It was another volatile week on Wall Street with triple digit swings in the Dow Industrials for four or the five trading days. It was all about the Fed. Officials of the central bank were all over the place on a rate move for September and the outlook for the remainder of the year. The FOMC will be meeting this week to decide if the economy can withstand a 0.25% short-term interest hike. Most observers are betting that the committee will pass based on tepid economic news that were released last week. August retail sales and industrial production were far from robust. While the unemployment rate appears to have met Fed targets, the slow rate of job growth, sluggish hourly wage increases and a static labor participation rate all point to only modest economic growth.
For the week, the Dow Industrials managed a modest 0.2% gain and the S&P 500 index was able to show a 0.5% rise. The NASDAQ, however, was higher by 2.3% as technology stocks were in vogue. Apple rose four out of the five sessions gaining 9% as sales of the new iPhone 7 got off to an unexpectedly strong start. Income candidate Intel was also a winner jumping to a new 52-week high, gaining 6.3% on the week on a revised revenue outlook. In all, technology related shares moved higher by over 3%. Crude oil was a major negative closing at $43.03/bbl. from last week’s $45.88. Hence, energy was the weakest market sector with a 3% plunge along with basic material stocks and financials, which will likely endure low interest rates a while longer. Utilities reversed their downward course over the past several weeks with the prospect less likely for a September rate hike and moved higher by about 2.2%.
On Wednesday the Fed will meet and it is unlikely – but not out of the question – that a rate hike will be approved. The after-meeting news conference will provide some insight into the bank’s thinking and what the outlook may be for December. On the earnings front, Jabil Circuit will report fiscal fourth quarter results with earnings per share of about $0.25 vs. $0.53 a year ago. The initial success of the Apple iPhone may provide some support, however.
Here is the answer to last week’s trivia question: Domino Foods, Inc. has a long history in the sugar business dating back to 1891. The company was originally named? Dominico Sugar, Ltd., Great Atlantic and Pacific Sugar Co., The American Sugar and Refining Co., Sugar Cane Growers Cooperative. Answer: The American Sugar and Refining Co. and was one of the original members of the Dow Jones Industrial Average.
Today’s Trivia Question: In what year was the U.S. Federal Reserve Banking System established? 1875, 1893, 1913 or 1933.