 (+57.73)

S&P 500: 2,025.90 (+23.29)

Market Watch: Oil Prices Continue to Tumble

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Tuesday was a new day, but the same story on Wall Street—considerable losses in the face of declining oil prices. Oil fell another 4.3%, settling just under $48 a barrel. Prices haven’t been this low since April 2009, the tail end of the Great Recession.

Stocks were hit to the tune of a 130-point drop in the Dow Jones Industrial Average. Combined with Monday’s 331-point drop, which was Wall Street’s worst day since October, the Dow has fallen 461 points—more than 2.5% in the first two days of trading this week. Tuesday was the fifth straight day of losses on the S&P 500, the index’s longest losing streak since late 2013.

Until oil finds its lowest level, concern and volatility will reign on Wall Street. The Chicago Board Options Exchange (CBOE) Index, the market’s main measure of investor uncertainty and stock volatility climbed another 7% Tuesday.

Investors will continue to hope for some good news when jobs reports go public on Thursday and Friday of this week. But for now, the question remains “how low will oil go?”

Here were the Tuesday numbers on Wall Street:

Dow Jones Industrial Average: 17,371.64 (-130.01)

NASDAQ: 4,592.74 (-59.84)

S&P 500: 2,002.61 (-17.97)

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