Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Investors entered the week hoping to put Friday's nightmarish 2% sell-off behind them. Wall Street had other plans. Last week's steep losses and the poor performance of the stock market thus far in January have rekindled a familiar debate: Is this the beginning of a more severe pullback, or a prime buying opportunity? This week should be pivotal in helping to answer that question. Not only is earnings season going strong, but the extent of the next Federal Reserve taper will be known by Wednesday, and GDP figures will be released on Thursday. With so many catalysts on the horizon, investors were decidedly risk-averse on Monday, and the S&P 500 Index (^GSPC 1.03%) lost 8 points, or 0.5%, to end at 1,781.
Xerox (XRX) stock slumped 5.6% today, ending as one of the S&P's most severe decliners. In all fairness, shares of the document management company may be due for a cooldown. Earlier this month Xerox stock soared to 52-week highs capping off a 70% rally. Although the company met quarterly expectations last week and even raised its dividend by almost 9%, Wall Street isn't impressed. Barclays downgraded Xerox shares from "equal weight" to "underweight," slapping a $10 price target on the stock. After today's sell-off, Xerox closed at $10.61.
A similar fate befell E*Trade Financial (ETFC) stock today, as shares lost 4.3% in trade. The online brokerage ironically fell victim to the very services it provides, slipping on volume more than twice its three month average. At least E*Trade racked up some commissions in the process. The company swung to the black in the fourth quarter, earning about $58 million in the period, a stark contrast to the $186 million in losses posted just a year before. Again, Wall Street yawned at the remarkable comeback story, and shareholders headed for the exits today.
Lastly, tech giant Yahoo! (NASDAQ: YHOO) shed 3.3% on Monday, as pre-earnings jitters rattled shares. Yahoo! will report fourth-quarter results Tuesday afternoon, and a recent shakeup at the top of the corporate ladder has investors worried those results might not dazzle. CEO Marissa Mayer got rid of her former Google colleague Henrique de Castro, whom she'd recruited to be Yahoo!'s COO, earlier this month. Cautious statements from analysts surrounding the search company's stake in China's Alibaba are also at play behind today's pullback. Much more will be known about Yahoo!'s health in just 24 hours.
