Equities are still unable to gain traction with ongoing fluctuations spawned by indecisive buyers and sellers. There appears to be a major split in thinking for the intermediate direction of the market with headlines of slow economic growth contrary to otherwise better-than-expected data. The prospect of the Fed moving rates higher in June re-surfaced in mid-week causing havoc on Tuesday with a 181-point drop in the Dow Industrials, behind a gain of nearly as much on Monday. The rest of the week seesawed between positive and negative territory ending with mostly mixed results. Even followers of retail stocks can’t make up their minds with April spending results positive, but with some individual retailers showing signs of distress, especially the large mall-based stores focusing on clothing and other so-called soft goods. Autos, online retailers and home improvement products appear to be gaining favor, however. The ongoing wavering among traders has moved the market virtually nowhere since last May’s all-time high. The twelve-month change in stock values remains negative by about 4% and about break-even for the year.
For the week, equities were pretty much split down the middle with technology, energy and financials showing plus signs and interest-sensitive utilities, telecommunications and consumer staples moving downward. The Dow was negative by about 0.2% for the week, while the S&P 500 gained as much. The tech-heavy NASDAQ was the best performer with a 1% advance and transportation stocks showed strength with bidders taking charge by over 2% to the upside, on average. Oil prices seem to be stabilizing in the $45-$48 per barrel range, but here too there is much disagreement for the future with some analysts predicting returns to the $30 level and others looking for a leg up to near $60/bbl.
Thus short-term traders have their hands full trying to decipher from day-to-day which way the market is heading. Longer term, however, the bias is basically favorable as housing and overall consumer spending is looking up. However, with employment figures positive and wage gains trending higher, the possibility of inflationary anxiety will pressure the Federal Reserve to consider a short-term rate increase sooner than later, despite a mediocre growth curve. Meanwhile, the stock market is still hanging in there, even as it suffers a few dents and scrapes. Best to maintain a multi-year view of high-quality stocks paying decent and growing dividends and let the day traders wrestle it out.
Here is the answer to last week’s trivia question: Scotts Miracle-Gro Co., founded in 1868 as O.M. Scott & Sons, is a leading lawn and garden products manufacturer. Which product is not a Scotts’ brand offering? Ortho, RoundUp, Morning Song Bird Seed or Osmocote. Answer: Morning Song Bird Seed, which was sold by Scott’s in 2014.
Today’s Trivia Question: The ARCO gasoline station brand was purchased from BP, plc in 2013 by Tesoro Corp. and operates exclusively on the west coast. ARCO was originally? Atlantic Richfield Co.; Amalgamated-Rundell Petroleum Corp.; Appalachian Refining & Chemical Co. or American Refining Company.