Investors Panic but Markets Recover; Yelp Finishes Strong

in Market Commentary by

Market Digest – Week Ending 2/7

A big down day for stocks on Monday generated the first meaningful signs of investor panic in over a year. Almost immediately, the S&P 500 began to rebound, finishing the week up about one percent. Small stocks did not fare as well, and the Russell 2000 lost 1.3%.  Emerging markets stocks were particularly volatile, but ended 1.7% higher. The January jobs number released Friday was disappointing, but stocks managed gains anyway. Headline unemployment dropped to 6.6%. Bond prices fell.

Weekly Returns:

S&P 500: 1,797 (+0.8%)
FTSE All-World ex-US: (+2.2%)
US 10 Year Treasury Yield: 2.68% (+0.03%)
Gold: $1,267 (+1.8%)
USD/EUR: $1.364 (+1.1%)

Major Events:   

  • Monday – The S&P 500 dropped 2.3%, at least partially driven by a lower than expected manufacturing activity report.
  • Tuesday – Microsoft named Satya Nadella as CEO and announced Bill Gates will assume a more central role as technical advisor.
  • Wednesday – Twitter announced users were up 30% from last year but said usage declined and reported a wider than expected loss. Shares fell.
  • Thursday – SAC Capital Advisor’s Mathew Martoma was found guilty of insider trading.
  • Thursday – LinkedIn posted solid earnings growth but projected lower than expected sales growth. Shares fell.
  • Friday – Apple’s CEO said the company bought back $14 billion of stock in the last two weeks.
  • Friday – The US added 113,000 jobs in January, less than expected.

Our Take:

Yelp shares jumped 18% this week and have quietly risen over 300% in the last year. The company is now worth over $6 billion, and I’m really happy for them. Perhaps more than any public internet company outside of Google and Apple (if you want to call Apple an internet company), Yelp has made my life better.

I can’t remember the last time I tried a new restaurant or hotel without checking it first. The same goes for doctors, landscaping, and much more. Yelp quickly helps you make better purchasing decisions for services. I strongly believe Yelp has also forced across the board improvement from businesses by making it harder to skate by on good location or marketing alone. If you don’t have a good product and good service, Yelp will expose you.

It is tough to say if the stock remains attractive, but it is great to see companies using the internet in innovative ways to make life better. That’s what Personal Capital is all about too.

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Craig Birk, CFP®

Craig Birk, CFP®

Craig Birk is a member of the Personal Capital Advisors Investment Committee. He also serves as Vice President of Portfolio Management. Prior to Personal Capital Advisors, he was an integral leader within the portfolio management team at Fisher Investments. During Craig’s time there, the company increased assets under management from $1.5 billion under management to over $40 billion. His responsibilities included risk management, portfolio implementation oversight, and management of all securities and capital markets research analysts. Mr. Birk graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
Craig Birk, CFP®

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