Thanks in part to huge gains in Caterpillar and Boeing, the Dow Industrials recorded a new high this week, up over 250 points or nearly 1.2%. Some of the so-called FANG stocks, like Amazon.com and Alphabet (Google), didn’t fare as well and the NASDAQ was slightly negative. Tech stocks in general were among the weakest of the sectors along with healthcare. The S&P 500 was flat on the week. A sudden rise in oil prices helped the energy sector. Crude futures were up nearly $4.00/bbl. to close near the $50 mark as Saudi Arabia cut production and OPEC said it would crack down on countries not living up to their planned reductions. The largest gains came from telecommunications with a 6.5% positive showing, but the other sectors were mostly mixed.
The Fed kept interest rates in check, but confirmed that it expects to scale back its balance sheet “relatively soon” by selling a small portion of its holdings of Treasury bonds. The interest rate vote was largely due to muted Inflation as well as the latest GDP number for the second quarter that rose just 2.6%, less than the consensus forecast. While there have been some positives in the economy (housing starts, employment and consumer confidence), unevenness in retail and modest improvements elsewhere are still present.
Pundits are on the fence with every record high signaling a correction, while others see any downturn as a buying opportunity. The volatility index – or VIX – hit a record low during the week at 8.8, which could signal a selloff in the short run. Clearly, the bulls still hold the better hand right now. Looking ahead, however, their grip might not be quite as firm as it was earlier in the year. That’s when equity prices were lower and the path to health care revision, further deregulation, tax reform and infrastructure revitalization all seemed better defined. Conclusion: The market outlook is still positive, overall, as the economic and profit variables affecting equity prices remain largely supportive.
Here is the answer to last week’s trivia question: As of June 30, 2017, which company lead the pack in terms of market capitalization (shares outstanding times price per share)? Apple, Alphabet (Google), Amazon.com or Microsoft. Answer: Apple. Alphabet comes in second, followed by Microsoft and Amazon.com.
Today’s Trivia Question: Ford Motor Co. was founded by Henry Ford in 1903. In what year did the company become publicly held? 1905, 1919, 1931 or 1956.