Stocks were muted today, while the international government bond market drew attention as rising inflation expectations and better-than-expected growth out of post-Brexit United Kingdom led to a selloff in government bonds and rising yields.
The Dow dropped 29 points, with 18 of its 30 components retreating; the S&P 500 Index declined 6; and the Nasdaq lost 34. Decliners led advancers by eight to three on the NYSE and two to one on the Nasdaq. The prices of Treasuries weakened, with yields spiking along with many other foreign government bonds. Gold futures rose $2.90 to close at $1,269.50 an ounce, and the price of crude oil advanced 54 cents to settle at $49.72 a barrel.
Stocks ended mixed following disappointing earnings results from firms such as Dow component Apple Inc., which reported its first annual revenue decline in 15 years. Meanwhile, doubts about OPEC’s ability to reach a deal to cut global oil output overshadowed new data showing a weekly decline for U.S. crude supplies.
The Dow rose 30 points, with 16 of its 30 components gaining; the S&P 500 Index slipped 3 points; and the Nasdaq lost 33. Decliners topped advancers by nine to five on the NYSE and by about nine to four on the Nasdaq. Treasury prices weakened. Gold futures slid $7.00 to close at $1,266.60 an ounce. The price of crude oil fell 78 cents to settle at $49.18 a barrel.
Value is in the eye of the beholder. Disagreements about whether something is cheap or expensive have typically driven people to trade. Those who assign more value to something tend to buy from those who assign less. It’s simply a way that markets work. It should be no wonder there is no universal agreement about whether stocks are cheap or expensive. If there were universal agreement, no trading would take place.
As I’ve written before, I prefer to look at a medley of measures, but it’s also important to look at the context of those different equity valuation metrics. To me, it looks like investors have almost fully embraced the idea of low growth and low inflation. If either of these factors surprise to the upside, we could exit the relatively narrow trading range the market has been in for the past few months.
Based on the consensus expectation of next 12-months earnings for the S&P 500 Index, stocks are pretty much at their 15-year average in terms of price/earnings (P/E) ratio. The expectation for long-term growth (LTGR) in earnings per share is significantly below average.
The major U.S. indexes posted moderate losses after a drop in consumer confidence, mixed earnings reports, and anticipation over several high-profile earnings reports after market close today, including Apple Inc.’s.
The Dow fell 53 points, with 19 of its 30 components retreating; the S&P 500 Index lost 8; and the Nasdaq closed 26 points lower. Decliners led advancers by three to two on the NYSE and two to one on the Nasdaq. The prices of Treasuries strengthened. Gold futures gained $9.90 to close at $1,273.60 an ounce, and the price of crude oil declined 56 cents to settle at $49.96 a barrel.
“When the gods wish to punish us, they answer our prayers.” —Oscar Wilde
I almost did it. With only two weeks left until the election, I have carefully avoided writing anything about it. Now I am about to spoil my record.
Well, not quite. I am writing about the election, but I don’t know if I have much to say. I have always thought that any predictions about electoral results made more than three or four weeks before the event were pretty useless. Too many things can change. Being a front-runner is like leading the pack in a bicycle race: You’re the one getting the most resistance.
In September, S&P Dow Jones Indices LLC and MSCI Inc. moved real estate investment trusts (REITs)—companies that own income-producing commercial real estate—out of the financials sector into a newly created real estate sector, mainly composed of REITs. This change reflects the growing significance of real-estate assets in today’s global economy. It also makes it much easier for investors to track REITs’ performance in benchmarks and their own portfolios.
In our view, now may be a good time for investors to take a fresh look at REITs.
It used to be easy to overlook REITs, which date back to 1960.
Tucked away until now as an industry within the financials sector, REITs have been somewhat hidden and have held small weightings within the S&P 500 Index and other major indexes. Continue reading →
Stocks started the week with gains, buoyed by corporate earnings and a new batch of mergers and acquisition announcements.
The Dow rose 77 points, with 20 of its 30 components advancing; the S&P 500 Index increased by 10 points; and the Nasdaq added 52. Advancers led decliners by about three to two on the NYSE and on the Nasdaq. Treasury prices weakened. Gold futures slipped $4.00 to close at $1,263.70 an ounce. The price of crude oil fell 33 cents to settle at $50.52 a barrel.
Editor’s note: In September, the number of industry sectors tracked by the Standard & Poor’s 500 Index expanded from 10 to 11. The new sector is Real Estate, and it includes two new industries within it: Real Estate Management and Development, and Equity REITs for real estate investment trusts.
Here are some insights for investors about the REIT investment option, from John LaForge, head of Real Asset Strategy for the Wells Fargo Investment Institute.
What is a REIT, and how does it work?
A REIT, or real estate investment trust, is a company that owns (and typically manages) income-producing real estate for investors. There’s broad interest in REITs because buying and managing properties may potentially be lucrative but is also confusing, expensive, and time consuming. In fact, the only experience many people have with purchasing real estate is when they buy a home, and that certainly isn’t an income producer!
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