Ouch! With no industry sectors showing plus signs this week, it was not a pleasant experience for the “long” investor. While gold and oil prices trended higher, equities took a beating moving lower for four out of the five trading sessions. The Dow Industrials lost 415 points and the S&P 500 fell 47 points; both measures negative by about 2.3%. The NASDAQ was lower by 2.7%, as semiconductor stocks took a tumble on fears that the strong dollar will crimp demand and that some of the biotech names are bubbling. Hence technology shares were greeted with a nearly 2.7% average loss on the week along with financials and healthcare, losing 3% and 2.6%, respectively. Thanks to the Heinz-Kraft Foods merger announcement, consumer goods were lower by only 0.5%, as a group. There wasn’t much news on the economic front with the exception of a 1.4% surprise drop in durable-goods orders reversing what was to be a positive number. With a holiday-shortened trading week ahead, the market will continue to react to the effects the dollar will have on first quarter earnings. Specifically, the stock market is bracing for a 4.5% drop in earnings for the large cap multinationals that comprise the S&P 500, so the selling may not be over. Valuations remain elevated and questions concerning global economies and currency headwinds offer a reason for pause. Transportation stocks have been beaten down and some selective names in rails hold promise as do other domestic plays such as pharmacy services. I still like CSX Corp. and CVS Health, which can be bought on dips. And with the Fed still accommodative, a reasonable argument can be made for equities and on a longer term basis and any setbacks could be viewed as a buying opportunity.
Here is the answer to last week’s trivia question: What is the highest priced stock traded on the New York Stock Exchange? Answer: Berkshire Hathaway Class A stock, which closed on Friday at a whopping $217,000 per share. Berkshire Hathaway also has a Class B variety, often referred to as “baby Berkshire”, which trades at a more reasonable price of about $144 per share. Omaha-based Berkshire Hathaway is a holding company run by legendary investor Warren Buffet. The company wholly owns GEICO, BNSF (Burlington Northern-Santa Fe) Railway, Lubrizoil, Dairy Queen, Fruit of the Loom, MidAmerican Energy, FlightSafety International, NetJets, Benjamin Moore and Johns Manville, among other iconic household names. On November 14, 2014, Berkshire announced that it would acquire Duracell from Procter & Gamble for $4.7 billion in an all-stock deal. It collaborated with 3G Capital in 2013 to jointly acquire H.J. Heinz Co. (a buttonwoodproject income choice) and this week Berkshire and 3G announced it will merge Heinz with Kraft Food Group forming what will be the world’s fifth largest food company.
Today’s Trivia Question: Who now owns once publicly traded Westinghouse Electric Corporation?