Thanks, in part, to the recent chaos in Washington, equities are having a hard time finding their footing. In all, stocks took a well-needed breather this week and retreated about 1.5%. Smaller cap stocks were hardest hit with a nearly 3% tumble. Except for safe-haven utilities, up 1%, and gold, tacking on $18/oz., all market sectors were down for the week. With the failure in Congress to repeal the Affordable Care Act, Wall Street took an ax to financials as questions surfaced on how soon and to what degree President Trump’s deregulation and tax initiatives will bear fruit. The group was down about 3%. Infrastructure plays such as Martin-Marietta and Vulcan Materials were in the red big time, as well.
Transportation stocks also slumped, reflecting worries that economic growth will not accelerate as much as hoped and were negative on average by 2.5%. The railroad, trucking and airline groups have all declined since early March despite posting mostly solid fourth quarter results. The retreat in oil prices are also a negative. Small-company stocks, seen as especially sensitive to the outlook for tax reform and U.S. economic growth, have dropped nearly 5% since March 1 and are now down year-to-date.
Not surprisingly, market volatility is on the rise with the equity indexes experiencing recent wide swings, as sentiment gyrates in large part on the ebb and flow of news out of Washington. Stocks don’t advance in straight lines, and pullbacks are part of all bull markets. While the slump in the economically sensitive Dow Transports is discouraging on a near term basis, a wholesale retreat out of stocks seems premature. With the end of the first quarter in sight, earnings season will begin in a few weeks and the focus will turn to corporate results and management’s guidance for the remainder of the year.
Here is the answer to last week’s trivia question: Russian energy giant Lukoil trades on the Moscow Exchange as its primary market place. In the U.S., shares can be purchased on the? New York Stock Exchange, Over-the-Counter Marketplace, NYSE MKT or NASDAQ. Answer: The Over-the-Counter Marketplace under the symbol LUKOY.
Today’s Trivia Question: The iconic board game “Monopoly” was first introduced in the mid-1930’s by Parker Brothers. Today, the game is owned by? Mattel, Fisher-Price, Selchow & Righter or Hasbro.