Weekly Update

Week in Review

Stocks continue to hit record highs. Large-cap stocks have certainly taken the lead with the Dow Industrials moving higher on the week by 410 points or 1.5%. The S&P 500 managed a 0.8% gain and the Nasdaq 1%. However, small and mid-cap stocks have lagged with the Russell 2000 giving back 0.36% and the S&P Small Cap Index negative by 0.6%. Transportation stocks made a nice comeback despite higher fuel costs with the price of West Texas Intermediate crude oil gaining $2.70/bbl. to settle at $60.21. Not surprisingly, energy related stocks gained the most ground this past week tacking on nearly 2% on average. Consumer services and technology gains were offset by weakness in telecom and health care names. Gold once again topped $1,400/oz. closing out at $1,409.90.

       Investors now seem almost certain that the Federal Reserve will ratchet back interest rates by 0.25% by the end of the month, barring any significant new data. While the economy is showing signs of slowing, inflation remains muted and the Fed does not want to appear as hindering any future growth, moderate as it may be. The unemployment rate remains close to a fifty-year low at 3.7%; GDP is estimated to grow around 1.4% in the second quarter just ended; and manufacturing surveys, though weaker, remain in expansion territory. While interest rate watchers never leave the headline scene, the upcoming weeks will focus on earnings with fifty-six S&P 500 companies expected to report this coming week with 243 by the end of the month. Blog followers will be interested in hearing from . . .

       . . . JPMorgan Chase on Tuesday, along with Johnson & Johnson and east-coast rail CSX Corp. Later in the week, health technology provider Danaher will report revenue and profits for the second period, and oil services giant Schlumberger’s results will come in on Friday. Like most earnings’ seasons, equities tend to be volatile with wide swings on any surprises in results or guidance, and this go around should be no different. Investors, however, should pay attention to the long-term business plans in invested companies and their corollary results over time with an eye toward total returns.

Here is the answer to last week’s trivia question: Which was the top stock in the S&P 500 so far this year? Visa, Microsoft, Xerox or Johnson Controls. Answer: Xerox Corp. with a return of 87.2% through the end of June.

Today’s Trivia Question: Metal fabricating company Arconic, Inc. was created on November 1, 2016 as a spin-off from what company? Harsco Corp., Kennametal, Inc., Timken Co. or Alcoa Corp.

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