The wild ride on Wall Street continues. Including last Friday, stocks have risen six straight days and for the week, the Dow gained over 1,028 points or 4.3%, recovering nearly half of the prior two-week correction. The S&P matched the Dow and the NASDAQ – heavily weighted in technology – was higher by 5.3%. Advances on the NYSE was 7 times those stocks declining for the week and volume ebbed. Following tech, industrials, consumer services and financials were also strong, as all market sectors were positive. Gold strengthened by $40/oz. and crude oil recovered by 4% to settle above $61/bbl.
Where equities head from here is still in doubt as a strong economy will wrestle with inflation and higher interest rates. On point, when the Consumer Price Index was released on Wednesday, the unexpected gain of 0.5% vs. the 0.3% forecast, sent the Dow futures tumbling from strongly positive to decidedly negative by a swing of nearly 200 points in a few minutes. Technically, we may re-test the lows of the year before bouncing back, but – again – timing the market is a dangerous game. To be certain, however, volatility will return and triple-digit swings in the Dow Industrials are more likely than not.
Yes, stocks took a body blow earlier this month, demonstrating their vulnerability with stretched valuations. Hence, some retracement of the past fifteen months was inevitable and arguably needed. Meanwhile, as sentiment is now shakier and headwinds from rate hikes loom, greater care in equity selection appears warranted. Also, re-assessing a balance between stocks and fixed income is prudent, depending on one’s tolerance for risk and long-term investment goals.
Markets will be closed on Monday in observance of Presidents Day. Enjoy the holiday.
Here is the answer to last week’s trivia question: United Parcel Service was formed in Seattle in 1907 as American Messenger Co. The now Atlanta-based package delivery provider made its initial public offering on November 10th of what year? 1909, 1937, 1953 or 1999. Answer: Since its founding, the shares were family held and not offered to the public until 1999.
Today’s Trivia Question: Over the past year, inflation has averaged 2.1%, led by the energy sector at 9% and vehicle insurance of 8.5%. The laggard of negative 5.1% was attributed to? Healthcare, airline fares, food or consumer staples.