While the Grown-Ups Are Away, the Kids Will Play
Despite investors' efforts to push the markets higher, equity mutual funds, once again, experienced redemptions, while money continued to pour into fixed income.
The grown-ups are either on vacation or in the Hamptons, and the kids are staffing the trading desks. The kids were eager to move the markets up, and the week started off on a positive tone as new merger and acquisition activity heated up and earnings continued to beat expectations.
The equity market disregarded any weak economic news, made some gains, and pushed credit spreads tighter for the first half of the week. However, that tone changed Thursday, as either the kids were chastised by data too rough to ignore or a few of the grown-ups called to check in. New jobless claims rose for the fourth week in a row, to 500,000, easily surpassing estimates of 478,000. This is the highest weekly reading since mid-November 2009 when jobless claims were on a solid downward trajectory after peaking in the spring of 2009.
David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.