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Week Ending 3/3/2017

Summary

  • The S&P 500, a measure of large U.S. stocks, gained for 6th consecutive week
  • The Dow Jones tops 21,000 just one month after reaching 20,000
  • Trump Talk fuels market’s rally
  • While large U.S. stocks continued to move higher, most other asset classes did not
  • Federal Reserve leaders continue to imply interest rate hike is near

Notable Market Headlines

Large-cap U.S. stocks, measured by both the S&P 500 and Dow Jones Industrials, notched gains for the week while small U.S. stocks were flat. This divergence in performance is contrary to the performance since Trump’s election which has seen small stocks gain 16.6% and large U.S. stocks higher by 11.4%.

Investors responded well to President Trump’s speech to congress with the Dow Jones Industrials rallying more than 300 points…it’s biggest daily gain of the year.

Healthcare stocks were the best performing sector for the second week in a row gaining another 1.5% and are now higher year-to-date by 10.2%. Energy stocks were a close second with gains of 1.4% but remain lower year-to-date by nearly -5%.

International stocks were mixed for the week. Developed country stocks, on average, were higher with Spain’s market gaining 4.1% and France’s up 3.1%. International emerging markets gave back some of their big year-to-date gains with China’s markets leading the way lower this week by -1.7%.

Last week bonds posted their biggest weekly gain for the year of 0.6% and this week was the biggest weekly loss of -1.0%. These sharply lower bond prices push bond yields higher with the 10-year U.S.

Investor Trivia Question

The parent company of the extremely popular disappearing messaging app Snapchat went public this week (symbol: SNAP). The stock offering was a big success. Users of Snapchat generally share pictures and videos. Approximately how many videos are viewed DAILY via Snapchat? (answer at the bottom)

Market Leaders

Monster Beverage (MNST), maker of energy drinks and a variety of other beverages, reported strong earnings and expectations of continued strength into 2017. The stock jumped 10.3% for the week. This reverses a decline in price in 2016 of -10.7%.

Micron Technology (MU), a large computer chip maker, pre-announced earnings that will be reported later in March. The pre-announcement was well ahead of Wall Street analyst estimates resulting in the stock rallying 4 out of 5 days during the week. This company is recovering from a streak of quarterly losses. Investors are optimistic that the earnings recovery will continue with its stock up 117% during the past year!

Market Laggards

Target (TGT), the $70 billion in sales retailer, reported disappointing earnings and provided a bleaker than expected outlook for 2017 resulting in its stock falling -13.7% for the week. Online sales increased by 34% but store sales declined. Investors clearly have concern about the company’s ability to reverse its downward trend in both sales and earnings.

First Solar (FSLR), a leading maker of solar panels, stock dropped -8.7% this week. The company is mapping a new direction given increased competition from China. This stock is less than half the price it was just a year ago.

The stocks of both food retails Kroger (KR) and Whole Foods (WFM) fell this week. Kroger reported disappointing earnings and this drug other stocks in the industry down. Whole Foods weathered relatively better than Kroger both last week and during 2016 but the entire sector is having problems with multiple headwinds.

Economic Indicator - Reported

None of the week’s economic reports were market-moving.

Consumer Confidence was rose more than expected in February continuing its post-election gains. Among other things, consumers are feeling better about the job market which could bode well for the coming employment report.

Auto sales came in unchanged in February at an annual rate of 17.6 million vehicles.

Economic Indicators – Upcoming

The February Employment Report will be out Friday. This is always one that active investors watch closely. The consensus is that the economy added 195,000 jobs for the month and that the unemployment rate dropped a fraction of a percent to 4.7%. It is being widely discussed that a relatively strong jobs report will give the Federal Reserve what it needs to proceed with an interest rate hike in March.

ADP, the leading payroll services provider, will release its economic report on Wednesday. Also on the same day will be a report on worker productivity and costs.

Investor Trivia ANSWER

Ten BILLION videos are viewed daily on Snapchat by approximately 160 million daily users worldwide. As mind-blowing as these numbers really are doesn’t make it a no-brainer investment. At Friday’s closing price, the company had a similar value to company such as hotel giant Marriott International and food company General Mills. Marriott and General Mills have annual revenue of roughly $17 billion each while Snapchat reported $400 million in 2016. At today’s price, Snapchat investors are anticipating extremely rapid growth.

Source: http://expandedramblings.com/index.php/snapchat-statistics/ ; statistic is as of 4/28/2016.

Contact Mark A. Patton :