Triple-digit swings in the Dow are becoming more-and-more commonplace than what we had seen last year. Intraday moves of 300-400 points are rattling traders struggling to hang their hats on any news out of Washington: Tariffs and potential trade wars, mid-east tensions, White House turnover, Congressional chaos and President Trump tweets, to name a few. True, the volatility index – or VIX – has ebbed somewhat, but investors are still stressed. The Dow Industrials managed to gain 1.8% for the week, however, with large point gains on Tuesday and Thursday offsetting losses on Wednesday and Friday. The S&P 500 was higher by nearly 2% and the hard-hit NASDAQ rose about 3%, thanks to a nice comeback in technology. Interest-sensitive utilities and telecom stocks were this week’s laggards with declines of 1.2% and 0.26%, respectively. Crude oil settled at $67.39/bbl. on Friday, its highest level since 2014, with a weekly gain of $5.33, sending energy stocks higher by 6%.
Minutes from the Federal Reserve suggest further growth ahead for the economy along with inflation and, hence, interest rate hikes. The growth, however, appears to be uneven with two steps forward and one step backward. Decent job growth in January and February were followed by a very weak March figure. After a sluggish first quarter (in which GDP likely grew by less than 2%), ongoing high levels of activity in manufacturing and services, and persistent gains in personal income should help lift GDP growth up to 3%, or so, in the seasonally strong current period. Thereafter, even assuming choppiness in several economic categories, such as housing, GDP growth should still hold near 3% in the second half.
First quarter earnings may help ease some of the recent pain, but expectations are mostly baked into prices at current levels. A better-than-expected report from JPMorgan Chase, for example, saw the stock decline 3% during Friday’s trading. This week we will get a slew of 2018 tax-cut adjusted results, including: Johnson & Johnson, which will report on Tuesday with first quarter per share estimates of $2.01 vs. $1.83 a year ago and CSX ($0.66 compared to $0.51); then Danaher ($0.94 vs. $0.85); ABB ($0.31 vs. $.28); and Schlumberger ($0.37 vs. $0.25), later in the week. Things certainly are unsettled. So, although readers should stay the course, they need to keep a watchful eye out for developments that could cause a shift in market sentiment.
Here is the answer to last week’s trivia question: The tagline “Building America” belongs to which American company? Construction equipment manufacturer Caterpillar; engineering service provider Granite Construction; home builder Toll Brothers; or rail company Union Pacific. Answer: Western rail Union Pacific Corp.
Today’s Trivia Question: Fremont, California’s Electronics for Imaging, Inc. is primarily engaged in the manufacturing of? Office copying machines, industrial printing solutions, 3-D printing equipment or digital photography products.