Wall Street suddenly got cautious just as earnings season got underway, and momentum stocks got clobbered Tuesday. Alcoa (AA), whose report marks the unofficial start of each earnings season, released its numbers after the bell, and then gained 0.75 percent. But the Dow Jones industrial average (^DJI) dropped 117 points, the tech heavy Nasdaq composite (^IXIC) slipped 60 points, and the Standard & Poor's 500 index (^GPSC) was down 13 points.
Momentum stocks -- in this case, mainly Internet and biotech stocks -- got hammered. Salesforce.com (CRM) was down more than 4 percent, Tripadvisor (TRIP) fell 5.5 percent, Netflix (NFLX) dropped more than 3 percent, Facebook (FB) was down close to 4 percent, and Tenet Healthcare (THC) lost 2.5 percent. First Solar (FSLR) was another big loser, down almost 5 percent.
And even an analyst upgrade for Groupon (GRPN) from neutral to buy failed to help the stock. It dropped more than 2.5 percent.
Airline stocks were hit with another day of selling. Delta (DAL) fell more than 1 percent, Southwest (LUV) dropped more than 1.5 percent, and JetBlue (JBLU) was lower by more than 1 percent. But United Continental (UAL) bucked the trend, gaining more than 2 percent. Analysts say the sell-off in the airline sector is overdone, but investors clearly aren't convinced. Delta is down by 9 percent over the past five days.
And cupcake maker Crumbs Bake Shop (CRMB) fell apart dropping 71 percent. The company announced it is shuttering all of its stores because of plummeting sales.
PetSmart (PETM) fell slightly a day after rallying. News recently broke that major investor Longview Asset Management wants the company to sell itself. Over the past 5 days, the stock is up 13 percent.
AbbVie (ABBV) upped its bid for U.K. biopharma company Shire by 11 percent and AbbVie's stock dropped 3 percent.
Pharma company Mylan (MYL) also fell slightly after announcing it has launched a generic product to fight hypertension.
And finally, botox maker Allergan (AGN) bucked the downward trend, gaining slightly a day after activist investor Bill Ackman proposed bringing in a new group of directors.
-Produced by Karina Huber.
What to Watch Wednesday:
The Mortgage Bankers Association releases weekly mortgage applications at 7 a.m. Eastern time.
The Federal Reserve releases minutes from its June interest rate meeting at 2 p.m.
WD-40 Co. (WDFC) releases quarterly earnings after U.S. markets close.
How I Tuned Up My Finances in 9 Simple Steps
After Market: Summer Earnings Season Opens with a Clunk
Before launching into review our finances, I kicked off with the same Money Organizer Workbook I have my readers or clients use when reviewing their finances. It broke down steps for me to conquer and review one at a time, and allowed me to see the areas I needed to focus on and where I was good to go.
Creating a plan around your finances without having clearly defined goals in akin to getting into the car to drive somewhere without a destination in mind. There's no room for vagueness. My husband and I had to sit down and determine what we're trying to accomplish (aside from just surviving the change wave that is hitting us). We got detailed and created actionable SMART Goals (Specific, Measurable, Attainable, Relevant and Timely). So, instead of merely saying we'll vacation in Europe, we're now "saving $5,000 for a vacation to Europe next summer."
We all know we're supposed to spend less than we make, but are we? Building a budget is the most important part of getting financially organized. You can't create a plan to meet your goals without knowing where your money is going. Start tracking your spending by paying attention to fixed expenses, debt payments and discretionary (or what I call "fun times") expenses. Pinpoint the areas that are prime for reductions if necessary. In our house, we're willing to cut back on dining out in order to build up our travel fund.
Have you added to or reduced debt since the year began? When it comes to tackling debt, either go after accounts with the highest interest rates first (meaning extra money goes towards this balance only) or use the "snowball" method (targeting lowest balances for payoff first) to build momentum. I have clients and readers use the debt spreadsheet in the Money Organizer Workbook to document creditors, outstanding balances, terms, interest rates and minimum monthly payments and prioritize from there. While we make an effort to pay off our credit cards in full each month, knowing the balances we carry in other debt helps us to understand how much mortgage we can afford when we make the move into a house later this year.
If you didn't start on Jan. 1, there are still six months left to maximize retirement plan contributions. The max contribution for Roth and IRA accounts in 2014 is $5,500 -- $916.67 a month, for the next six months.
The max contribution for your Roth and regular 401(k)s is $17,500. That's $2,916.67 a month for the next six months.
If you haven't been paying attention to your investments, now is the time to check in on allocations and adjust or rebalance to align with your intended strategy. With the market on the move upwards, I took the chance to look at our accounts and the original intended allocation for our funds. With the growth in the market, some funds were out of balance with their intended targets, so I sold and purchased and rebalanced back to target allocations.
You may think "it won't happen to you," but in reality, it could and it might. Having the right kinds of insurance in place for home, auto, life, disability and personal liability is incredibly important. It's even more important to update these numbers as your income fluctuates, your family grows, your career changes, you make large purchases or acquire debt. Many of these numbers are being revamped this month in our household due to my husband's transition to a new job and the adjustments to benefits that we have and need.
Thinking about your death or possible disability is by no means sexy, but it's important. Having the tough conversations and creating documentation for your wishes is a gift of peace of mind for your family. (It's also a good time to tell your spouse who he or she can and can't date if you're no longer around). This is a conversation that my husband and I had a while ago during a road trip, and we have documentation in place, but with family planning on the horizon, it has recently brought up some new questions that we needed to address.
Schedule a check-in for six months from now to track the progress you've made on goals and to review the list of items you've tackled in the previous months. Celebrate your wins along the way. In our house, we have a list of the things we want to purchase (big or small) on the refrigerator. Each time our savings accounts get to a certain amount, we celebrate by allowing ourselves $100 toward one of the items we wanted to purchase. It's a small way to celebrate success and to curb impulse spending.