Stocks had a good week despite the devastation affecting the Gulf Coast. The tragedy in the Houston area may have taken headlines away from North Korea and Washington, but the issues there remain. Growth in second quarter GDP was revised up to 3% from 2.6%, but non-farm payrolls rose a less-than-expected 156,000 jobs in August and the unemployment rate ticked up to 4.4%. New home sales dropped 9.4% in July, while sales of previously owned dwellings dipped 1.3%. However, little of this shortfall reflected a lack of buying interest. Rather, the declines resulted from dwindling inventories of unsold homes, with residences staying on the market for shorter periods of time, even as prices continued to climb. Elsewhere, consumer confidence remains strong while durable goods orders fell in July following a strong June showing.
Heading into the holiday-shortened week, equities moved higher over the past five trading sessions with the Dow Industrials ahead by 0.8% and the S&P 500 by 1.4%. However, the NASDAQ was the star of the week hitting a record high and advancing 2.7% taking the S&P mid-cap and Russell 2000 along for the ride. Crude oil was steady, but gasoline prices soared on refinery outages caused by the flooding in Texas. Healthcare stocks shined as did technology, popping 3.2% and 2.5%, respectively. Virtually all other sectors were in positive territory as well, except for income-centric utilities and telecommunication stocks.
The bulls are trying to hold it together, and they are largely succeeding, as the averages remain near or at all-time highs. True we have suffered a few brief reversals along the way due to political headwinds and stepped-up threats from North Korea, but the resiliency remains intact for now. Although we probably are in the latter stages of the bull market with a strong chance for a 3%-5% correction, there are still few attractive alternatives to stocks in this low interest-rate environment.
Here is the answer to last week’s trivia question: Radarange, the first commercial microwave oven discovered in 1947 and sold to consumers by Amana beginning in 1967, was invented by Amana’s then parent company? Litton Industries, General Electric, Panasonic or Raytheon. Answer: Raytheon. Amana is now a division of Whirlpool Corp.
Today’s Trivia Question: Naming rights for major league baseball stadiums is a multi-billion-dollar business. What industry group has the largest number of named ball parks? Insurance, Banks, Food & Beverage or Retail.