Despite lackluster economic news, stocks rebounded last week with solid gains across all the major averages. The S&P 500 moved higher by nearly 3% and the Nasdaq by close to 4%. The Dow Jones Industrials, however, were dragged down by a $43 drop in Boeing, but still managed a 1.6% move to the upside. All market sectors were in the green, led by technology. Tech’s 4.2% advance was followed by energy names at 3.5% and a 3.4% advance in health care stocks. Transports also moved higher by nearly 2%, despite a 4 percent rise in oil prices and declines in some of the airlines. Gold edged up above the $1,300 mark to settle at $1,301.80.
Trade talks with China linger on and there is still no solution to a Brexit deal. Add an anemic 0.1% rise in February’s industrial production and a reading from the New York Fed’s Empire State Manufacturing Index at 3.8 that was well below the forecast of 10. So, what drove stocks higher with such sluggish fundamentals? Technicals. The S&P 500 finished the week at its highest close since October 9th of last year and nicely above the 2,800 resistance level watched by chartists. And traders are now looking at dips as buying opportunities as opposed to selling into rallies. The NYSE advance-decline line has been positive and market breadth is decent with most sectors participating in the advance.
The stock market’s retracement at the end of last year made valuations somewhat more attractive. And the positive technical factors likely explain the stock market’s subsequent comeback and generally rosier mood. Best investors stay the course for now, while keeping a watchful eye on economic trends both here and abroad.
Here is the answer to last week’s trivia question: DowDuPont, which was created when the two chemical giants merged in August 2017, will be splitting into three publicly-traded companies: Dow (concentrating on Material Sciences), DuPont (Specialty Products) and what other named independent entity? DuPont Pioneer, DowDuPont Agriculture Products, Corteva Agrisience or Dow AgroSciences. Answer: Corteva Agrisience.
Today’s Trivia Question: Sandwich shop Arby’s is owned by privately-held Inspire Brands along with Rusty Taco, Buffalo Wild Wings and what other fast-food brand? Subway, Sonic, Quiznos or WhataBurger.