Not without some volatility, markets were virtually flat for the holiday-shortened week. Positive earning’s news helped stocks including some tech names like IBM, Lam Research, Texas Instruments and Xilinx. The Dow eked out a small 0.12% gain; the S&P 500 fell by less than ¼ of 1 percent (ending a four-week winning streak); and the Nasdaq inched up 0.11%, behind a strong semiconductor group. Indeed, the technology sector outperformed its peers moving ahead three-quarters of one percent. Despite a small gain in oil prices, energy stocks gave back about 1.5% as global growth concerns continued to make headlines.
Industry leaders at The World Economic Forum in Davos, Switzerland were in a less-than-encouraging mood regarding the future of their businesses and the world economy in general. In addition, China announced that 2018 GDP grew at its lowest pace in three decades. And the International Monetary Fund reduced its global growth forecast for the year. On some more positive notes, the slowing economic backdrop is taking some pressure off the Federal Reserve here at home; talks between China and the U.S. are slowly moving along and a temporary “cease fire” among Republicans and Democrats ended the government shutdown for at least the next three weeks.
Earnings season has been mostly positive and living up to expectations. Guidance has been muted, but still positive in most cases. This week we will get results from bellwether 3M Co., viewed to have earned $2.38 per share in the fourth quarter vs. $2.10 last year. Following up, we will hear from Verizon, Danaher and United Parcel Service, all looking for earnings gains from a year-ago. I am still maintaining my optimistic theme for now: i.e.investors are best served by emphasizing stocks with steady earnings growth, strong balance sheets and rising dividends backed by well covered payouts.
Here is the answer to last week’s trivia question: What was the best performing market sector in 2018? Technology, Consumer Discretionary, Health Care or Utilities. Answer: Health Care with an average gain of 6.5%.