Why Stocks Fell This Week & the Death of American Icon

On today’s episode of the Zacks Friday Finish Line, Associate Stock Strategist Ryan McQueeney and Editor Maddy Johnson recap a volatile week in global markets. The hosts chat about the stock selloff, inflation concerns, global economic growth, and bond yields. Later, they discuss the slow-bleeding fall of Sears.

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U.S. stocks are rebounding Friday after a brutal two-day stretch of selling that saw major indexes suffer their worst losses in months. Momentum stocks like Square SQ were brutalized, while market leaders such as Apple AAPL, Amazon AMZN, and Microsoft MSFT also saw significant volatility.

The selloff was inspired by a number of concerns, including worries that the American economy is overheating while growth in key global markets is slowing down.

One topic of discussion this week was the bond market. Bond prices have been falling, sending bond yields to multi-year highs. Bond prices are typically correlated with stock prices, but this effect normally takes time to manifest as it relates to the cost of borrowing and its effect on company earnings.

This week, we saw what can happen when yields rise suddenly, as many investors simply were not interested in buying higher-risk equities.

Interestingly, inflation was a major topic of concern as well, even though the latest Consumer Price Index came in cooler than expected. September’s CPI increased 0.1 percent, down from a rise of 0.2% in August. CPI growth on a year-over-year basis was 2.3%, also slower than the 2.7% advance seen in August.

But that read was not enough to calm Wall Street, which also had plenty of troubling headlines from foreign markets to digest. Notably, China’s stock market was hammered again as the country’s central bank moved to stimulate its economy once again. There was also political and economic uncertainty developing in Brazil and Italy.

This was all underscored after the International Monetary Fund lowered its worldwide economic growth forecasts for 2018 and 2019. The fund later elaborated that it is concerned rising trade and political tensions could put a dent in synchronous global recovery.

Make sure to check out this week’s episode for the key facts and Maddy’s and Ryan’s perspectives on all of these stories.

Also this week, the Finish Line team discusses the impending bankruptcy of Sears SHLD. The ever-struggling retailer has a huge debt bill due on Monday, and with suppliers already reporting that it has missed payments, the end finally looks near for Eddie Lampert’s company.

Maddy and Ryan spend some time discussing the legacy of Sears and Lampert. Don’t miss it!

If you feel that we missed something, or if you want us to cover a different story, shoot us an email at podcast@zacks.com. Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave us a rating on Apple Podcasts.

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