Markets "In a Nutshell" for April 3, 2018Apr 03, 2018
Investment Week at a Glance
Stocks were up last week. The Dow Jones Industrial average was up 2.4% while the S&P 500 gained 2.0%. The New York Stock Exchange Composite (2,000 stocks) increased 2.2% and the “average investor’s index” (Value Line index) was up 1.7%. Foreign stocks (DJ Global ex U.S.) gained 0.6% and bond prices were up as the 10 year Treasury yield ended at 2.74%. (Data sources: Barron’s Financial, Wall Street Journal)
Down quarter breaks winning streak for stocks
The U.S. stocks market finished the 1st quarter of 2018 with losses for the first time in 10 quarters (since 9-30-15). The NYSE Composite stock index (an average of all stocks on the New York stock exchange) was down 2.8% as was the Value Line (average investors index). The Dow Jones Industrial average lost 2.3% and the S&P 500 dropped 1.2%. Bond prices also were down for the quarter with the 10 year Treasury losing 1.5%. With the losses for stock and bond indexes for the quarter, investors should expect to see minus signs on their quarterly statements.
Can energy stocks be the next “winners?”
Oil stocks have had a rough go of it over the past few years. As technology stocks have roared ahead for the past 5 years with annualized returns of over 19%, energy stocks have suffered with annualized losses of 7% a year. However, today’s underperformers are often tomorrow’s outperformers. So while nothing is guaranteed, at some point it is likely energy stocks perform well. A quick look at some stocks reveals inexpensive prices and. The Motley Fool investment website lists three potentials: Kinder Morgan (3% yield), Apache Energy (3% yield), and Hess (2% yield). All are down at least 50% off their highs.
Relief for Savers
After 9 years of suppressing short term interest rates on investments such as savings accounts and bank cd’s, the U.S. Federal Reserve has now raised rates four times since the beginning of 2017 from zero to a 1.75% range. Short term treasury bills such as 6 month bills have responded as they now earn an annualized rate of 2%. 1 year bank cd’s have responded as well with numerous banks paying 1.5-2% on 1 year cd’s.
According to the Treasury Dept. the U.S. government ran a $215 billion deficit in just the month of February. What year was the last year the U.S. government ran an entire annual deficit of less than $215 billion? a. 1964 b. 1977 c. 1986 d. 1995 e. 2007? ...Answer is below…
Have a good week!
Answer to quiz:
e. 2007. The deficit for the year was $161 billion.