Despite some disappointing economic news, equities were nicely higher this past week. The Dow Industrials added nearly 777 points or 3.1%, thanks in part to a strong rally on Friday. It was the eighth week in a row the Dow closed higher – its longest weekly winning streak since November 2017. The S&P 500 and the Nasdaq Composite rewarded investors with about a 2.5% gain. Except for a small decline in safe-haven utilities, all sectors had up arrows, led by energy names which were higher on average by some 5%. Indeed, oil prices showed some strength with West Texas crude gaining $2.87/bbl. for the week to settle at $55.69. But the rise had little effect on transportation stocks, with the Dow Transport Average up nearly 4%, a good technical sign for Dow theorists.
Traders were focused on hopes from China on trade issues and the avoidance of another government shutdown and dismissed a miserable retail sales report, which fell by 1.2% in December, the biggest month-to-month decline in nine years. The news surprised economists, who’d predicted an increase or, at worst, a modest decline. And industrial production fell in January by 0.6%, the first drop in eight months. Indeed, economic growth is slowing both here and abroad and international issues are still looming including another setback on Brexit and continuing turmoil in Venezuela. The effects of a slowdown here at home does have the Federal Reserve on a more accommodative trajectory, however.
The recent surge in equities for the start of 2019, brings the averages back to early November of last year, before the December market swoon. The S&P 500 is still 5% below its September 2018 high, but valuations are starting to climb as earning’s guidance has disappointed. All things considered, I am still comfortable with an optimistic, albeit cautionary, equity position in high-quality, dividend growing stocks. As we wind down earning’s season, we will hear from CVS Health and Newmont Mining on Wednesday. Note, financial markets will be closed on Monday in observance of Presidents Day. Enjoy the holiday.
Here is the answer to last week’s trivia question: Denny’s, founded in Lakewood, California, began life as? Denny’s Diner, Danny’s Donuts, American Diner or The Pepper Grinder. Answer: Denny’s originally opened as a coffee shop under the name Danny’s (with an “a”) Donuts in 1953.
Today’s Trivia Question: From 1966 through 1984, North American Van Lines was owned by? Union Pacific Corp., United Parcel Service, JB Hunt Transportation or PespiCo.