Despite a sharp sell-off on Friday, the major averages managed small gains for the week with the Dow Jones Industrials and the S&P 500 each ahead by about a half of a percentage point, while the NASDAQ once again pulled back by .67%. As was the story in the prior week, momentum stocks are being punished with their high PE’s (for those companies that even have an “E”). Investors moved away from many of the technology names in favor of more value plays; a number of which can be found here in thebuttonwoodproject portfolios. Specifically, the conservative list was up 1.7% on the week; the income portfolio advanced 1.1% and even the riskier aggressive candidates were ahead by 1.6%, on average. Payroll numbers provided a short-lived lift on Friday, only to succumb to profit taking in afternoon trading. Non-farm payrolls rose a seasonally adjusted 192,000, somewhat less that economists had hoped for but decent enough. The unemployment rate remains at 6.7%.
Competition is heating up in the lucrative fast-food breakfast market, with YUM! Brands’ Taco-Bell unit giving McDonald’s (NYSE: MCD – $97.87) a run for its early morning money. While more cash register challenges is the last thing income candidate McDonald’s needs right now, the breakfast war may bring more overall foot traffic to all the players and the profit margins in this area are higher than the lunch menu. And McDonald’s has been fighting back with temporarily offering free coffee during breakfast hours. So bad news may be some momentary good news for Mickey Dee’s. MCD was up $0.63 on the week. First quarter earnings season will begin this week with aggressive choice JPMorgan Chase & Co. (NYSE: JPM – $59.81) on point to report Friday. JPM is estimated to earn $1.41 per share compared with $1.59 a year ago. For the full-year, analysts have the company pegged to earn $5.88-$5.90 vs. a litigiously plagued 2013 of $4.39. If Chase can make the numbers, it will provide for a valuation at a very reasonable 10 times earnings with a yield of 2.6%, based on the company’s proposed new dividend rate.
And finally, baseball is in full swing and the Masters tournament begins in Augusta on Thursday. But remember, there are no mulligan’s when it comes to investing, so stay committed to your financial plan and turn down the daily TV market noise while you enjoy the games.