Not even a 186.55-point rally in the Dow Industrials on Friday could move the needle for the week into positive territory. The Dow settled for a net loss of 22 points, while the S&P 500 and NASDAQ managed only fractional gains. Likewise, market sectors were also divided, with half losing ground and half in the plus column. Health care stocks were the clear winners with a nearly 2.5% upside on average, offsetting telecommunication providers that shed about 2%.
U.S. employers added 227,000 new jobs in January, the largest gain in four months, but the unemployment rate ticked up to 4.8%, as more Americans looked for work. The encouraging figure topped the estimates of 175,00 by a wide margin. Revisions from previous months, however, subtracted 39,000 from the 2016 total, with November cut from 204,000 to 164,000 and December edging higher from 156,000 to 157,000. The Federal Reserve stood pat leaving interest rates unchanged this week and reiterated that it is on track to gradually raise short-term rates this year, citing improvements in business and consumer sentiment.
The backdrop for equities is still positive, as it often is when stocks are in an extended uptrend. However, price-earnings ratios also are rising, as are bond yields, with the latter again threatening to become competition for equities. Traders are still placing bets on the new administration’s economic initiatives and tax reforms, keeping many on edge. Earnings’ season is tapering off, but this week we will hear from health care providers Gilead Sciences, Cerner Corp. and CVS Health, with drug pricing and the evolution of the Affordable Care Act still in question. Thus, while long-term positions can be maintained, care is needed in one’s investment approach in the short-run. In the meantime, enjoy today’s game.
Here is the answer to last week’s trivia question: The Dow Jones Industrial Average closed above 20,000 for the first time on January 25, 2017. It reached the milestone 10,000 level on March 29 of what year? 1989, 1992, 1999 or 2008. Answer, March 29, 1999.
Today’s Trivia Question: Super Bowl commercials can fetch upwards of $5 million for a thirty-second spot. Which company over the years has aired the most Super Bowl commercials? PepsiCo., Anheuser-Busch InBev, Walt Disney Co., or Pizza Hut.