Today’s domestic manufacturing data is another addition to a recent series of disappointing economic reports we have seen since January. The recent cold and snowy weather is likely negatively impacting most of the data, but disappointing earnings and the crisis in emerging markets are the real drags on an equity market that had not corrected in some time.
While the volatility in the equity markets is making great headlines and creating some anxiety, it may be helpful to consider that the 52 week high for the Dow Jones Industrial Average was 16,588 and the 52 week low was 13,784 (Source: Yahoo Finance). The close today at 15,372 is still far above the 52 week low (Source: WSJ.com) Our view at this time (subject to revision) is that domestic economic data could rebound with better weather in the spring. We are not ready to downgrade our economic outlook for 2014, but the markets could continue to experience some volatility in the short-term.
The level of volatility we are seeing in the markets could signal they are oversold. If this is the case, we may be seeing a bottoming process. Should markets and technical data deteriorate at a greater pace, we may see a more severe correction. However, at this time we view the current activity as most likely short-term in nature.
We will continue to monitor the situation and keep you informed of our thoughts. The shifts that we made in most of our actively managed portfolios were based on our view of a favorable equity market in 2014. At this time we do not believe any strategic shifts are prudent. We recommend staying the course until we see if the correction indicates greater depth than anticipated.
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This commentary is intended for the dissemination of general information regarding market conditions to Lowe Wealth Advisors clients. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results, and there is no guarantee that the views and opinions expressed in this report will come to pass. While any general market information and statistical data contained herein are based on sources believed to be reliable, we do not represent that it is accurate and should not be relied on as such or be the basis for an investment decision. Any opinions expressed are current only as of the time made and are subject to change without notice.
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