Equities were little changed this week on light volume despite some choppiness. With earnings season all but in the rear view mirror, traders are again focusing on the Federal Reserve and placing odds on a September rate hike. Just the mere mention that one is possible sends equities in an immediate tailspin. Release of the minutes from the FOMC’s July meeting on Wednesday indicated that the central bank is upbeat on the economy, but uncertain about rates. Fed bankers are torn – almost fifty-fifty – whether the economy can withstand a 0.25% increase citing global issues as the major headwind.
Market sectors were split fairly even with energy stocks moving higher by about 2% along with some interest in basic materials. With the threat of a possible rate move, the usual culprits – utilities and telecommunication stocks – headed lower by 1.25% and 3.75%, respectively. Shares of oil and gas companies were strong on the uptick in crude prices that were hovering around $40/bbl. a few weeks ago and closed on Friday at $48.52.
In some surprise earnings news, Deere & Co., in the conservative portfolio, rose 13.5% or $10.32 for the week and aggressive choice Foot Locker moved higher by $7.35 per share or 12%. Applied Materials also showed strength closing higher by 9% this week to a multi-year high of $29.64; a level not seen since the dot.com bubble of 2000. Although valuations are getting stretched its hard to fight the tape, as they say. So equities are likely to hold their own for a while longer.
Here is the answer to last week’s trivia question: By most measures, which company is considered to be the largest grocery retailer? Publix, Safeway, Kroger or Wal-Mart. Answer: According to the U.S. Department of Agriculture, Wal-Mart is the largest seller of grocery items in the US. Wal-Mart gets about 55% of its total sales from grocery items or about $270 billion per year. Pure-play Kroger’s top line is approximately $116 billion.
Today’s Trivia Question: Alternative investments of various strategies using a pool of funds from sophisticated investors is known as a? Closed End Fund, Hedge Fund, Exchange Traded Fund or Fund-of-Funds.