Despite continued record highs, markets were little changed for the week. Traders continued to rotate out of utilities and other income-centric choices and moved further into technology and consumer discretionary stocks. As oil moved higher for the week by about 6% or $2.60/bbl., so did energy stocks enjoying a 1.25% gain on average. In all the Dow Industrials were ahead by a mere 0.2% and the S&P 500 was virtually flat while the NASDAQ was able to edge up about 0.25% to an all-time high.
Retail and retail stocks were in the headlines with overall retail sales for July unchanged from a revised higher June figure, but less than anticipated. From a year ago, however, the Commerce Department has retail sales up 2.3%. Macy’s announced that it is closing about 100 more stores or about 15% of its total outlets as it restless with buyers moving more-and-more to Internet purchases. Wal-Mart reached a deal to buy Jet.com to further capitalize on e-commerce and fend off the likes of Amazon.com. J.C. Penny narrowed its loss and Kohl’s beat Street estimates as “back-to-school” shopping hits its peak. A lot more retails will be reporting this week as well, including bellwethers’ Home Depot, TJX and Wall-Mart.
Traders will scrutinize details of the Fed’s July meeting on Wednesday, but I sense the central bank will continue going slowly on the monetary front. Although encouraging job growth will, in time, encourage a tighter monetary stance, an uncertain international outlook and the absence of serious pricing and inflation pressures suggest that such a shift is not imminent. We will also get results from a few blog candidates this week. Applied Materials will report third quarter earnings on Thursday with expectations of $0.48 per share vs. $0.33 last year. On Friday Deere & Co. reports its 3rd quarter results ($0.94 vs. $1.53), with guidance in the spotlight. And athletic apparel retailer Foot Locker will let us know how they did in the second period with estimates of $0.90 as compared to $0.84.
As with the historic temperature highs this week in the Northeast, valuations will also eventually return to more normal levels. In the meantime, stay cool.
Here is the answer to last week’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! Answer: Family Dollar Stores was purchased by Dollar Tree in an $8.5 billion deal.
Today’s Trivia Question: By most measures, which company is considered to be the largest grocery retailer? Publix, Safeway, Kroger or Wal-Mart.