January blues

A month that started so promisingly has ended with the Dow Jones down 3.49% and the S&P 500 down slightly more than that. The Nasdaq was the weakest of all of the major averages down some 5.5% for January. A weak January is not a good barometer if you are hoping for market gains. In years when the Dow is a winner, stock gains on the average exceed 10% - conversely when the Dow is down the average gains are some 1% or thereabouts. Not great news but remember the Dow lost money last January too. The Dow was lower by some 8% last January and finished the year solidly in the black.

Earnings have been good - Ford left the door opened for a continued rebound in car sales (and with Toyota’s missteps Ford could benefit), GE also was solid - the real question in investors’ minds is Washington. Will our politicians get their acts together and exhibit some spending restraint.  To us, that is what upsets this market most. Unbridled spending worries investors.

The coming week will be interesting. Check back here for updates.

This entry was posted on Sunday, January 31st, 2010 at 1:09 pm and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.