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TechnologyInvestors are finding out now why the stock market tanked in December

17:05  10 january  2019
17:05  10 january  2019 Source:   cnbc.com

Toronto stock market lower, U.S. stocks down

Toronto stock market lower, U.S. stocks down Toronto stock market lower, U.S. stocks down

But now it seems clear that the market was mostly anticipating what has actually happened in recent days: Companies are cutting profit forecasts and trying to temper expectations for earnings growth this year after a big 2018. On the first day of trading last week, Apple warned that its first quarter sales

The stock market isn’t tanking because a trade war or a Trump scandal. The stock market shrugged its shoulders. Then a gangbusters jobs report came out indicating This former Wall Street insider reports on why you should expect the Federal Reserve to hold off on acting in December if…

Investors are finding out now why the stock market tanked in December© Provided by CNBC LLC Traders work on the floor of the New York Stock Exchange (NYSE) on the last day of the trading year on December 31, 2018 in New York City.

When U.S. stocks posted their worst December since the Great Depression, traders put plenty of the blame on actions by the Federal Reserve and that other favorite scapegoat, computerized trading.

But now it seems clear that the market was mostly anticipating what has actually happened in recent days: Companies are cutting profit forecasts and trying to temper expectations for earnings growth this year after a big 2018.

On the first day of trading last week, Apple warned that its first quarter sales wouldn't be as high as previously projected and said its profit margin would be ever so slightly narrower than forecast. The Nikkei Asian Review reported this week that Apple is cutting its iPhone production by 10 percent for the next three months.

Toronto stock market lower, U.S. stocks down

Toronto stock market lower, U.S. stocks down Toronto stock market lower, U.S. stocks down

No stock was spared from the wrecking, as every single stock on the Dow closed the day at a loss. The throngs of investors who have sought Buffett’s level of wealth and success all follow one of his best-known maxims: “ Be fearful when others are Click through to find out how much these other billionaires would lose if the stock market crashed. Why Vail Resorts Stock Fell 25% in December .

As a stock market investor , you own a piece of a company with stocks or equity funds that may pay Start by mapping out your goals and doing a risk assessment, says Magdalena Johndrow "Many new investors are looking to make it big and fast when investing in the stock market for the

It is more of the same for other companies. Beverage giant Constellation Brands said Wednesday that its fiscal 2019 earnings per share would be $9.20 to $9.30, down from the range of $9.60 to $9.75 it forecast earlier. The company said it expects weak sales in its wine and spirits business next quarter.

And home builder Lennar Corp. said Wednesday it would delay putting out a 2019 forecast because of "softness" and "uncertainty" in the housing sector.

'Now starting to come to the fore'

Interest rate hikes by the Fed have contributed to weaker demand for mortgages and home purchases, but there are other reasons for the late-2018 market decline. Maneesh Deshpande, the head of U.S. equity strategy at Barclays, outlined several factors in a note on Tuesday, including U.S. political turmoil — the federal government is in week three of a partial shutdown — a weakening Chinese economy and bearish sentiment by retail investors.

North American stock markets lose 2018 gains

North American stock markets lose 2018 gains North American stock markets lose 2018 gains

The first thing to know about the stock market 's eye-watering slide Monday is that it wasn't caused by anything fundamental. "The S&P is trading where it was in sometime in December . So it's not like we ' re retracing an entire 12 months of returns here. I think investors are just understandably nervous.

Stock market forecast. By December , a majority of the companies in the S&P 500 had fallen into a Even if investors are feeling less optimistic, history is reliable in one sense: The stock market has This strategy, known as dollar-cost averaging, smooths out the price you pay for stocks over time.

Barclays cut its S&P price target for 2019 to 2,750 from 3,000, still up 6 percent, and lowered its projected S&P EPS to $171 from $176.

Morgan Stanley's Michael Wilson, also a chief U.S. equity strategist, told CNBC on Tuesday that he has left his S&P price target unchanged at 2,750. "All of the things that we've been worried about, the market's been worried about all year, are now starting to come to the fore."

Samsung Electronics warned Tuesday of lower than expected profit in the fourth quarter, which is soon to be reported, because of rising economic uncertainties. Last month, logistics company Federal Express slashed its 2019 earnings outlook and said it would have to cut costs because of a global economic slowdown.

For the fourth quarter, which for many companies ends in December, 72 S&P 500 companies have issued earnings warnings, twice as many as have issued positive guidance, according to FactSet. Earnings growth rates have been revised lower by companies in all 11 S&P sectors.

Apple is no longer the biggest company in the world by market cap

Apple is no longer the biggest company in the world by market cap Apple is no longer the biggest company in the world by market cap

Stocks closed out the week with a bang but not in a good way. The Dow finished Friday's session down 665 points. This week is now the worst in two years. Here are three reasons why the market tanked on Friday. Could investors be waiting for the other shoe to drop? It's possible.

" The stock market is the only place I've ever seen where when something goes on sale, no one will touch it," said Scot Lance, managing director at He is currently invested 100% in stocks . For people already in the market and worried about their money, now is a good time to evaluate your portfolio

It's possible S&P could have earnings growth of more than 15 percent for the fourth quarter, but that would be below the 25 percent notched for each of the previous three quarters, FactSet research said.

And analysts are now looking for single-digit earnings growth for the next three quarters of this year. While fourth quarter 2018 earnings growth is projected to be 11.4 percent, the first quarter projection is for 2.9 percent growth, then 3.7 percent in the second quarter and 4.3 percent in the third.

"In the last three months of 2018, markets were pricing in no earnings growth, and perhaps even negative growth, in 2019," says Earnings Scout's Nick Raich. "The good news is that markets likely overshot just how much 2019 EPS estimates were going to drop."

Stocks have rebounded so far in 2019 as investors make a bet that the bad news yet to come this earnings season is priced in. We'll just have to see.

Related video: Markets were oversold in December, asset manager says

Don't panic: Here's your bear market survival guide.
Even though we are headed to a long-term bear market, there are still values in the market to profit from. Balancing act At a time when almost nothing is profitable, investors are forced to sit on a lot more cash than they are used to. The flip side of the stock market's worst rout is that its valuations are getting cheap, creating attractive buying opportunities. The question then becomes when is a good time to go in again. "It is a balancing act.

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