The market saw 200 point swings in the Dow Industrials on Monday and Tuesday, but after all was said and done, equities closed only slightly higher for the week. Both the Dow and the S&P 500 ended up about 0.3% and the NASDAQ was flat during the holiday-shortened trading week. Mid and small-cap stocks fared better with the Russell 2000 ahead by 1.25%. Gold perked up to close above $1,200/oz. and oil prices stabilized, sending energy stocks higher by about 1.7%, on average. But oil prices may take a hit should sanctions against Iran be removed, thereby flooding the already saturated market with more oil exports. Interest-sensitive utilities and telecom stocks also lead the sector pack, while healthcare and technology were in the red. European and Asian markets were decisively strong on the week.
For the past five months, the market has treaded water and has been in a virtual trading range since late November. The Dow is negative by 0.3% for the year and the S&P 500 ahead by a mere 0.4%. Only the NASDAQ could boast reasonable gains, moving higher by 3.5% in the first three months of the new year. A breakdown in transportation stocks, which have shed 5% since January 1, is a major negative given the benefits of lower energy-input costs. The economy has been sending Wall Street mixed signals with good news followed by negative news. Friday’s payroll numbers, for example, rose about half of what was expected, but jobless claims have trended lower and weak factory orders conflicted with a stronger purchasing manager’s index. And consumer confidence, which had decreased in February, improved in March. So the Federal Reserve will continue to struggle with its interest rate hike dilemma, now expected to be in late summer rather than June. All eyes will now turn to the upcoming earnings season set to unofficially get started on Wednesday when Alcoa reports first quarter results. Expectations for the S&P 500 members are low, so corporate profit slip-ups may not trigger the usual market swings, even if companies pour on foreseeable expenses into the first period to avoid less-favorable comparisons down the road. Guidance for the remainder to the year will probably take precedent over revenue and earnings’ reports, per say. Nonetheless, valuations remain high and once numbers are fully digested, the market may have to adjust to a new strong-dollar, low growth reality.
Here is the answer to last week’s trivia question: Who owns once publicly traded Westinghouse Electric Corporation? Answer: CBS Corp. One of my readers came up with Toshiba for an answer. To set things straight, when Westinghouse Electric dismantled its legacy businesses in the late ‘90’s, it sold its nuclear business to Britain’s’ BNFL, which in turn sold it to Toshiba Corp. in 2006, who operates the unit under the name Westinghouse Electric Co. LLC, but does not own the old company. Westinghouse Electric Corp. acquired CBS Corp. in 1995 and began to exit virtually all its non-broadcasting businesses and eventually changed its name to CBS, which later merged with Viacom. When Viacom split off its CBS television and radio networks from its cable and film operations in 2006, CBS retained the rights to the Westinghouse name and logo and licenses them to independent companies manufacturing electronics, generators, lighting and home appliances; none of which are related to each other except for the common name they share. Hence, CBS owns the old Westinghouse Electric Corp. solely for its licensing rights.
Today’s Trivia Question: On March 19, 2015 Apple replaced venerable AT&T as a member of the Dow Jones Industrial Average. The prior change occurred on September 20, 2013 when Goldman Sachs, Nike and Visa replaced Alcoa, Bank of America and what other company? Feel free to post your answer in the “Leave a Comment” section above, but no peeking.