Locking in Profits Before a Spring Selloff?
It looks like investors are locking up their gains with just a few days left in the first quarter. U.S. stocks lost ground for the second day in a row Wednesday, and U.S. futures this morning are pointing to another lower open.
Dow futures are indicating a decline of 30 points at the bell.
With the broader market up some 12% in the first quarter, many investors may simply be taking money off the table before jumping back next month. While April is historically a strong month for equities, it's also been the start of big selloffs. The past two years saw a confirmation of the old Wall Street adage "sell in May and go away." Last year, the S&P 500 fell 21% in the five months between May and October.
As for a spring selloff this year, many analysts say that if there is one, it won't be as pronounced, in part because the battered housing market is showing small signs of life. In addition, central banks around the world continue to keep interest rates low, which is meant to spur growth.
While weekly tally of new claims for unemployment benefits came in a bit better than expected (though previous weeks were revised for the worse), there were some positive numbers from across the Atlantic: The unemployment rate in Germany dropped for the fifth consecutive month in March, as the jobless rate slid to 6.7%, marking a new low. Still, most European equities are lower today.
It looks like Facebook will be a publicly traded stock in May. The social media giant is halting the sale of its shares on the secondary markets next week, trying to reduce volatility in the company's valuation. But since private trades can take up to 33 days to close, and other paperwork takes another 3 days or so, it's looking like an IPO will come in early May. Facebook could be worth $100 billion, and its founder and CEO Mark Zuckerberg owns around a third of the company's stock.
Speaking of CEOs, the average head of an S&P 500 company, per data pulled by USA Today, made $9.6 million in 2011, a rise of 2% from 2010. Over the past year, corporate profits rose an average 15% and CEO bonuses were down 3%.