While this past holiday-shortened week ended on a positive note, it was a rough first quarter for stocks. After a strong start to January, the S&P 500 has surrendered 1.2% for the three months ended March 29. The Dow was negative by nearly 2.5%, while the NASDAQ was able to show a 2.3% gain, despite a rough past few weeks. Sector rotation has taken its toll on technology stocks of late, especially the so-called FANG stocks: Facebook, Amazon, Netflix and Google (Alphabet). Add to that, high-flying Tesla has shed nearly 47% since its September high, as investors are less willing to pay up for perceived growth. Industries that were targeted as laggards this year have gained some traction this past week, including some consumer staple names.
For the week, the Dow Industrials posted a 2.4% gain, the S&P 500 Index moved higher by 2%, while the tech-heavy NASDAQ managed only a 1% advance. All market sectors were in the green, led by the safe-haven consumer, utility and telecommunication stocks. Economic news, with some exceptions, is net positive. Existing home sales and durable goods orders are being offset to some degree by slower new home figures and a reduction in consumer confidence. Looking ahead, larger tax-relief paychecks should translate into some buying by consumers for homes and consumer discretionary products. Corporate earning’s gains for the second half are predicted to be positive, but market sentiment may be tempered by more interest rate hikes, inflation fears and trade concerns.
In all, the bull market looks weary and will likely climb at a slower rate that what we have been used to over the past few years with increased volatility. Nonetheless, holdings in high-quality names with strong and growing dividend payouts makes sense.
Here is the answer to last week’s trivia question: Chunky candy bar, originated in New York City in the late 1930’s, is now a product of? The Hershey Co., Tootsie Roll Industries, Mars, Inc. or Nestlé, SA. Answer: Swiss-based food giant Nestlé acquired the brand in 1984.
Today’s Trivia Question: The current Chair of the Federal Reserve Bank is Jerome Powell. The Chair was held from August 11, 1987 to January 31, 2006 by? Ben Bernanke, Alan Greenspan, Paul Volker or Arthur F. Burns.