Markets “In a Nutshell” for June 25, 2019

Investment Week at a Glance

Stocks gained last week. The Dow Jones Industrial average was up 2.4% while the S&P 500 rose 2.2%. The New York Stock Exchange Composite (2,000 stocks) gained 2.0%. The “average investor’s index” (Value Line index) was up 1.9%. Foreign stocks (ishares EAFE index) were up 2.4%. Bond yields dropped (bond prices up) as the 10 year Treasury ended at 2.07%. (Data sources: Barron’s Financial, Wall Street Journal)

Dow 30,000

Barron’s (6/24) is on 30,000 Dow Industrials watch. The Dow, a stock index reflective of some of the largest companies in the U.S., is currently at 26,719. 30,000 Dow implies a 12% gain. Barron’s originally predicted in 2017 that the Dow would hit 30,000 by 2025. Barron’s now sees, based on corporate earnings growth, the 30,000 level by 2021. This would mean a 5% yearly return for stocks from here through 2021.

“Easy Money” to propel growth stocks?

According to Barron’s central banks from around the globe (including the U.S.’s Federal Reserve) are about to embark upon “easy money” policy in which interest rates are lowered in order to encourage people to borrow more money to buy things such as houses. Lower rates also encourage stock investing as bonds, cd’s and money markets pay less interest.

Investors buy homes at a record pace

The Wall Street Journal reports that more than 11% of home purchases were made by investors in 2018, a record. Low interest rates have encouraged real estate speculators and private equity firms to gobble up homes with the hope to sell at ever increasing home prices. With home price increases of 6% in 2018, house flipping paid off for home investors.

Quiz:

As of 12/31/41 (1941) the U.S. had 12.9 million manufacturing jobs. What was the number of manufacturing jobs in the U.S. as of 12/31/18?

a. 6.5 million

b. 12.8 million

c. 14.6 million

d. 16.9 million

Answer is below…

 

Have a good week!

 

Answer to quiz:

b. 12.8 million