It has been a tumultuous couple of weeks with devastating hurricanes in Texas and Florida, North Korean missile firings and ongoing wrangling in Washington over the nation’s debt ceiling. Nonetheless, stocks have held their own for the most part with only a few minor one-day setbacks. The resilience is indeed encouraging. The economy is still giving mixed signals, however, and I am hard-pressed to find any solid trends to justify the market’s strength . . . but there it is. Employment growth has been uneven, the auto industry is in a slump and housing starts have been waning. Conversely, consumer confidence remains upbeat, manufacturing has reached its highest level in six years, non-manufacturing activity continues to gain ground in most categories and GDP growth has been decent. So the big question remains: What will the Federal Reserve do about interest rates and how will equities react?
For the week, the market gave back some of its momentum as traders remain on the sidelines moving more into cash and fixed income. And safe-haven gold is at twelve month high, closing the week at $1,346/oz. The Dow Industrials ended the week on a down note with a weekly loss of nearly 1% and the S&P 500 by 0.6%. The NASDAQ was negative by 1.2% as technology stocks bid lower. Health care, energy and utilities were the only sectors in positive territory, but telecoms tumbled nearly 4.5%. Market internals were also bearish with twice as many NYSE stocks declining vs. the prior week.
Investor sentiment continues to waffle between a relatively resilient economy, solid earnings, a supportive Fed keeping sentiment strong and high valuations. Now, lawmakers must secure agreement on some politically charged economic issues, including tax reform, while also having to deal with increasing geopolitical tensions. So, market volatility will understandably move up. On Thursday, we will hear from Oracle Corp. to see how well they performed in their first fiscal quarter with estimates of $0.60 per share compared to last year’s $0.55.
In the meantime, keep up your thoughts and prayers for those effected by the recent hurricanes.
Here is the answer to last week’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. Answer: Banks with seven named stadiums, followed by Food and Beverage (5), Insurance (4) and Retail (2). Communication companies also have two named fields. The remaining stadiums are not under contract with a sponsor.
Today’s Trivia Question: The first Exchange Traded Fund in the U.S. was the S&P 500 Depository Receipt or SPDR. It was originally released on January 1 of what year? 1984, 1987, 1993 or 2000.