Stocks were whacked as the Dow fell 1,175 on heavy volume to close at 24,345. Some are calling it a “wash-out”, some are calling it a “breather” but the troubling thing to me is that there is no apparent reason for it other than people started taking money off the table after earnings reports from several big players like Amazon and Apple. This may have started a rogue wave of selling that is not based on computer trading/ETFs and not fundamentals since the economy and earnings are good. BTS, at last look, was still in high yield and IBD had gone from market in rally to rally under pressure althought today they might change that. The important thing to remember is that this pullback in not based on a deterioration of fundamentals.
The latest ISM service sector report came in at a reading of 59.9 which was much better than expected with forward indicators signaling even more growth in the months ahead. This in turn is forcing investors and traders to recalculate expectations for interest rates and inflation. Jerome Powell takes over as head of the Federal Reserve today and maybe this is a little welcoming love tap or as Keith Jackson used ot say…”now that’s a fine howdy doody!”
Boeing received orders for several 747 cargo planes from UPS which will keep production on the jumbo line going until 2022. The move also signals that UPS is seeing more global freight demand and the new jets are not replacing existing aircraft rather they are expanding the fleet for long haul international trade.
The wood ticks at Random lengths reported that lumber traders in January saw the fastest increase in lumber prices going back to the spotted owl fueled price spikes 25 years ago. The wood ticks also noted that lumber retailers surveyed in late January are revising sales projections sharply higher. The survey revealed that many questions are being raised as to the exact cause of the surge but for now demand for logs and lumber is strong.