MINNEAPOLIS — Target (TGT) has agreed to pay $2.8 million to settle a hiring discrimination claim filed by the U.S. Equal Employment Opportunity Commission, the federal agency announced Monday.
Three employment assessments formerly used by the Minneapolis-based retailer disproportionately screened out applicants for professional positions based on race and gender, and the tests weren’t sufficiently job-related, the EEOC said in a statement. The commission also said an assessment that was performed by psychologists violated the Americans with Disabilities Act, which prohibits employers from subjecting applicants to medical exams prior to making a job offer.
Thousands of people were adversely affected and the settlement money will be divided among them, the EEOC said.
Target agreed to take several steps to ensure the validity of its hiring process, including keeping better data for assessing the impact of its hiring procedures.
The number of people covered by the settlement is “in the four-figure range” out of tens of millions of applicants who applied for positions with Target over the past decade, Target spokeswoman Molly Snyder said in an email. She also said the EEOC didn’t find any disparities in Target’s actual hiring, just potential adverse impacts.
Target is no longer using those tests and it is no longer working with the vendor that performed the psychological assessments, she said.
“We continue to firmly believe that no improper behavior occurred regarding these assessments,” Snyder said, but added that Target agreed to settle to save the costs of litigation.
Fresh off Wall Street’s worst week in four years — one that saw the Dow Jones industrial average lose 10 percent of its value and the Standard & Poor’s 500 index slip below the magical 2,000 barrier — financial advisers have two words of advice for gun-shy investors.
“We’re starting to get some calls, as should be expected,” says Erik Jensen, president and founder of Jensen Wealth Advisors in Palm Desert, California, and a registered principal with LPL Financial. “We empathize with them; nobody likes seeing drops like last week. However, we recommend they keep a long-term perspective, understanding that corrections are the norm, not a calamity.”
Sure, last week may have felt like a calamity if you were watching your portfolio shrink by the hour. But there were tell-tale signs — after riding an extraordinary bullish market since 2009, Wall Street had been essentially trading sideways until this month. Then the market’s softening became a full-blown meltdown Thursday and Friday.
Wall Street’s darling stocks — the tech sector — were among the hardest hit.Netflix (NFLX) lost nearly 16 percent; Apple (AAPL) and Facebook (FB) were both down nearly 9 percent and Microsoft (MSFT) fell 7.7 percent.
Banking stocks were also horrid, as Bank of America (BAC) fell 9 percent, JPMorgan Chase (JPM) fell 6.3 percent and Wells Fargo (WFC) — arguably thebest banking stock of 2015 — dropped nearly 6 percent for the week.
Meanwhile, crude oil fell below $40 a barrel for the first time since 2009, and the CBOE Volatility Index — the so-called “fear index” — jumped more than 45 percent Friday and more than 90 percent for the week.
“While investors should avoid panicking over short-term movements in the value of their long-term investments, the recent volatility ought to serve as a wake-up call to re-examine risk and stress-test your portfolio against the possibility of further declines,” says Kurt Rossi, president of Independent Wealth Management in Wall, New Jersey. “Be especially careful if you were like many investors that were pushed into taking on higher risk investments due to the low-yield environment. Consider reviewing the compatibility of your portfolio and your financial planning goals, making changes to your investments if the two are out of alignment.”
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Matthew Tuttle, CEO of Tuttle Tactical Management in Stamford, Connecticut, says the S&P 500 is in a critical area of technical support. “We believe the bull market will end in 2016 or 2017 and believe we need one more rally to the upside before the market crashes, so unless we see the S&P go into the 1,700s, we would use weakness as a buying opportunity. Now, more than ever, investors should be in tactical investments that can shift out of the market if this is the end of the bull market, but that can stay invested if it is not.”
Like Tuttle, financial advisers say the recent weakness in the stock market isn’t a reason to abandon stocks in favor of greener — or less volatile — pastures. Instead, it’s an opportunity to reassess holdings, particularly for investors who are taking a long-term approach.
Steve Sanduski, president of Belay Advisor in Mequon, Wisconsin, says the biggest mistake investors can make is fleeing the market at the wrong time. He says investors should hold tight, but he recommends a diversified portfolio that contains low-cost investments and a time horizon of at least 10 years. “On a regular basis, do the best you can at estimating your ‘sleep allocation,’ meaning, what’s the allocation among stocks, bonds and cash that allows you to sleep comfortably at night,” he says. “If the thought of a certain percentage drop in your portfolio makes you break out in a cold sweat, it’s time to dial down the risk.”
Andrew Carrillo, president of Barnett Capital Advisors in Miami, also recommends the diversification approach. “What exactly investors should do depends on their time frame, risk tolerance and their ability to be nimble in their investing, but based on valuations, there is much more downside over the next year to the market than upside at current bubble territory.”
Sam Seiden, chief education officer for the Online Trading Academy, says investors can expect more downside in the short term. “The major problem for investors is that they think like average investors and not like Wall Street pros, and let themselves get into these risky situations to begin with, which are certainly avoidable,” Seiden says. “There are plenty of simple things the average investor can do to not only protect themselves, but also profit when markets decline just like Wall Street does.”
For example, short-term investors can move funds into safe high-yield corporate bonds, where they will receive interest.
“Then, use the interest to participate in market moves without any market risk to your principle,” Seiden says. “This is one of many simple strategies Wall Street uses that the average investor can use also. The key is to stop thinking like a retail investor and start thinking like Wall Street with your hard-earned money.”
Long-term investors, meanwhile, should look for opportunities to buy cheap stocks and rebalance their portfolio. And they should have the assistance of a financial planner to help them, says Bill Keen, founder and CEO of Keen Wealth Advisors in Overland Park, Kansas.
“Success in long-term investing is about thinking ahead and not being caught off guard by the inevitable market corrections when they come,” Keen says. “We spend a lot of time providing perspective to our clients — talking about the expected volatility of various asset classes. Long-term perspective is something that investors are in desperate need of.”
Apple’s Chief Executive Officer Tim Cook, in comments to CNBC, took the unusual step of reassuring shareholders about the iPhone-maker’s business in China ahead of a dramatic 13 percent drop and rebound in its stock, which closed down just 2.5 percent at $103.15.
The Dow Jones industrial average (^DJI) closed down 588.4 points, or 3.6 percent, at 15,871.35. The Standard & Poor’s 500 index (^GSPC) lost 77.68 points, or 3.9 percent, to 1,893.21, putting it formally in correction mode.
An index is considered to be in correction when it closes 10 percent below its 52-week high. The Dow was confirmed to be in a correction Friday.
The Nasdaq composite (^IXIC) dropped 179.79 points, or 3.8 percent, to 4,526.25, also in correction.
The CBOE Volatility index, popularly known as the “fear index,” briefly jumped as much as 90 percent to 53.29, its highest since January 2009.
Preliminary data from BATS Global Markets show that there were 1,287 trading halts on U.S. stock exchanges due to excessive volatility or the tripping of circuit breakers, far more than usual.
The S&P 500 index showed 187 new 52-week lows and just two highs, while the Nasdaq recorded 613 new lows and eight highs.
Betting on Emotion
“Emotions got the best of investors,” said Philip Blancato, chief executive at Ladenberg Thalmann Asset Management in New York.
The conjecture that the Chinese economy can propel the U.S. economy into recession is ridiculous, when it’s twice the size of the Chinese economy and is consumer-based.
“The conjecture that the Chinese economy can propel the U.S. economy into recession is ridiculous, when it’s twice the size of the Chinese economy and is consumer-based.”
All of the 10 major S&P 500 sectors were down, with energy losing 5.18 percent.
U.S. oil prices were down about 5 percent at 6½-year lows, while London copper and aluminum futures hit their lowest since 2009.
Exxon (XOM) and Chevron (CVX) each fell more than 4.7 percent. U.S. oil and gas companies have already lost about $310 billion of market value this year.
The dollar index was down 1.7 percent. It fell more than 2 percent earlier to a 7-month low as the probability of a September rate hike receded.
Traders now see a 24 percent chance that the Federal Reserve will increase rates in September, down from 30 percent late Friday and 46 percent a week earlier, according to Tullett Prebon data.
Wall Street’s sell-off shows investors are becoming increasingly nervous about paying high prices for stocks at a time of minimal earnings growth, tumbling energy prices, and uncertainty around a rate hike.
Alibaba (BABA) lost 3.5 percent to $65.80, below its IPO price of $68, making it the second high-profile tech company to fall below its IPO price in the past week, after Twitter (TWTR) on Thursday.
Declining issues outnumbered advancers on the NYSE 3,064 to 131. On the Nasdaq, 2,632 issues fell and 281 advanced.
Volume was heavy, with about 13.9 billion shares traded on U.S. exchanges, well above the 7.0 billion average this month, according to BATS Global Markets.
What to watch Tuesday:
Standard & Poor’s releases S&P/Case-Shiller index of home prices for June and the second quarter at 9 a.m. Eastern time.
At 10 a.m., the Commerce Department releases new home sales for July and the Conference Board releases the Consumer Confidence Index for August.
These selected companies are scheduled to release quarterly financial results: