Equities continue to be range-bound since late November of last year with one percent weekly advances followed by a similar drop the next. The directionless, or consolidation as it is often referred to, is not necessarily a bad thing, but the days of 20% annual gains may well be over. However, I do not believe we have seen the end of the six-year-old bull market which, admittedly, is getting long in the tooth. Thanks in part to a 1.5% drop in the Dow Industrials on Friday, the market took yet another breather and fell about one percent on average for the week. Oil has risen to its highest level since the beginning of the year with light sweet crude ahead this week by $4.10 to $55.74, but still way off its highs of $109/bbl. seen last summer. Gold is also returning to some of its luster and, while down a few bucks for the week, is above $1,200. Sector-wise only energy stocks saw gains along with a few basic material plays, but all other market segments were in the red, led lower by industrials and consumer services. Europe and China were both in the headlines this week: Greek debt is still a major issue on the continent and China wants to rein in its hot stock market by lifting restrictions on short selling and raising margin requirements. The heart of the earnings season begins this week, but last week there were some pleasant surprises from income choices Intel and Johnson & Johnson, conservative pick Schlumberger and aggressive selection CSX Corp. So not a bad week for blog followers. Ahead we will hear from Verizon Communications with a $0.95 per share estimate vs. $0.91 a year ago. DuPont reports on Tuesday ($1.31 vs. $1.58) along with Kimberly-Clark at $1.33, a penny ahead of last year’s tally. Later in the week: QUALCOMM ($1.33 vs. $1.31), 3M Co. ($1.92 compared to first quarter 2014 of $1.79), Danaher ($0.93 vs. $0.81) and Dow Chemical ($0.76 vs. $0.79). In sum, the bulls are still in charge. Despite selloffs along the way, investors have taken the ups and downs of economic data, European financial woes and the strong dollar effects on earnings in stride; somewhat encouraging given the lofty valuations at which stocks are trading.
Here is the answer to last week’s trivia question: What was the largest single day percentage gain for the Dow Jones Industrial Average? 18.5%, 15.3% or 12.9%. Answer: 15.3% on March 15, 1933 when the Dow rose 8.26 points to 62.10. To put that figure into perspective, if the Dow were to rise 15.3% at current levels, the average would have a one day advance of 2,277 points.
Today’s Trivia Question: What was the largest single day percentage loss for the Dow Jones Industrial Average? 22.6%, 19.7% or 16.9%?