Stocks continued to push higher into record territory this week, with major averages up about 1%. Those in the know, believe that positive earnings are driving equities higher. With few exceptions, the earnings season so far has been positive and companies are providing guidance that is, at least, in line with expectations.
While crude prices remained virtually unchanged, they appear to be leveling off at $54.00/bbl. However, energy stocks were the only drag on markets this past week, surrendering 0.7%. All other sectors were positive, led by consumer stocks, industrials and technology. Gold prices spiked $16/oz. to $1,234.40 as the inflation gauge ticked higher. And while job growth is trending up, wage growth is not. Therefore, it is unlikely that the Federal Reserve will change course anytime soon. Things are less settled overseas, where a more confrontational approach is being taken by Washington on trade, immigration and military matters. For now, global markets are taking it all in stride.
This week we will get fiscal first quarter earnings from Applied Materials with consensus of $.66 per share vs. $.26 a year ago, and from Deere & Co. ($0.58 compared to $0.80). The bulls are still in charge, as good news on the economic and earnings fronts, the potential for lower taxes and reduced regulation remain popular on Wall Street. The good news, however, would seem to be adequately reflected in the generous price-earnings multiples now in place, suggesting that while stocks could still go higher, the possibility of a retracement cannot be ruled out.
Here is the answer to last week’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. Answer: Anheuser-Busch InBev (Budweiser and Bud Light brands combined for 36 commercials).
Today’s Trivia Question: 2014 marked the record high for initial public offerings (IPOs) for a total of 383. How many IPOs came to market in 2016? 128, 187, 209 or 266.