Weekly Update

Week in Review

Going back to last Thursday, the Dow Industrial Average has had a seven-day winning streak. Since the last Week in Review posting, equities have climbed about 2.5 percent, led by energy stocks, gaining some 3.7%, as oil continues to climb to new levels. Technology and industrials were not far behind with a strong showing from transportation stocks. Consumer staples remained a laggard, but managed to close the week in positive territory, leaving only utilities in the red. From a technical prospective, the S&P 500 broke through an important resistance level of 2,700 on Thursday, heading toward its next resistance of 2,783, set back in March. 

       The economy? The early second quarter has seen further growth in manufacturing, services and employment, with the jobs picture being especially encouraging. By comparison, some past upturns have been knocked to the canvas by overheating growth and escalating inflation. This time, with GDP advancing by just 2.0%-2.5% for much of the up cycle, and with inflation only now nearing the Federal Reserve’s 2% target, there is little to suggest the upturn will not continue. True, there are always some headwinds. With inflation nudging higher, additional interest rate increases are likely, with several hikes possible this year and next and one or two more in 2020, as the Fed returns to a more normal rate structure. Other issues are in play for investors, too: Trade disputes with China, testy relationships with North Korea and especially Iran and a further surge in oil prices. 

       Earning’s season has been kind to investors for the most part and guidance from some of the bellwether names have been positive, albeit conservative. This week a few more companies of note will be reporting including aggressive candidate Applied Materials with expectations of $1.14 per share compared to last year’s second quarter of $0.79. And Deere & Co. reports on Friday, with Street estimates of $3.31 for the second period vs. $2.49.

Here is the answer to last week’s trivia question: Behr Process Corp. (better known as BEHR Paints) is owned by? The Behr Family, Home Depot, Masco Corp. or Bain Capital. Answer: Though exclusively sold by Home Depot, Behr is owned by home improvement products company Masco Corp. 

Today’s Trivia Question; The price of West Texas crude oil settled on Friday at a multi-year high of $70.70/bbl. The recovery of oil has been slow and steady of late since a February 12, 2016 low of? $28.01, $29.44, $32.16 or $34.50.

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