Stocks were volatile throughout Monday trading before ultimately slipping into the red, and they looked set to continue that trend Tuesday morning. Nervousness about the tepid pace of the economic recovery and potential shortfalls during the upcoming earnings season weighed on investors' sentiments.
Dow Jones Industrial Average index futures slipped 28 points to 10,935, while S&P 500 index futures dropped 3.7 points to 1,158.6 at 9:02 a.m. EST. Nasdaq 100 index futures retreated 2.75 points to 2,022.75.
European equities were equally bearish; Dow Jones Euro Stoxx 50 index futures slid 13 points to 2,764, while FTSE 100 index futures declined 7.5 points to 5,640.
There were a few bright spots, notably in Australia, Brazil and Japan. SPI 200 index futures gained 17 points to 4,649, while Nikkei 225 index futures rose 20 points to 9,420 at 8:51 a.m. EST.
Brazil's Bovespa futures gained 87 points to 70,915 during yesterday's session.
Some heavy hitters, including eternal optimist Warren Buffett and permabear Marc Faber, see stocks as the winners of the next decade.
"It's quite clear that stocks are cheaper than bonds," Buffett told an investors' conference, according to Bloomberg News. "I can't imagine anyone having bonds in their portfolio when they can own equities."
Buffett – the legendary billionaire value investor who is the chairman of Berkshire Hathaway, spoke last week at a Fortune magazine event called Most Powerful Women.
Faber, on the other hand, is known for telling investors to bail out of the stock market a week before the Black Monday crash in 1987 and calling for a general equities bear market in August 2007. The Swiss investor is known for his blunt style and his pessimistic attitude towards the markets in general ; he publishes a popular investment letter called the Gloom, Boom and Doom report.
Faber has repeatedly told investors to hunker down and prepare for staggering inflation and the implosion of world currencies and the bond market. He favors investments like physical metals and gold futures, land and emerging market equities.
At an event in Seoul on Tuesday, Faber told reporters from Bloomberg and other news services, "Instead of interest rates going down, they could start to go up, instead of the dollar being weak, it could strengthen. I'm ultra-bearish on everything, but I believe you'll be better off owning shares than government bonds."
In the shorter term, it's worries about earnings seasons that are dominating the newswires and the potential for major companies to fall short of investor expectations.
"Investors are highly anticipating earnings out of Intel and JPMorgan," Steven Neimeth, a money manager at SunAmerica Asset Management in Jersey City, told Bloomberg. "In the past two weeks, we've seen downgrades of semiconductor companies that makes investors nervous about the next two quarters, which are the critical back-to-school and Christmas quarters."
Holiday shopping is widely regarded as a barometer of the average consumer's sentiment and ability to spend money that will drive the economic recovery. If the next three months prove disappointing, the markets in general may have a broadly negative reaction.
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