While the holiday-shortened week had its ups and downs, equities ended mostly higher. The Dow Industrials continued its ninth straight weekly advance edging up 0.37% to 26,032. The S&P 500 and the Nasdaq did a bit better with gains in the 0.7% range. But traders saw value in smaller cap names this week with the Russell 2000 Index higher by 1.3%. Basic material stocks along with telecoms led the charge, up 2.8% and 2.6%, respectively. And except for health care and energy names, all market sectors were in the green, including utilities with an average 2.4% advance.
Minutes from the Federal Reserve’s Open Market Committee helped stocks when the central bank reaffirmed its more dovish stance. For now, the Fed is easing back on rate increases and suggested that its balance sheet reduction program might be ending. This week, Chairman Powell delivers the semi-annual Monetary Policy Report to Congress. However, there are several foreign issues still causing some angst among investors. A lack of a Brexit solution may start to affect companies on our shores. Colgate-Palmolive and UPS are already signaling logistics issues with movement of goods in and out of Great Britain. The slow-down in China’s growth can become contagious on a world-wide level and concerns in Venezuela continue to make headlines.
While I believe a reasonably good year lies ahead for investors, there are still challenges. As seen in the last few months of 2018, sentiment can turn on a dime. Companies will be hard pressed to beat last year’s tax reform-loaded profits as guidance has been lowered and valuations are once again moving higher with the rise in stock prices. So, investors should proceed carefully, with emphasis on quality stocks that will prove resilient in most environments and have sufficient cash flow to pay – and grow – dividends.
Here is the answer to last week’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. Answer: Frank from NJ got it right – PepsiCo.
Today’s Trivia Question: What company manages the SPDR exchange traded funds? Standard & Poor’s, Invesco, State Street Global Advisors or BlackRock.