Stocks followed bonds again, as flattening and inverted yield curves changed direction this past week signaling on and off recession fears. At Friday’s close, the 10-year Treasury note settled at 2.41% and the three-month bills at 2.40%: A virtually flat short-term spread. The Dow posted nifty gains for the week popping 1.7% to close out its best quarterly performance since 2013. Along with the Dow, the broader S&P 500 advanced 1.2% remaining 33 points above the all-important support level of 2,800. The Nasdaq Composite rose 1.13%. Small and mid-cap stocks performed well ahead of the big boys moving higher by about 2.3%. And the Dow Transportation Average had a nice showing with a 3.5% advance. Except for telecom and utilities retreating 0.4%, all market sectors were in the plus column led by industrials, consumer goods and basic materials.
Meanwhile mortgage rates fell, fourth quarter economic growth was revised down to 2.6% and business confidence was off. West Texas crude settled on Friday above $60/bbl. – its November 2018 level for the first time. Brent crude is trading at about $67.60/bbl. Optimism about trade talks between the U.S. and China apparently was behind the late-week positive mood. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer wrapped up meetings in Beijing on Friday, with talks scheduled to continue next week when Chinese Vice Premier Liu He visits Washington. Enthusiasm over reported progress temporarily helped ease rising concern over slowing economic growth. However, economic concerns are building in Europe and the European Central Bank said it would launch new stimulus efforts to support the region.
Investors are best served during such volatile times by concentrating on the fundamentals, which despite some suggestions of a slowing in the economy, remain fairly positive. As such, I would continue to prudently add to positions in quality stocks that have a solid dividend growth track record.
Here is the answer to last week’s trivia question: Ride sharing service Lyft will soon be going public. What is the approximate value of the company based on the number of new shares being offered, existing shares and the estimated IPO price? $8 billion, $12.3 billion, $18.5 billion or $22 billion. Answer: $18.5 Billion. NOTE: Shares were eventually priced at $72. The stock closed on Friday at $78.29, giving the number two ride-hailing service a market value of $22 billion.
Today’s Trivia Question: Ontario-based Blackberry Ltd. develops and manufactures wireless hand-held devices and provides enterprise related services to customers. The company was originally named? TCL Communications, Palm Corp., PDA of North America or Research in Motion.