The bulls’ grip on the equity market weakened a bit this past week, after a succession of all-time highs had been made fueled by rising earnings and talk of tax cuts. However, concerns about higher interest rates and questions about how fully the President’s economic and political plans will be adopted are leading to some selling pressure. Of note this past week, oil posted a 9.2% drop closing on Friday at $48.43/bbl., its lowest level since November and a negative omen for economic growth. On the plus side, non-farm payrolls rose by a better-than-expected 235,000 new jobs in February and the unemployment rate ticked down to 4.7%. The Federal Reserve is clearly taking note, as recent comments from Fed officials suggest the central bank will assume a tighter monetary stance in the months ahead, with perhaps as many as three interest rate hikes being implemented this year with the first predicted on Wednesday.
The Dow and the S&P500 moved lower by about 0.5% and the NASDAQ was virtually flat thanks to some bidding for technology stocks; the only sector to gain ground this week. Small cap stocks were particularly weak and energy fell nearly 3% with the slide in oil prices. Gold has given up ground the past few weeks, settling at $1,200/oz. and fixed income has also out of favor. Declining stocks the past week led advances by 3.5 times.
On Wednesday, we will get results from Oracle with a third quarter estimate at $0.62 per share vs. $0.64 last year as well as Jabil Circuit’s second period ($0.46 vs. $0.57). On the economic front, jobless claims, housing starts and February’s industrial production numbers will be released, along with the Fed policy meeting. The bank has been cautious for a long time, but economic indicators should spur it into action.
Here is the answer to last week’s trivia question: “CAR” is the ticker symbol for what company? Fiat-Chrysler, Avis Budget Group, AutoZone or Cooper Tire & Rubber. Answer: Avis Budget Group – traded on the NASDAQ.
Today’s Trivia Question: Which of the following S&P 500 companies is not headquartered in Atlanta? Coca-Cola, United Parcel Service, Home Depot or General Mills.