Let’s put this past week in the loss column. Although the Dow Industrials managed a 0.3% gain, the S&P 500 and the Russell 2000 were negative by 0.2% and 0.02%, respectively and the NASDAQ by nearly 1%. Most of the retreat came late in the week, as gains on Monday and Wednesday were all but erased. U.S. markets, which came close to previous all-time highs, followed European stocks, which were lower on fears of Britain’s possible exit from the European Union. A referendum is scheduled to take place on June 23. While the U.K. is a member of the E.U., it maintains its own currency and is not part of what is considered the monetary Eurozone. Nonetheless, its retreat from the Union will cause havoc in Europe, with possible repercussions on other global economies including, to some extent, the U.S. While the odds are that Britain will remain a member, the final result will be a nail-biter.
Giving the market strength early in the week focused on Janet Yellen’s comments about the economy, fueling doves that the Federal Reserve is not all that anxious to pop on interest rates come Wednesday’s meeting of the FOMC. The possibility of another hold on a rate hike sent the dollar higher and yields on Treasuries lower, as traders moved to more safe-haven fixed income instruments and gold. The precious metal traded higher by $34/oz. to $1,274, and closing in on a 52-week high. Gold mining stocks are also making new highs, including aggressive choice Newmont Mining Corp., which reached a new yearly peak of $36.82 on Friday; the second biggest gainer in the S&P 500 this year. A less-likely move by the Fed also sent interest-sensitive telecommunication and utility stocks higher and bank stocks lower. A rebound in oil prices from the prior week moved energy stocks to the upside by an average of 1.4%. Trading volume, however, remained low and exacerbated the restlessness.
This week we will get earnings from two blog candidates: Oracle Corp. on the conservative list reports its fourth quarter results, expected to come in at $0.82 per share vs. $0.78 last year and aggressive choice Jabil Circuit at $0.16 compared to $0.49/share in the third quarter of 2015. The choppy stock market pattern is likely to persist, as continued fears of slow growth around the world makes headlines. The two presumptive nominees for president are also striking fear into markets, as neither have favorable economic and tax platforms that will satisfy Wall Street. Nonetheless, there still does not appear to be viable investment alternatives for stocks right now, which will keep a floor on prices for the time being.
Here is the answer to last week’s trivia question: Humana is one of the country’s largest private health insurers. The company, created in 1974, was originally formed as a: Human resources provider; owner/operator of hospitals; pharmaceutical research firm; or medical supply distributor. Answer: Owner/Operator of hospitals. In 1993, Humana had become the largest hospital operator in the country owning 77 hospitals. Humana spun off its hospital operations from its health insurance business, to create Galen Health Care and subsequently sold Galen to Nashville-based Hospital Corporation of America. Currently, Humana is in negotiations to be acquired by rival Aetna.
Today’s Trivia Question: Last month, which two office supply companies called off their planned merger after a federal judge blocked the deal on antitrust concerns? Staples and Office Depot; W.B. Mason and Staples; Office Max and Office Depot; or Office Depot and Boise-Cascade.