Investors were in a good mood this week, especially after Fed Chair Janet Yellen provided an upbeat outlook for the economy and reiterated that rate hikes would most likely be gradual, citing slow inflation and moderate growth. All three major averages posted record highs with the Dow Jones Industrials ahead 1%, the S&P 500 gaining 1.4% and the NASDAQ with a 2.6% advance. Except for telecoms, all sectors had up arrows led by technology scoring a nearly 4% gain for the week. Tech was followed by basic materials and energy related stocks, both up around 2.5%. Oil futures moved forward by $2.31 to close at $46.54/bbl. Financial stocks lagged, despite good earnings reports from the major banks including blog candidate JPMorgan Chase, but the dovish comments from Yellen ruling out aggressively higher interest rates cut into the enthusiasm.
Economic news has been anything but consistent. Good manufacturing and job growth has been offset by sluggish GDP numbers and the consensus forecast, which stands at 2.5% for the remainder of the year. Second quarter earnings will be telling over the next few weeks as reports will pour in with high expectations and positive first period surprises. To wit . . .
…. this week we will hear from Johnson & Johnson, east-coast rail carrier CSX, Danaher, oil service provider Schlumberger and Colgate-Palmolive; all of which are expected to surpass last year’s second quarter results. Earnings will need to be strong enough to support the already high valuations built into many stocks, however. Holding on to positions in one’s portfolio of quality stocks with strong fundamentals and growing dividends remains a worthwhile investment strategy for now.
Here is the answer to last week’s trivia question: This 1902 building was the original headquarters for which company? Coca-Cola, Pfizer, General Mills or 3M. Answer: 3M. Now the 3M/Dwan Museum in Two Harbors, MN where Minnesota Mining and Manufacturing Co. began.
Today’s Trivia Question: California’s Knotts Berry Farm amusement park destination is owned by? Walt Disney, Six Flags, Cedar Fair Entertainment or Comcast/Universal Parks.