Stocks ended mixed, as investors weighed a mixed bag of corporate earnings. Coming out of its monthly policy meeting, the Fed offered optimistic comments on the U.S. economy, but no clear timing for future rate increases.
The Dow ended down by less than a percentage point, with 20 of its 30 components retreating, the S&P 500 Index fell 2 points, and the Nasdaq added 29, lifted by Apple’s estimate-topping earnings report. Decliners topped advancers by seven to six on the NYSE, and advancers beat decliners by four to three on the Nasdaq. The prices of Treasuries strengthened. Gold futures rose $6.20 to close at $1,334.50 an ounce. The price of crude oil fell $1, settling at $41.92 a barrel.
In earnings news:
John Manley and Jim Kochan, capital market strategists at Wells Fargo Asset Management, point to areas of opportunity in the equity and fixed-income markets around the globe.
Laurie King: I’m Laurie King, and you are On the Trading Desk. This week, Capital Market Strategists John Manley and Jim Kochan join us to discuss drivers of opportunity in stocks and bonds, respectively. John, welcome.
John Manley: Thanks for having me.
Laurie: Jim, glad you could join us.
Jim Kochan: Thank you, good to be here.
Laurie: John, what set off the upward trajectory in stocks?
John: What set this off, I think, was the jobs number we saw a little while ago, and that sort of indicated hiring is picking up, that the economy is doing OK. And when you look at the three things I think drive stock prices up or down: the Fed—the Fed is going to keep supporting the economy for some time; earnings—I think we’re at the point in time where earnings begin to lift off after a two-year stall; and valuations—they are OK and there’s nothing that I see that will constrain the stock market from going higher.
This post is an excerpt from Wells Fargo Investment Institute’s “Ask the Institute” series.
What are commodities? The basic building blocks for essentially everything, commodities are the raw materials grown on farms or pumped or mined out of the ground. In the investment world, commodities are a major asset class, similar to stocks or bonds.
Investors typically choose commodities because they can add diversification benefits. Commodities often run counter to other major assets, especially stock markets—shown in the chart below. The top portion represents commodities and the bottom stocks. The shaded areas represent the bear markets for each. Note that the different shadings give the chart a “checkered” look. When commodities have been in a bear market, stocks have frequently been in a bull market, and vice versa. Investment portfolios can benefit from such differences.
Today’s Daily Advantage comes to us from guest contributor Jim Durning.
Major stock indexes in the U.S. were mixed while advancers led decliners on the New York Stock Exchange and the Nasdaq. Investors may have been weighing a positive housing report with uneven corporate earnings while awaiting the Fed’s rate announcement scheduled for Wednesday. The Dow fell 19 points, with 16 of its 30 components declining; the S&P 500 Index gained less than 1 point; and the Nasdaq gained 12. Advancers led decliners by about three to two on the NYSE and about five to three on the Nasdaq. The prices of Treasuries were little changed on the day as yields were relatively flat compared with the day before. Prices and yields on bonds move in opposite directions. Gold futures added $1.30 to close at $1,320.80 an ounce. The price of crude oil fell $0.21, settling at $42.92 a barrel.
In earnings news:
Now that we have the Brexit referendum behind us, more investors are beginning to refocus on the U.S. presidential elections. I’ve written a couple pieces on this subject this year:
With those warnings in place, here are some interesting, data-driven findings about how the stock market has performed in election years. I looked at the inflation-adjusted total return on the S&P 500 Index from August 1 to the day of the presidential election for every election since 1928 (prior to the 1950s, the data comes from Global Financial Data). Here are the key findings:
Stocks began the week with declines, due in part to falling oil prices brought on by weaker demand and a summertime supply glut.
The Dow dropped 77 points, with 18 of its 30 components declining; the S&P 500 Index fell 6 points; and the Nasdaq lost 2. Decliners topped advancers by five to four on the NYSE and by almost four to three on the Nasdaq. The price of the 10-year Treasury weakened, and the price of the 30-year Treasury strengthened. Gold futures decreased by $3.90 to close at $1,319.50 an ounce. The price of crude oil fell $1.06, settling at $43.13 a barrel.
In earnings news:
“History repeats itself, first as tragedy, then as farce.” Karl Marx
After two years of frustration, July has been a month of new highs. On Friday, the S&P 500 Index closed at 2,175.03, another record. I thought it would be interesting to put a little context around that. I’m still hearing the buzz that stocks are up too much and that it’s only a matter of time until another 2008 crisis pulls us down. To me, that first assertion is incorrect and the second one—while technically true—gives us no useful timing and provides a lot of tinder for continued appreciation. Sure, someday we will hit the wall (of worry), but I think that we can climb that wall for a while.
Below is a table that shows the dates and levels of prior cyclical highs for the S&P 500 Index.
Stocks traded higher throughout the day as investors sorted through mixed earnings results. At the close, the Dow gained 53 points, with 22 of its components advancing; the S&P 500 Index climbed 9 to a record high; and the Nasdaq was up 26. Advancers outpaced decliners by two to one on the NYSE and by nine to five on the Nasdaq. Treasury prices weakened. Gold futures lost $7.60 to close at $1,323.40 an ounce. Crude-oil futures slipped $0.56 to settle at $44.19 a barrel.
For the week, the Dow advanced 0.28%, the S&P 500 Index increased 0.6%, and the Nasdaq added 1.38%.
In earnings news:
Stocks ended lower today as data indicating U.S. economic strength was overshadowed by sentiment over the European Central Bank’s decision to not adjust interest rates as it monitors Brexit’s potential effects on regional economies.
The Dow fell 77 points, with 24 of its 30 components retreating; the S&P 500 Index slipped by 7 points; and the Nasdaq lost 16. Decliners topped advancers by about three to two on the NYSE and by five to three on the Nasdaq. The price of the 10-year Treasury strengthened, and the price of the 30-year Treasury weakened. Gold futures rose $11.70 to close at $1,331.00 an ounce. The price of crude oil fell $1.00, settling at $44.75 a barrel.
In earnings news: Continue reading
We’re spending a couple of editions discussing considerations for helping a diverse client base—lessons learned from CFP program coursework.
Listen to the podcast (new window).
Jon: Wayne, as you know, I’ve embarked on a journey to earn my CFP designation. Continue reading