The markets were down overall this week with SP500 closing at 3913, down – 0.8%, Dow down – 0.5% to 32628 and NASDAQ down – 0.8% to 13215.
The smaller companies were similar to large caps with mid cap SP400 down – 1.2% and small cap SP600 down – 3.1%.
For the past 3 months, SP500 is up 5.9%, Dow up 8.0%, NASDAQ up 3.7%, SP400 up 14.6% and SP600 up 22.6%
Over the last 6 months, SP500 up 19.3%, Dow up 20.2%, NASDAQ up 22.6%, SP400 up 43.6% and SP600 up 61.1%
In past year SP500 is up 74.9%, Dow up 75.5%, NASDAQ up 92.6%, SP400 up 114.4% and SP600 up 127.4%
For the broad market indices, DOW has been best over the past 3 months and NASDAQ over the past 6 and 12 months. Based on market cap, the small cap SP600 did best over the past 3, 6 and 12 months.
For the SP sectors, the past week saw XLB (materials) up 4.5%, XLC (communications) up 1.8%, XLE (energy) up 1.1%, XLF (finance) up 3.3%, XLI (industrial) up 3.6%, XLK (technology) up 1.9%, XLP (staples) up 2.3%, XLRE (real estate) up 6.0%, XLU (utilities) up 4.5%, XLV (health) up 1.4% and XLY (discretionary) up 6.4%
For 3 months XLB up 12.4%, XLC up 12.0%, XLE up 35.0%, XLF up 23.8%, XLI up 10.5%, XLK up 5.3%, XLP down – 1.3%, XLRE up 8.3%, XLU up 0.8%, XLV up 3.4% and XLY up 6.6%
Over 6 months XLB is up 19.2%, XLC up 24.5%, XLE up 62.9%, XLF up 38.7%, XLI up 23.0%, XLK up 14.0%, XLP up 1.7%, XLRE up 7.1%, XLU up 4.5%, XLV up 8.0% and XLY up 13.0%
In the past year XLB up 69.3%, XLC up 61.7%, XLE up 66.5%, XLF up 50.7%, XLI up 53.9%, XLK up 56.1%, XLP up 17.0%, XLRE up 10.5%, XLU 8.2%, XLV up 26.4% and XLY up 63.1%.
The relative performance of the sectors was 1 week XLY best and XLE worst, 3 months XLE best and XLU worst, 6 months XLE best and XLP worst and 12 months XLB best and XLU worst.
The week started with advance retail sales figures for February down 3% compared with January, greater than the estimated 0.5% decline. Sales are up 6.3% compared with February 2020. January retail sales were revised to a 7.6% increase.
Industrial production was down by 2.2% in February and down 4.3% year over year. Average estimate was a gain of 0.3%. Capacity utilization dropped 1.7% in 73.8 (estimate 75.6%) and this rate is 5.8% below the long term average. Business inventories in January increased in line with estimates by 0.3% but are down 1.8% on an annual basis. The import price index rose 1.3% in February.
Housing news started with a 2 point drop in the National Association of Home Builders Index to 82, the lowest reading in 6 months. This was attributed to rising interest rates and material costs. Housing starts dropped a sharp 10.3%, much worse than estimated, as did building permits by 10.8%. Housing starts are down 9.3% year on year.
Weekly initial unemployment claims unexpectedly rose from a revised 725,00 to 770,00 this week with continuing claims essentially stable at 4.12 million. The peak weekly unemployment during the Great Recession was 665,000 and a typical value is around 225,000 in a health labor market.
The Leading Economic Indicators from the Conference Board rose 0.2% to 110.5. The January increase was 0.5% and December 0.4%. The Conference Board estimates the economy could grow 5.5% this year.
Markets fluctuated this week before ending with the major indices all down. While there is optimism that the economy will grow with the 1.9 trillion stimulus and the accelerating pace of vaccinations, there is increasing concern that this will trigger inflation and therefore higher interest rates.
The Fed stated on Wednesday that it expects the federal funds rate to remain near zero through 2023 and that inflation remained below its 2% target. However, the yield on the 10 year Treasury note reached at high at 1.75 before ending the week at 1.73, the highest since January 2020. Rising yields are generally negative for stocks as they make conservative investments more appealing for income oriented investors.
Stock Wealth Safely this week
Four Stock Wealth Safely selections reached their 5% target this week. CNC 8 weeks after selection (SPX rose 1.6%), UHS after 6 weeks (SPX 2.5%), AMGN after 2 weeks (SPX 1.6%) and WEN within one week of selection (SPX 1.8%)
The Stock Wealth Safely approach is a good method of creating investor wealth.