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Emerging-Market Madness Wreaks Havoc on U.S. Stocks in January

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Still wiping your buddy's mysterious multiple-layer dip "appetizer" off your face post-Super Bowl? Good. You deserve the break. Especially after Wall Street capped its worst month since May 2012 -- the Dow dropped a painful 5.3% in January on mixed corporate earnings, freaky activity in emerging markets, and anticipation of Bruno Mars' halftime song and dance.

1. Emerging markets keep scaring Wall Street
Emerging markets, those young-gun nations with great economic potential and notable financial risk, scared Wall Street all week long. First, some unimpressive manufacturing data from China came in below expectations, then Ukraine's government began falling apart, and Argentina's food prices started spiking. Plus, every commentator west of the Ural Mountains is warning of a terrorist attack at the Olympics in Sochi. The combined geopolitical and economic worries over the past week have shaken those invested in the growth potential of the developing world, and the flight of capital from emerging markets caused their currencies to plummet. Ripple effects were felt in the ol' USA, which helped drive stocks of multinational companies lower.

2. Fourth-quarter earnings winners ...
Even though a slowdown in China hurt revenues, legendary equipment-maker Caterpillar (NYSE: CAT  )  crushed earnings expectations thanks to profit-boosting cost-cuts. Ford (NYSE: F  )  drove to its best performance in a decade on big North American demand for its Focus sedan. Facebook (NASDAQ: FB  )  may not add as many users as it used to (now that your aunt is on it), but investors ate up the solid growth in mobile ad sales. Plus Google topped earnings forecasts and ditched its disastrous Motorola tablet/phone hardware unit.

3. ... and Fourth-quarter earnings losers
Big boy Apple's (NASDAQ: AAPL  )  earnings were unimpressively flat last quarter, as 51 million iPhones sold was short of analysts' expectations of 57 million. Purple powerhouse Yahoo! missed earnings expectations after fresh-faced CEO Marissa Mayer ended 2013 by purchasing a bunch of random start-ups. And (NASDAQ: AMZN  ) , which usually spends its cash building new warehouses for its warehouses, actually pulled in a profit but suffered from its Christmas snafu of not delivering gifts in time for the big day.

4. U.S. econ data was kind of mixed
On the bright side, America's protein-packed fourth-quarter GDP growth was an impressive 3.2%, bringing the total 2013 GDP up to 1.9%. However, consumer confidence dipped in December, according to the Reuters/University of Michigan poll, and orders for durable goods (aka big-ticket items, like airplanes and dishwashers) dropped 4.3% last month. Home sales tumbled at the end of the year, but economists blame the cold weather for that -- plus, 2013 was already the housing market's best year since '08.

What MarketSnacks is checking out this week:

  • Monday: Motor-vehicle sales; earnings: Yum! Brands
  • Tuesday: Factory orders; earnings: Buffalo Wild Wings, Michael Kors, Sirius XM Radio
  • Wednesday: ADP employment report; earnings: Merck, Walt Disney, Yelp
  • Thursday: Weekly jobless claims; earnings: AOL, Expedia, Universal Studios
  • Friday: January employment report; earnings: Moody's

MarketSnacks Fact of the Day: The U.S. hot-sauce market has grown by 150% since 2000 -- more than BBQ sauce, ketchup, mayonnaise, and mustard combined.

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