July 2007, the Dow hit 14,000. On October 9, 2007 it retested 14,000 and fell precipitously for the next year and a half, losing more than half its value. Between year-end 2007 and 2008, the S&P 500 index fell by over a third—the largest single-year drop in the index since 1974. Professional investors usually pay more heed to the S.& P. 500.
Were young male traders equipped with raging hormones responsible for the financial crises? According to neuro scientist and former Wall Street trader John Coates, during a bull market, testosterone shifts traders' risk profiles to become overly aggressive, causing bubbles. In bear markets, the stress hormone cortisol interrupts the production of testosterone and causes people to be too risk averse.
Yao Wei, China economist at Societe Generale SA in Hong Kong, said in a Jan. 29 report "Conditions ripe for defaults to occur: slowing credit growth, elevated costs of funding, waning economic momentum and tighter financial regulations.”
On Friday, nonfarm payrolls data showed job creation in the United States slowed sharply over the past two months, raising the prospect that the economy may be losing strength.
Federal Reserve Chair Janet Yellen will testify before U.S. lawmakers next week in her first public comments on monetary policy and the economy after taking the reins at the U.S. central bank. Yellen will appear before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday. Yellen has repeatedly expressed fascination with the possibility that the Fed could “optimally control” the U.S. economy by raising and lowering interest rates in a more scientific manner. Ben Bernanke and his predecessor, Alan Greenspan, long argued that bubbles were impossible to identify in advance. Yellen, a strong supporter of the Fed's easy-money policies, will be responsible for ramping down a huge bond-buying program and, later, raising interest rates and shrinking the Fed's swollen balance sheet.
FINAL CHRISTMAS SNAPSHOT
The Commerce Department is expected to report on Thursday that retail sales were flat in January, held down by a drop in receipts at auto dealerships, after rising 0.2 percent in December. Even after stripping out autos, retail sales are seen barely rising. A group of nine retailers that report comparable monthly sales posted a 3.6 percent rise for January, below the 4.9 percent pace a year earlier, according to Thomson Reuters. The data suggested that January was a tough end to the most competitive holiday season for U.S. retailers since the 2007-2009 recession.
Confidence fell acutely among households with annual incomes below $75,000.
Last week, Wal-Mart said its profit for the fourth quarter ended January 31 would come in at or slightly below its forecast. JCP is in big trouble 1 Year Change: -71.74% Retail is in a slump across the board. Kohl's net income for FY13 is likely to come in a full 25% below its FY11 result.
On Monday, McDonald's Corp. will report January sales. Last month, the company reported weaker-than-expected quarterly sales at established restaurants as fewer diners frequented the fast-food chain. McDonald's warned that sales would again fall short of analysts' expectations in January.
Are elevated testosterone levels dictating the markets? Friday 2-7-2014, the S&P 500 Index gained 1.24 percent to close at 1,773.43.
The preliminary February reading on consumer sentiment will be released on Friday by Thomson Reuters and the University of Michigan.
Wall Street defines a stock market correction as a drop of at least 10 percent from the previous high. A bear market is a plunge of 20 percent from a previous peak.
All-Time Daily Theoretical High: Tuesday, January 7, 2014: 16,629.41
Since 1929 the average price return for the S&P 500 in the third year following a gain of 10% or more in each of the previous two years has been -1.25%. For the seven instances since 1929 in which there has been a third consecutive "up" year, the average gain has been 10.9%.