The stock market continued its winning ways with another impressive weekly gain. Indeed, so far, it has been the best start of a New Year since 1997. The Dow Jones Industrial Average gained ground for the fourth straight week with a nearly 3% advance to close at 24,706. The S&P 500 and the Nasdaq Composite were not too far behind and both higher by about 2.8%. The Dow Transports were up over 4%, helping the industrials to a 3.3% gain for the week. But the financial stocks were the market leaders along with healthy gains in technology and energy. Telecommunication shares, however, were negative by 0.8%, as Netflix and Verizon were a drag on the group.
Fourth quarter earnings were in the spotlight this past week, and traders did not seem to fret over misses in some high-profile names such as JPMorgan Chase, Blackrock and Schlumberger. And optimism on U.S. – China trade differences quickly turned the tide. Rumors that the Administration was open to cutting tariffs with the world’s second largest economy lifted stock prices on Friday. Equities also turned a blind eye to the prolonged government shutdown, although the effects are quickly taking its toll on the economy.
As we look to the holiday-shortened week ahead, Washington wrangling and earnings will take center stage. Johnson & Johnson will report fourth quarter results on Monday with estimates of $1.95 per share vs. last year’s $1.74. We will also hear from Intel and Colgate-Palmolive later in the week. In all, sufficient froth has been taken out of the market with the December swoon and valuations are more in line with reality.
This week we lost a Wall Street legend in John C. (Jack) Bogle who passed away on Wednesday at the age of 89. He was one of the most influential and outspoken figures in the investment management industry over the past half century. Not only was he the founder of The Vanguard Group, Bogle is considered the father of index investing with the invention of the S&P 500 index fund in 1976, which eventually led to the explosive world of exchange traded funds. As an advocate for the individual investor, his presence will be missed.
U.S. markets will be closed on Monday in observance of Marin Luther King Jr. Day.
Here is the answer to last week’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. Answer: Sue from Long Island got it right – Mobil, which later merged with the former Standard Oil Co. of New Jersey in 1999 to form today’s Exxon Mobil Corp.
Today’s Trivia Question: What was the best performing market sector in 2018? Technology, Consumer Discretionary, Health Care or Utilities.