The S&P 500 Indices fell 5.77% for the week

BY  | FROM  | 2015-08-24 14:56

It was the worst week for the market since November 2012, with open talk of a correction, as the market moved from Monday’s 2,102 close to under 2,000, to close the week at 1970, falling 5.77%, as it lost USD 1.1 trillion in market value for the week - ouch. Among the high-flyers (or crashes) for the week were: Apple (AAPL), which fell 8.8%, losing USD 59 billion in market value for the week; Microsoft (MSFT), off 8.4% and declining USD 32 billion;, and Exxon Mobil (XOM), closing the week 8.0% lower, and worth USD 26 billion less. The issue was COF.  In this case COF was not Capital One Financial, which did decline 5.7% this week (and is off 7.2% year-to-date), but rather China, Oil and the Fed. 

Chinese volatility grew over its currency and markets, as the Shanghai declined 11.5% for the week (but remains up 8.4% year-to-date); oil traded under USD 40, closing at USD 40.29 level, off 4.4% for the week and off 62% from its June 2014 close; and the Fed, which is now believed to be waiting at least until the fourth quarter before they return to the interest rate increase business, which they last participated in June 2006 (increasing from 0.25% to 5.25%, after increasing it to 5.00% in May of 2006). The Fed notes were partially published inadvertently from an embargoed copy via Bloomberg about half an hour early, which temporarily disrupted the market. 

The notes showed that the Fed wants to increase interest rates this year, but the members appeared to be split on if it would be in September – and that was before this week’s fun.  The Fed also seemed concerned if inflation would be back to the 2% area soon, and there was also concern over what action the Fed could take if the economy declined.  The takeaway was that the Street’s expectation of a September increase was lower, which put the “best guess” to December. In economic news, second quarter e-commerce sales increased much more than expected (4.2% when 3.7% was expected), as the year-over-year gain is 14.7%, compared to the 1.0% gain for store sales (e-commerce accounts for 7.2% of all sales).  July Housing Starts came in strong (an annual rate of 1.206 million units), as housing remains one of the growing spots of the economy. 

Core CPI (ex-food and energy) came in at 1.8% year-over-year rate, which was near the Fed’s 2% target. In M&A news, Liberty Interactive (QVCA) said it would buy web-based shopping issue Zulily (ZU; up 42.2% for the week) for USD 2.4 billion.  Gas and petroleum issue Williams Companies (WMB; off 4.9% for the week) found another company interested in buying it, Spectra Energy (SE), which would need to compete with Kinder Morgan (KMI) and Energy Transfer Equity (ETE).

For the week, the index posted a devastating 5.77% decline to close at 1,970.89, the worst week for the index since the 6.54% fall in September 2012.  Year-to-date, the market is now down 4.27%, as issue volatility is high, with 86 issues up at least 20% year-to-date and 33 down at least 20%.  The combination of opposite extremes accounts for the relatively low index movement, as winners and losers partially negate each other. It was the seventh week of alternating breadth and market returns—meaning someone, somewhere may now be playing it (with the hope that next week will go up).

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