DECEMBER 14, 2018 DAILY INSIGHTS FOR INVESTORS The Story Behind the Dow's 496-Point Drop A week in which the market mostly held its ground despite sickening turbulence ended with a gut punch. All the major indices cratered Friday on a mix of macroeconomic and single-stock news. U.S. stocks were clipped by international worries -- but rather than tariffs, disappointing economic data out of China and Europe weighed heavily on sentiment. Meanwhile, Johnson & Johnson (JNJ) was battered by 10.0% to lead the Dow lower following a Reuters report alleging that J&J knew for decades that its baby powder contained asbestos. And fellow Dow component Walgreens (WBA) lost 4.4% after a Goldman Sachs analyst cut the stock to Sell on doubts about its growth initiatives. The industrial average slumped 2% to 24,100 -- its lowest close since May -- putting it into correction territory (a drop of 10% or more from a peak).
Volume was exceptionally low yesterday, comparable to the Friday after Thanksgiving. Seemed like more of a lack of buying as opposed to heavy selling interest. This really is a sentiment drop more than anything. The average consensus for GDP got bumped up to 3% yesterday, earnings are void of many pre-announced misses, the Fed is talking more dovish and businesses seem to be saying things are good. While fundamentally not much has changed since we were at SP2900, sentiment is a powerful force behind market movement. When it shifts, I expect one of those face ripping rallies.