The headline read: “Dow Falls 1% on Fears of a Fed Rate Hike”. Enough already with this badgering about “fears” of a rate hike. The good news (for the economy) is bad news (for the market) argument is getting old. U.S. equities have struggled for direction with a host of better-than-expected economic figures failing to boost sentiment and, instead, renewed focus on whether the Fed will begin to raise short-term lending rates before long. The latest positive news was employment, with 280,000 new jobs added in May and average hourly wages moving up 0.3%; robust auto sales last month; and the Institute of Supply Management manufacturing index showing surprising strength. This all sent income-related stocks reeling, especially utilities, telecommunications and REITS. The buttonwoodproject income portfolio was lower by nearly 3% from the previous week, vs. a 1.4% reversal in the conservative group and a mere 0.25% loss for the aggressive lot. Personally, I am looking forward to the central bank making a move to raise rates and getting us back to a more normal monetary policy, even if that means a significant market correction. Then, hopefully, equities will trade in line with corporate growth and ensuing profits, with “winners” and “losers” specific to a sector or individual stocks. For now, investors lack any particularly strong inclination to buy or sell. But the market moved lower for the second week in a row, with the Dow falling 161 points or 0.9% this past week and the S&P 500 Index in the red by about 0.7%. The NASDAQ was basically flat and bonds took a hit, again on rate “fears”. Oil stabilized and settled at $59.13/bbl., but gold was battered losing $21.60/oz. on the current contract to $1,167.80. The only sector to show green arrows was financials, as banks will perform better with higher interest rates and improved business conditions. Assuming a rate hike will not take place at the June Fed meeting, the summer months will continue to ebb and flow with speculation for September. In the meantime, enjoy the weather.
Here is the answer to last week’s trivia question: Prices for micro-cap companies or penny stocks, which do not trade on any of the major exchanges can be found where? On “Pink Sheets”, online at cheapstocks.com, The Wall Street Journal Saturday Edition, Reuters “Low-Priced Stock Hub”? Answer: Pink Sheets, a daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter (OTC) stocks, including the market makers who trade them. The pink sheets got their name because they were actually printed on pink paper and a common clipboard fixture at brokerage houses. You can tell whether a company trades on the pink sheets because the stock symbol will end in “.PK”.
Today’s Trivia Question: WD-40 Company is: Privately held, a division of Occidental Petroleum Corp., a publicly traded company or owned by private equity firm Apollo Group?