Market Recap for 10th Jan 2016 – Can the markets turn around this week?

By Markus Heitkoetter

Stocks just can’t seem to catch a break this year.

After the worst 4-day start to the year EVER, traders were hoping that a positive Jobs Report on Friday could help stabilize the markets. And the report was great!

December’s jobs data showed 292,000 jobs added vs. the 215,000 that were expected, and the unemployment rate remained unchanged at 5%. End of year data showed that 2.65 million jobs added in 2015, the 2nd best year for American workers since 1999.

The positive jobs data was well received and stocks started the day higher. With a gap higher to begin the session, U.S. stocks were up almost 1% for the day in early trading.

BUT it was all downhill from there.

Stocks filled the gap in the morning session and continued their march lower. By day’s end, the major indices were trading at session lows, down another 1% on the day.

Here’s where the major U.S. indices ended the week:

The S&P closed 6.0% lower. Down 122 points, the S&P ended at 1,922.

The DOW dropped 6.2%. Down 1079 points, the DOW closed at 16,346.

The NASDAQ ended 7.3% lower. With a 364 point drop, the NASDAQ ended at 4644.

According to Bloomberg, the richest 400 people lost $194 billion last week. Amazon (AMZN) founder Jeff Bezos was the hardest hit, with a $5.9 billion loss.

Why the rough start to the year?

You can point fingers everywhere, but it really comes down to 2 things:

China – If you thought trading in the U.S. was bad, it was even worse in China. The Shanghai Composite ended the first week of 2016 with a 10% loss. It was the worst week for the index since August’s slide. But the losses might seem tame compared to the chaos that was experienced throughout the week. The week included 2 early market closures, multiple circuit breakers that halted trading, a removal of circuit breakers by Chinese officials, and daily measures by the People’s Bank of China to devalue the yuan (bringing the yuan to a 5-year low against the dollar).

Crude Oil – CL ended the week 10.7% lower, closing at the lowest level since 2008. Lower energy costs can be viewed as a good thing when consumers save and spend the savings in other places. But with huge swings lower the drop in energy prices becomes a big concern. Especially when energy companies struggle to turn a profit and the global growth picture looks bleak.

Earnings session will begin this week with Alcoa (AA) reporting after the bell on Monday.

With the first week of 2016 behind us, will global markets find some stability this week? Will the panic in China last week turn into buying opportunities this week?  We’ll just have to wait and see. But if we don’t find support this week, there’s a strong chance that we’ll be heading back down to 2015 lows.

Here are the major reports for the upcoming week:

Monday – No Major Reports.

Tuesday – JOLTS Job Openings at 10:00am ET.

Wednesday – Crude Oil Inventories at 10:30am ET.

Thursday – Unemployment Claims at 8:30am ET.

Friday – PPI & Retail Sales at 8:30am ET, Preliminary Consumer Sentiment at 10:00am ET.

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