Thanks to a 191-point gain in the Dow Industrials on Friday, stocks eked out a weekly gain of about a half-of-one percent. The S&P 500 and the NASDAQ, which added over one percent, hit new all-time highs. A strong jobs report helped propel the averages, which have been in the doldrums the past few weeks. U.S. employment jumped in July with payrolls climbing by 255,000 new jobs – much better than expected – and May and June’s jobs reports were revised higher. The unemployment rate held at 4.9% as more people entered the workforce and average hourly earnings rose slightly. The Bank of England also added some impetus to equities as it cut its main interest rate for the first time in more than seven years and Japan moved to introduce a $274 billion government stimulus package.
For the week, sectors were split down the middle with technology, financial and industrial stocks moving higher while utilities, telecommunications and consumer staples were mostly in negative territory. Crude oil was trying to find some support at the $40/bbl. level and closed the week at $41.80. Oil and gas stocks were virtually unchanged on average. Gold gave up some of its recent gains closing Friday at $1,336.40/oz. lower by $12.60.
Earnings were fairly positive for the second quarter and there were no major negative guidance surprises. A number of retailers will be reporting results this week for their latest period and on Friday we will get a sense of July’s overall retail sales figure estimated higher by 0.4% and close to 1.0% if you exclude autos. The University of Michigan will release its preliminary August consumer sentiment findings and the Labor Department will report on producer prices. A lackluster growth in GDP makes it difficult to provide an argument for stocks and there are risks at these high market levels. But until the profit or interest rate outlook changes, the alternatives to equities still remain hard to find.
Here is the answer to last week’s trivia question: In October of last year, Google, Inc. changed its corporate name to? Google Internet Services Co., Chrome Group, Alphabet, Inc., or Mountain View Industries Corp. Answer: Alphabet, Inc. The company still trades on the NASDAQ under the ticker symbol GOOG, but created a holding company – Alphabet – that includes Google and a number of start-up ventures to include Jigsaw, Firebase, Nest and Google Ventures.
Today’s Trivia Question: In January, 2015 discount and variety store chain Dollar Tree, Inc. purchased which rival? Family Dollar Stores, Dollar General, 99 Cents Only Stores, or Big Lots!