U.S. Stock Market: Worst January on Record
For several years, analysts have looked to the “January Effect.” The idea is that normally, the stock market gains in January — and sets the tone for the entire year. If that’s the case this year, we could be in trouble (or presented with some great buying opportunities, depending on how you look at it). The numbers are in on the last trading day of January, and the verdict is that this is the worst January on record.
Even though it looked as though the Dow might break through the 8,000 level, it didn’t happen. Instead, the Dow managed to stay just above. This is important, since psychologically the 8,000 level is a Big Deal for many investors right now. At any rate, the dismal ending for a dismal month once again proves that there is just no way of instilling confidence in investors.
Earnings and economic news trump plans for stimulus
Even though the House passed an economic stimulus bill this week aimed at helping the economy — and Wall Street — the confidence just isn’t there. For one thing, earnings news has just been relatively bleak. Companies had a pretty bad Quarter 4, and overall earnings on an annual basis were pretty lackluster. (The exception — as usual — was Exxon Mobil, which managed to gain a record profit in 2008, breaking the company’s own record as biggest U.S. corporate profit.)
The other issue is the economic news. Even the prospect of an economic stimulus package can’t change the fact that unemployment keeps rising and the GDP is contracting. The economic stimulus bill may help when it is passed, but for now there is nothing really giving the economy a boost.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
