It was a tug of war between trade jitters and earnings’ fundamentals, which ended in a draw at week’s end. Okay, the Dow Industrials was up nearly 39 points, but that’s only 0.15% and the S&P 500 and the Nasdaq indexes were virtually flat. Mid and small-cap stocks did a bit better with the Russell 2000 gaining 0.6% and the S&P SmallCap Index ahead by about 1%. Advancing stocks on the NYSE were about even with those that declined. Looking at equities on a sector-by-sector basis, financials made up for some lost ground climbing 1.4% on average, following better-than-expected earnings two weeks ago and industrial stocks made some headway with a one-half percent gain. But the green arrows just about ended there, as the averages were taken down by telecoms and energy, each giving back about 1.8%.
The Administration continued to hammer at China, threatening $500 billion in tariffs or just about all the imports we receive from the world’s second largest economy. The continued battle sent the Chinese yuan to a one-year low vs. the U.S. dollar. Earnings, so far, have been better than expected. To wit: Of the 75 companies in the S&P 500 that have reported earnings, 71 topped Street estimates. Such a strong showing may already be priced into the market, so guidance for the upcoming quarters, which have been mostly favorable so far, will be watched closely. With the economy likely to grow at a 4% annualized clip over the next two quarters, inflation fears can’t be ignored. Hence, the Federal Reserve will continue to keep up its interest rate hike agenda, despite President Trump’s comments of “not being happy about it”.
The case for the bulls (a growing economy and strong earnings) and the argument for the bears (rising interest rates and a possible trade war) would seem sufficiently offsetting to keep major market moves at bay in the short-term. So best stay with your long-term, diversified investment plan. Upcoming this week, we will have a slew of earnings reports from blog candidates, namely: 3M, Verizon, Kimberly-Clark, Gilead Sciences, UPS, Intel and concluding on Friday with Colgate-Palmolive.
Here is the answer to last week’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. Answer: Citrix primarily provides desktop products and software and was the pioneer in thin client-server technology.
Today’s Trivia Question: Investment management and ETF provider Invesco was spun off from? State Street Corp., The Bank of New York Mellon, McGraw Hill or Citizens & Southern National Bank.