It was another stormy week on Wall Street as the Dow dropped nearly 1,000 points on Monday’s open and saw triple digit moves throughout the remaining five day span. On heavy volume, equities managed a 1% gain for the week, with the tech-heavy NASDAQ higher by over 2.5%. Oil was the recipient of a technical rebound and advanced over 10% since last Friday to $45.22/bbl. taking energy stocks higher by 3.9%. Other sectors in the plus column included technology and consumer services, while interest sensitive utilities plunged over 4%. With the stall of China’s growth in the headlines, noise resurfaced that the Federal Reserve may defer a September rate hike and financial stocks, which are looking forward to an uptick in short-term interest rates, were also weak. Despite the relatively small gain this week, stocks are down 10% from their 2015 highs and negative for the year. U.S. data show the economy continues to expand with little signs of inflation. Second quarter GDP was revised upward to 3.7% from the previous 2.3% reading and July durable-goods orders rose 2%, the second consecutive monthly rise. Friday, look for a healthy gain in nonfarm payrolls of 200,000 and a possible tick down in the jobless rate to 5.2%. My advice is to stay vigilant, not panicky. While the last few weeks of pain stings more than wounds, this is not unchartered territory should the correction turn into a full-blown bear market scenario. The most recent of the bear markets is the 29th since 1899. Bear markets have averaged 15 months in length, but the last five averaged less than 13, and that’s including the 34-month slump that began in 2000. Three of the last five bear markets have lasted just four months and the recent comeback this week from earlier loses shows that bulls are still lurking about and the market is showing decent resiliency. And even if we’re getting ready to ride a full-grown grizzly, investors who take precautions and pay attention can hang on and make it back to bullish territory in one piece. Stocks are still the investment of choice in this low interest rate backdrop, and investors should use the recent spell of weakness to look for timely stocks with strong balance sheets and ample dividend payout ratios that have staying power over the long haul.
Here is the answer to last week’s trivia question: George Steinbrenner purchased the New York Yankees in 1973 for $8.7 million from which company? News Corp.; Coca-Cola; CBS; or New York Life Insurance? Answer: CBS. Today, the team is estimated to be worth $2.5 billion.
Today’s Trivia Question: Which fast-food chain has the most world-wide outlets? McDonald’s; Dunkin Donuts; Starbucks; or Subway?