Investment Commentary –April 11th, 2017
Market Indices as of Market Close March 11th, 2017
Dow 20,651 (5.22% YTD)
S&P 2,353 (5.89% YTD)
NASDAQ 5,866 (9.25% YTD)
Gold $1,275 (10.24%)
US 10Y Treasury 2.29 (-15.00%)
Barclay Bond Aggregate (1.06% YTD)
Wall Street ends down; geopolitical risks weigh ahead of earnings
U.S. stocks ended down but well off the day’s lows on Tuesday, with worries over geopolitical risks dragging down sentiment as investors readied for the start of U.S. earnings.
The worries drove investors into gold and other safe-haven assets and pushed up the CBOE Volatility index .VIX, Wall Street’s “fear gauge,” which closed above 15 for the first time since Election Day.
“Geopolitical risk is the focal point right now,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
But, she said, “this is also a market trading at 18, 19 times forward earnings, and that’s the higher range. The earnings season is unfolding, and that’s going to be important.”
Earnings season begins this week with results from a handful of banks. The financial sector .SPSY, down 0.3 percent, was among the day’s worst performers.
Technology was the biggest drag, with the tech index .SPLRCT down 0.4 percent.
LEADERS & LAGGARDS:
This past week’s leaders include industrial goods and basic materials. Laggards include financials, healthcare and technology.
Market moving headlines
STALLED SALES: Shares of automakers fell on Monday after the government reported that vehicle sales slipped in March. Overall, stocks were little changed, as the Dow fell 13 points.
BUMPY RIDE: The only surge in market volatility during the week came on Wednesday. The Dow climbed nearly 200 points in morning trading, but gave up all of that gain and fell 41 points for the day. One possible negative catalyst was the afternoon release of minutes from the U.S. Federal Reserve’s latest board meeting.
OVERVALUED MARKET?: The Fed’s meeting minutes also showed that some Fed officials questioned whether stock prices might have become high relative to certain valuation measures. According to FactSet, companies in the S&P 500 have traded at more than 20 times their past 12 months of earnings for 106 consecutive daily trading sessions. That’s the longest such stretch since 2010.
DIVIDEND BOOM: There’s been a surge in the number of companies increasing their dividends relative to those reducing payments. Net increases in dividends for U.S. common stocks climbed to $10.9 billion in the first quarter of 2017, according to S&P Dow Jones Indices. That’s up from $3.9 billion in the same quarter a year earlier.
THIS DAY IN FINANCAL HISTORY April 11, 1921: First Cigarette Tax Imposed
The state of Iowa became the first U.S. state to levy a tax on cigarettes.
The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.