As we start the New Year, markets continue to set records as consumer and business confidence remain strong. The Dow Jones Industrial Average started the first week of trading with a gain of 2.3% and the S&P 500 moved higher by 2.6%. With a strong technology sector, the NASDAQ scored a nearly 3.4% advance. Following tech, basic materials, energy and health care stocks were also strong on the week. Income-centric utilities and telecom, however, were negative by 2.4% and 1.3%, respectively. Gold continues to shine with another $14/oz. gain to $1,320. And it seems that the worst is finally over for oil with West Texas crude settling above $61/bbl.
The upturn’s foundation looks increasingly sound, with key industrial and consumer markets showing little sign of tiring. In fact, the recently enacted tax law changes appear to be giving the economy a psychological boost, which is being furthered by announcements that many companies will use some of their added income to increase capital expenditures, step up share buybacks and raise employee pay. In economic news, we have seen strength in a range of housing categories, holiday sales (both in-store and online) and manufacturing, which specifically has been lifted by gains in new orders, industrial production, exports and pricing.
This week we will see the start of the fourth quarter earnings season with aggressive choice Delta Air Lines releasing results on Wednesday with expectations of $0.92 per share vs. $0.82. JPMorgan Chase will report later in the week along with a host of other big banks. JPM is estimated to have earned $1.68/share in the final period compared to last year’s adjusted $1.58. Careful accumulation of quality stocks with decent and growing dividend streams is a good way to proceed in this pricey – but not without opportunities – market.
Here is the answer to last week’s trivia question: As mentioned (last week), the S&P 500 was up 19.4% this year (2017). It had its worst year in 2008 as a result of the financial crises. That year the S&P fell? 19.4%, 27.8%, 38.5% or 42.7%. Answer: 38.5%
Today’s Trivia Question: Radio Corporation of America was founded in 1919. Its iconic RCA brand of electronics and appliances is owned by which company? General Electric, Cerberus Capital Management, Whirlpool Corp. or Technicolor SA.