The stock market is trying to inch back from the historic losses in December. The Dow and the S&P 500 were able to tack on about 2.5% this past week with positive showings in all market sectors. The Dow Transportation Average gained 4.3%, sending the industrial sector to outperform. Oil & Gas stocks were up 3.6% as crude oil settled at $51.59/bbl. or 7.5% above last week’s close. A strong tech rebound moved the Nasdaq Composite higher by 3.5% and up by over 10% since the start of the year; the largest three-week gain since 2011. In all, the (so far) recent upward trend in January may be a harbinger for a better 2019. However, all price movements were not without volatility, which is becoming more commonplace.
The same reasons for the year-end collapse were viewed more positively by traders: Trade talks, monetary policy and Washington wrangling. Signs from three days of U.S.-China trade talks in Beijing suggested both sides were moving closer to a resolution on tariffs and intellectual property. Fed Chairman Powell is also sounding more dovish these days and, although the government shutdown continues, investors are hoping for a compromise there, too.
Caution in stock and sector selection is still the best bet for now. Investors should continue to focus on names with attractive valuations and are in a favorable position to capitalize on any economic growth we may see – both here and abroad – this year. And don’t discount healthy and growing dividend payouts, which should continue to rise along with profits and free cash flow. Earning’s season will start in full force this week as we will hear from the likes of JPMorgan Chase, Delta Air, east-coast railroad CSX and oil service provider Schlumberger.
Here is the answer to last week’s trivia question: How much is car-riding service company Uber likely to be worth following an initial public offering this year? $120 million, $1.2 billion, $12.0 billion or $120 billion. Answer: $120 billion.
Today’s Trivia Question: John D. Rockefeller’s giant Standard Oil cartel, which was broken up by a U.S. Supreme Court ruling in 1911, included several regional divisions. The Standard Oil Co. of New York was later named? Esso, Mobil, Humble or Amoco.