This week’s top headline was the Trump administration’s announcement of additional tariffs on $200 billion in Chinese goods. The Dow dropped more than 200 points on Wednesday following the news, but climbed nearly 563 points, or 2.3%, for the week thus reclaiming its 25,000 level. The S&P 500 rose 1.5% to 2,801.31, its highest point in more than five months. The Nasdaq Composite gained 1.8%, to a record 7,825.98 as technology stocks took center stage with a 2.3% pop. Consumer discretionary names were also strong, but income-centric utilities and telecoms lagged the overall market. Oil prices gave up ground on tariff worries with West Texas oil falling nearly $3.00/bbl. for the week and international Brent crude negative by $2.00. Gold fell again thanks in part to a rising dollar for a 1.3% weekly drop at a new 2018 low to $1,239.60 per ounce.
Monetary policy will nudge its way back into the news as Fed Chair Jerome Powell returns on Tuesday to Capitol Hill for the testimony formerly known as Humphrey-Hawkins. The U.S. central bank’s semiannual Monetary Policy Report, released on Friday ahead of the testimony, held no surprises. Policy makers continue to expect a further gradual rise in its federal-funds target rate from 2018 through 2020. In confirmation of the report, the economy was on a roll as the second half began, with much of this strength apparent in the manufacturing and non-manufacturing areas. The gains shown by these broad industrial and consumer categories were especially noteworthy in new orders and production and job growth is at all-time highs. There will always be headwinds for equities, but on balance the investment picture remains bright.
It will be a busy week for earnings with blog candidates CSX, Johnson & Johnson, ABB, Danaher and oil service giant Shlumberger all to report this week. My sense is that we will remain in a range-bound market for a while longer, with traders generally able to shrug off the trade war fears, but still likely to be vulnerable to headline news and rumors that will move equity prices wildly and sometimes irrationally.
Here is the answer to last week’s trivia question: The ice cream shop business of Berkshire Hathaway is? Ben & Jerry’s, Carvel, Baskin-Robbins or Dairy Queen. Answer: Founded in Joliet, Illinois in 1940, Dairy Queen was acquired by Berkshire Hathaway in 1998.
Today’s Trivia Question: Founded in 1989, Ft. Lauderdale-based Citrix Systems, Inc. does what? Manufactures integrated circuits, provides desktop products and software, makes semiconductor manufacturing equipment or manufactures electronic products for OEMs.