The year-end rally arrived on schedule, with the major equity averages concluding a banner year on a high note. The Dow Industrials rose 190 points or nearly 0.7% during the holiday-shortened week on light trading. The S&P 500 had a similar gain of 0.6%, while the Nasdaq Composite Index moved higher by 0.9%, thanks in part to a strong technology sector, which gained 1.07%. In fact, all but two market sectors were in the green as telecommunications and utilities lost some ground. Small and mid-cap stocks were mostly negative as well. West Texas crude oil prices increased $1.28/bbl. to $61.72 and gold was higher by $39.10/oz. to settle on Friday at $1,513.80, closing in on a new 52-week high.
The economy closed out the old year with a bit of a flourish, following several weeks in which some data had proven disappointing. This pickup centered around increases in housing starts, building permits, industrial production and factory usage. Moreover, with personal income rising 0.5% in November, consumer spending gained 0.4%. Looking ahead to next week, the key reports will be data on consumer confidence and the monthly issuance on manufacturing activity. Both reports will be carefully scrutinized, with the confidence data a likely harbinger of future spending plans, while the manufacturing survey has been weak for months. The Fed also will be out with the minutes from its last FOMC meeting this week.
The stock market is clearly not cheap entering 2020. While 2019 earnings were admittedly lackluster, valuations improved this past year sending averages to record highs. Despite the lofty prices, fundamentals are sufficiently strong for these prices to likely be sustained and possibly to slightly improve if things break right. Hence, investors should stay the course with high quality, dividend paying stocks that have revenue and earning’s growth at a reasonable price.
Here is the answer to last week’s trivia question: Twenty-First Century Fox, Inc. (20th Century Fox Studios and film library, Fox Animation, Fox Entertainment Cable Television, et. al) sold a major portion of its business to what company in March 2019? Comcast, The Walt Disney Co., ViacomCBS or Netflix. Answer: Walt Disney for $71.3 billion.
Today’s Trivia Question: What was the percentage increase in the price of gold so far this year? 8.5%, 10.1%, 14.3% or 16.0%,