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Week 3 Market Recap

The broad markets were all generally lower this week with U.S. large stocks posting their second consecutive down week. More notable was the -1.3% loss for small U.S. stocks. These are the stocks that have been leading the Trump rally and are still higher by 13% since the election as compared to U.S. large stocks up less than half that during the same time. International stocks, both in developed countries and emerging markets, were lower for the week but remain among the leaders year-to-date.

Notable Market Headlines

  • Earnings Season Continues – Procter & Gamble and IBM beat estimates and their stocks rally while GE misses their revenue estimate and the stock falls.
  • Tiffany’s Trump Troubles – jeweler Tiffany’s reported holiday sales in the U.S. declined by 4% while their flagship Fifth Avenue store experienced a 14% decline explained by “…post-election traffic disruptions.”
  • Inauguration Day Market Performance – the Dow Jones Industrials gained 0.48% on Friday. This is the only time of the past 9 that the market has moved higher on the day of the presidential inauguration. This is interesting but meaningless! The performance in the week following inaugurations have been mixed.

  • Dow Remains Below 20,000…again – this psychological milestone continues to elude investors closing the week at 19,827.
  • 10-Year Government Bond Yield at 2.468% – after falling for about a month, rates resumed their move higher but remain below their recent December peak of 2.6%.

Market Leaders

Top 10 Performers – Summary

  • CSX – activist investor appears to be planning a management shakeup at this railroad. The stock jumped 14% for the week and is up 23% for the year.
  • Big Tobacco Gains
    • Reynolds American and Philip Morris were two of the top 10 performers on expectations of strong earnings

Market Laggards

Bottom 10 Performers – Summary

  1. Several banks were among the week’s bigger losers giving back some of their Trump Rally gains
  2. Bristol-Myers Squibb
    • Stock was down -12.4% or a loss of $11.7 BILLION following disappointment related to the development of a cancer therapy

Economic Indicator - Reported

The Consumer Price Index, a broad measure of inflation, rose 0.3% in December fueled by higher energy prices (up 1.5% for the month). For the year, prices rose2.1%.

Housing Starts hit 1.226 million in December, at the top range of estimates. This measure includes both single-family and multi-family housing which had dramatically different changes for the month:

Economic Indicators – Upcoming

  • Existing Home Sales – average estimate is for a drop of -1.3% in December.
  • Gross Domestic Product (GDP) – estimates range from 1.8% - 3.3% growth in Q4.

Investor Trivia

Netflix was founded in 1998 as a DVD-by-mail service. Today they company has a value of $59 billion and more than 50 million customers. In what year did Netflix begin streaming content to customers over the internet?

2007. It was reported that Netflix accounts for 37% of all internet traffic as of a year ago!

Contact Mark A. Patton :

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