Tom Hudson: Confusing times for long-term investors

The 10 percent-plus drop in the S&P 500 Stock Index this year has been partially attributed to troubles China. For the past week, the market news out of China has been quiet. Not so in the week ahead.

After a week long Lunar New Year holiday that closed the Chinese stock market, it reopens confronting a deteriorating global appetite for risk. In the past week, the U.S. stock market sank to new 52-week lows, interest rates on Japanese government bonds slipped into negative territory signaling no confidence the world’s third largest economy can grow, and U.S. Federal Reserve Chair Janet Yellen insisting to Congress “The economy is in many ways close to normal.”

Welcome back, China. And Happy New Year.

These are confusing times for long-term stock investors. Employers keep adding jobs. Wages are finally starting to pick up ever so slightly. Auto sales hit record highs last year while home prices are rising. Yet, of the 11 major stock sectors that make up the S&P 500, 10 are lower compared to where they ended last year.

There is no shortage of theories for the stock sell-off this year. It’s the historic drop in the price of oil. It’s the Federal Reserve’s insistence on rising interest rates. It’s low interest rates hurting bank profits. It’s the strong U.S. dollar. It’s the risk of recession in America. It’s the reality of recession in Brazil. It’s deflation worries. It’s the lack of wage growth for American workers. U.S. home prices are too high in some cities. It’s political gridlock and the unprecedented uncertainty of the 2016 presidential primaries.

At least for a week it wasn’t China.

Financial journalist Tom Hudson hosts "The Sunshine Economy" on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.

This story was originally published February 12, 2016 at 6:05 PM with the headline "Tom Hudson: Confusing times for long-term investors."