Lacking much economic news, equities traded sideways for the week, but not without some volatility. The Dow Industrials continued its winning ways for the seventh straight week inching up 42 points or 0.17%. Although the S&P 500 made some late day gains throughout the week, it was virtually flat by Friday’s close. The Nasdaq composite did a bit better as some technology names lifted the index by about ½ of one percent. Looking at the market by sector, stocks were evenly split with utilities and tech leading on the plus side offset by basic materials and energy giving back 2.2% and 3.4%, respectively. Oil fell $2.54/bbl. on continued fears of slowing global growth and a world-wide glut not able to overcome moderating demand.
On trade – talks continue in Beijing, but it now appears that a meeting between Presidents Trump and China’s Xi before the March deadline on the tariff moratorium is “highly unlikely”. And other offshore problems continue to be of concern: Slumping growth in China and across parts of Europe (especially in Italy); no Brexit solution as of yet; and possible conflicts with Venezuela, all pose threats to our long-lived business upturn. While the State of the Union address was encouraging on bi-partisan cooperation on some issues, it did little to shed a positive light on a renewed government shutdown by the end of next week, as the two sides continue to wrangle over border security. And the yield on the ten-year Treasury note dropped to 2.632%, not an encouraging sign for the economy. So . . .
. . . while it is becoming clearer that economic growth is indeed slowing here and abroad, a recession is unlikely over the next twelve months. Corporate America delivered on fourth quarter results and guidance, while muted, has been far from dire. As earning’s season winds down, we will get a few more this week: Cisco Systems’ second quarter results and fiscal first quarter sales and earnings from chip equipment maker Applied Materials and ag giant Deere. All told, I remain cautiously optimistic on equities given a strong January start to the new year.
Here is the answer to last week’s trivia question: The major stock indexes in the U.S. are the S&P 500, Dow Jones Industrials and the Nasdaq Composite. Which country represents the KOPSI? South Africa, Kuwait, Kenya or South Korea. Answer: Frank from New Jersey got it right ~The Korea Composite Stock Price Index tracks all common stocks on the Korean Stock Exchange.
Today’s Trivia Question: Denny’s, founded in Lakewood, California, began life as? Denny’s Diner, Danny’s Donuts, American Diner or The Pepper Grinder.