Even a 119-point gain in the Dow Industrials on Friday couldn’t shake an otherwise down week for the average. The end-of-week advance did end an eight-day losing streak for the Dow, but it lost 2% or 510 points. The S&P 500 gave back 0.9% and the Nasdaq Composite Index fell 0.7%. No question as to the cause for weakness in equities: Tariffs. The escalation of trade wars continues with the President declaring another $200 billion in tariffs on Chinese imports on top of the previously announced $50 billion. And European autos are now also on the President’s watch list.
It was hard to find a place to hide this past week, although safe-haven domestic utilities saw a bounce, rising 2.5% as a group. Energy shares jumped nearly 2% on news that OPEC and some other major producing countries would be boosting output less than initially feared. The “OPEC-Plus” group that includes Russia has tentatively agreed to raise pumping volume by around 600,000 barrels a day, while the earlier thinking had been that a one million-barrel-day increase might be the case. OPEC and its cohorts had suspended daily production of 1.8 million barrels in 2016 to cut swollen global stockpiles of oil, and that mission has been accomplished. Domestic crude climbed $3.50/bbl. for the week. All other market sectors, however, were in the red with tariff-nervous multi-national industrials and basic materials taking the brunt of this week’s loses.
In other news, the 111 year-streak for General Electric’s presence in the Dow Jones Industrial Average has come to an end. One of the original companies in the average at a recent price of $13 per share, GE’s fading prospects became irrelevant for the administrators of the Dow to maintain the company in the group of 30. The stock will be replaced with health care candidate Walgreens-Boots Alliance effective June 26.
Investors are still buying in spurts as conditions warrant, even as they remain wary, preferring to believe the economy’s underlying strength will be enough to withstand the offshore headwinds and a slightly more hawkish stance of the Federal Reserve. It may be a delicate balancing act for investors going forward, suggesting that any future market gains will be hard to come by.
Here is the answer to last week’s trivia question: Jim Beam bourbon whiskey has been around since 1795. The brand is owned by? Diageo, Brown-Forman, Constellation Brands or Suntory Holdings. Answer: Since January 2014, the Jim Beam brand has been owned by Japan’s Suntory Holdings.
Today’s Trivia Question: As companies have market value (share price times the number of outstanding shares), so do company brands. At an estimated $182.8 billion, which company has the most valuable brand? Apple, Walt Disney, Coca-Cola or Amazon.