Markets “In a Nutshell” for October 12, 2021
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 1.22%, the S&P 500 was up 0.79%, and the NASDAQ gained 0.09%. Foreign stocks (MSCI EAFE) were flat. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 1.60%. (Data source: Wall Street Journal)
Job Gains Slow to Slowest Pace of 2021. What Does it Mean for Investors?
The U.S. Dept of Labor reported the economy gained 194,000 jobs in September, far below estimates. The Delta variant and the ongoing worker shortage are a big part of the reason new job growth has waned the past couple months. While the post Covid world economy has had a heroic recovery, the massive injections of government money (at about $6 trillion) that have been the driver of the recovery have left some imbalances that need to work their way through the economy. Supply chain shortages and inflation are two effects that may linger on and have implications for investors. Stock sectors such as energy (i.e. Chevron, NextEra), materials (Sherwin Williams, Freeport McMoRan), and consumer staples (Proctor & Gamble, Coca-Cola) can all benefit from higher inflation as they carry the ability to pass on price increases to consumers and suppliers.
Will Infrastructure Ever Get Passed in Congress?
Congress continues to dither and fight over how much and “who gets” infrastructure spending. Congressional arguments range from $1 to $3 trillion. We do eventually see an infrastructure program getting implemented and are keeping an eye on investment sectors that can benefit from infrastructure spending. The biggest industries that can benefit are energy, industrials and utilities. Companies such as Enbridge (gas pipelines), Transurban(toll road operator) , The Southern Co. (gas and utility), Nucor (steel), Eaton (electric power), and Kansas City Southern (transports) are companies that can benefit.
Which sector in the S&P 500 has been the best performer this year but the worst over the past 10 years?
Have a Great Week!
2) Energy is up 50.4% this year but has a total return of minus 6.2% the past 10 years.