For the week, the Dow fell 0.64% to 27,155.83; the S& P 500 lost 1.23% to 2976.81; and the Nasdaq Composite shed 1.18% to 8146.49. Once again, small and mid-cap stocks lagged with the Russell 2000 giving back 1.4%. For the most part, stocks moved sideways as trade policy and central bank moves appear to be baked into the major indexes. On a sector-by-sector basis, all but a slight gain in basic materials saw down arrows. A $4.58/bbl. drop in domestic oil had the energy sector at the bottom of the list with a 3% loss. Gold, however, continued to climb settling the week at $1,425.10/oz., up $15.20, to its highest level since 2013. Gold is becoming a good alternative to paper money and government bonds at a time of accommodative monetary policies around the world.
The latest reports on industrial production, factory utilization, export demand and across key retail sectors show enough inconsistency for the Fed to reduce rates several times over the next year or so. Such choppy trends notwithstanding, the economy still seems poised to press forward, with growth likely staying near 2% in the third and fourth quarters of the year. Looking at the international picture, there is significant uncertainty with Europe and much of Asia (including China) seeing slower growth than in recent years. Add in concerns relating to Brexit and questions on trade—where, in spite of periodic optimism, a lot of work still needs to be done.
For the most part, the bulls like what they see, with the lure of lower interest rates helping the Dow surge past 27,000 for the first time ever. Further gains are likely for Wall Street assuming expectations for the economy, profits and interest rates are met. Second quarter earnings and guidance have been a mixed bag so far and there is more to come. This week we get results from United Parcel Service, 3M, Intel and Colgate-Palmolive, all of which may deliver profits below last year’s levels.
Here is the answer to last week’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. Answer: Alcoa Corp.
Today’s Trivia Question: The Apollo 11 Lunar Module TV camera used to capture the first steps on the moon was designed and built by? RCA, Harris Corp., Raytheon or Westinghouse.