On the heels of strong economic data, equities were mostly higher for the week. The Dow Industrials, the S&P 500 and the Nasdaq Composite were all up about one percent, shrugging off additional tariff woes. The Dow Jones Transportation Average rose nearly 2%, an encouraging sign. Except for a small negative showing by banks and other financial stocks, all market sectors were in the green, outpaced by telecoms with a 3.5% pop. Helping the Dow this week were shares of Microsoft and United Technologies, with respective gains of 5% and 4%, which were offset by weakness in chemical giant DowDuPont and industrial bellwether 3M Co. Crude oil gained $1.24/bbl. to settle at $68.99.
The August consumer price index rose a mere 0.1%, below consensus estimates as annualized core inflation (ex volatile food and energy prices) moved to 2.2% from a year ago. Trade talks with our neighbors to the north remains elusive, so no NAFTA deal yet to send to Congress. And the President continues to put pressure on China with an additional $267 billion worth of tariffs on top of the $200 billion currently on the table. The mid-afternoon announcement on Friday sent the Dow lower by 127 points in a matter of minutes; only able to recover slightly by day’s end. Emerging market tensions eased somewhat but are far from over in some parts of the world. Turkey’s central bank defied president Erdoğan government and raised interest rates.
This week we will get a host of housing reports as to the state of new and existing home sales. And the Conference Board will release its Leading Economic Index for August on Thursday, with an estimated 0.5% increase from July – indicating continued economic growth. The bulls continue to tough it out, with the major indexes remaining near their all-time highs. Decent economic and profit trends and a sense that the Federal Reserve will proceed cautiously on monetary policy are helping to support equities. Hence, the bull market continues to move ahead despite higher valuations reflecting years of heavy buying. But it’s hard to bet against the tape, as the old Wall Street adage goes, so if the fundamentals stay positive, the bears should be kept at bay.
Here is the answer to last week’s trivia question: Which company built 1,172 commuter cars for New York’s Metropolitan Transportation Authority’s two commuter railroads – the Long Island Rail Road and Metro-North Railroad? Siemens AG, American Railcar Industries, Bombardier, Inc. or The Greenbrier Cos. Answer: Quebec-based Bombardier, Inc.
Today’s Trivia Question: During the financial crisis of 2008, JPMorgan Chase bailed out investment banker Bear Stearns. What commercial bank did Chase also save? The Bank of New York, Great Western Financial, First Federal Bank of California or Washington Mutual Bank.