Last week’s record-breaking highs were quickly replaced with lows this week as the Dow (DJI) dropped under its 22,000 point milestone Thursday morning.
Disney (DIS) announced that it would cut ties with Netflix (NFLX) as it planned to launch it’s own streaming service which seems fairly self-destructive. Both stocks went into a spiral, although the rest of the market for the most part held steady, and it raises a valuable question: will we see consolidation in streaming services or an expansion by content-producers seeking to capture more value.
President Trump’s comment about releasing ‘fire and fury’ against North Korea sent the markets into a tailspin Wednesday. Nervousness in the market usually causes investors to move their money into safer, less volatile pastures as gold rose to its highest level in nearly two months. The Swiss franc increased more than 1% against the US dollar while producing its greatest single-day raise against the Euro in almost 3 years.
As political uncertainty rose amid the increasingly tense situation with North Korea, the market continued to fall as the week went on. The Dow dropped almost a full percent on Thursday, leaving it well below the 22,000 mark. VIX, which tracks the volatility of the market, also known as the “fear gauge” stock, soared into the late hours on Thursday as the nervousness of investors nationwide continued to rise.
While Amazon’s stock fell this week, it’s imminent take-over of the retail business continued to show as Macy’s (M) and Kohl’s (KSS) posted lower sales than previous years causing both of their stocks to plummet. Nordstrom (JWN) was the only one of the big three to increase in the after-hours Thursday as its sales and guidance were strong. This could be attributed to Nordstrom’s aggressive push into online retail where Macy’s and Kohl’s have struggled.
Many investors looked towards this year’s golden child stock, Nvidia (NVDA), to turn around the bleeding tech industry by posting strong results for the second quarter. It beat earnings and revenue while raising future projected sales, but the Nvidia still dipped heavily after-hours which is an interesting reflection of the entire semiconductor industry. After the meteoric rises of Nvidia and AMD, have we hit the top of the semiconductor phase?
Snap Inc. (SNAP) also posted earnings after hours Thursday, but it continued to disappoint as its earnings fell below expectations.
But it’s not all bad. Although the market showed signs of red this week amid political uncertainty, history has shown that every low is met with a higher high. We must continue to monitor the North Korean tensions and hope for a peaceful resolution to bring certainty back to the markets.