Fear Grips Wall Street Again: 4 Ultra-Safe Bets
Zacks Investment Research | Aug 13, 2017 09:41PM ET
After scaling to new highs this year, the equity market is showing some cracks. The exchange of bitter words between U.S. and North Korea has kept many traders on their toes, while brick-and-mortar retailers are facing declining foot traffic, drop in comparable store sales and increased store closures. Also, wider losses for Snapchat and Walt Disney Co’s (NYSE:DIS) plans to pull its movies off Netflix, Inc. (NASDAQ:NFLX) have dented investors’ sentiments.
In fact, historically, August has been a bearish month for most of the major indices. This calls for investing in some rock-solid stocks for steady gains.
Wall Street’s Fear Gauge Springs Back to Life
The bears are back in control. Even though the Wall Street’s “fear-gauge”, the CBOE Volatility Index (VIX), has soared more than 70% since the all-time low hit on Jul 26. In fact, last week it witnessed the highest weekly rise since December 2015. CNNMoney’s Fear & Greed Index also flipped back into the ”fear” territory last week.
Wall Street crawled back into the green on Aug 11, recovering from a sharp decline in the previous session. However, it registered a weekly loss on lingering geopolitical concerns. Last week, the Dow saw its worst week since March, the S&P 500 recorded its steepest one-week drop since November and the tech-heavy Nasdaq posted its worst weekly decline since June.
Trump’s North Korea Nuclear Rhetoric
Last week was plagued by escalating tensions between the U.S. and North Korea. President Trump’s vow to unleash “fire and fury” in response to North Korea’s warning to strike the U.S. territory of Guam, finally indicated that the doom-and-gloom crowd on Wall Street is returning.
Trump has issued an ultimatum to Pyongyang saying that “they be met with fire, fury and frankly power the likes of which this world has never seen before”. His harsh words came in after U.S. intelligence analysts said that North Korea has developed a miniaturized nuclear warhead. Following Trump’s comments, North Korea said that it was “examining the operational plan” to strike sensitive areas like the Anderson Air Force base.
Such talks of “fire and fury” turned investors’ attention to the risk of a nuclear conflict with North Korea, instead of focusing on upbeat corporate earnings in the second quarter (read more: Zacks Investment Research
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