Morning Commentary
It was another good day for the market, considering these are the lazy days of summer when no one is around. I can leave the house an hour later than usual and make it in almost the same time it would take when everyone is back from the Hamptons.
S&P 500 Index |
+0.21% |
Communication Services (XLC) |
+0.62% |
Consumer Discretionary (XLY) |
+0.79% |
Consumer Staples (XLP) |
-0.71% |
Energy (XLE) |
+0.51% |
Financials (XLF) |
+0.39% |
Health Care (XLV) |
0.00% |
Industrials (XLI) |
+0.74% |
Materials (XLB) |
+0.39% |
Real Estate (XLRE) |
-0.91% |
Technology (XLK) |
+0.16% |
Utilities (XLU) |
-0.72% |
The Message of the Market
That said, the dynamics of the session was very telling. Money came out of high-yielding safer sectors in real estate and utilities, and consumer staples were the big losers. In fact, The J.M. Smucker Company (SJM), a name I thought was already oversold, took the sector down on flaccid earnings results.
Americans simply aren’t paying up for basic consumer staples. This might hasten consolidation in the sector, but it also means would-be premiums would be lower.
Conversely, we saw homebuilders roar after Toll Brothers (TOL) posted strong earnings, lifting Consumer Discretionary (XLY) sector to the top performer of the session. The homebuilders absolutely have been crushed this year. It will be interesting to see if value buyers flock in today.
On the topic of value, underperforming tech names, including chips, fetched a lot of interest yesterday. There is huge value there, although these names are a lot more volatile than traditional value investments.
Market breadth was very impressive: 361 new highs versus 54 new lows between the NYSE & NASDAQ.
Milestone
Yesterday, several equity indices reached all-time highs Intraday, including the S&P 500, Russell 2000, and the Dow Jones Industrial Average.
“Why should I invest in the stock market?”
Consider yesterday’s milestone, and what it would have meant to your life if you would have invested $10,000 or maybe $100,000 over time, or simply didn’t sell in a panic. You would have beaten inflation and be positioned to attain the things that are the foundation of the American Dream.
Climbing Out the 2009 Abyss |
Mar 9, 2009 |
Aug 21, 2018 |
Change |
S&P 500 |
676 |
2867 |
+324% |
Dow Jones Industrial Average |
6547 |
25848 |
+295% |
Climbing Out the 2009 Abyss |
Mar 9, 2009 |
Aug 21, 2018 |
Change |
College 4 year Private |
$29,260 |
$34,740 |
+19% |
College 4 year Public |
$8,040 |
$9,970 |
+24% |
New Car |
$28,970 |
$34,670 |
+20% |
New Home (Median) |
$205,100 |
$302,100 |
+47% |
College source: College Board
Housing source: https://www.census.gov/construction/nrs/pdf/uspricemon.pdf
Political Intrigue or Injury?
We’ll see how all the late breaking news interferes with the stock market rally. I’m not sure to what degree if any - it will curb investor enthusiasm. The Dow pulled back into the close 58 points, but it also pulled back the last three sessions (49, 59, and 38 points).
Meanwhile, after the close, Urban Outfitters (URBN) was higher on earnings, continuing the trend of strong results from retail and reflecting a very robust and confident consumer.
Today’s Session
The big news of the morning is the resolve of the consumer now being recognized and acknowledged by Wall Street. I’ve been pointing this out for a long time.
Urban Outfitters beat as operating margins surged to 11.8% from 8.6%.
La Z Boy beat and guided higher.
Target crushed consensus and is the story of the day:
Last year, the company saw average ticket plunge as lower prices were the only way to lure customers to brick and mortar stores. Digital growth of 41% versus 32% a year ago underscores execution, and since its only 5.6% of total revenue, there is significant room for growth.
Today, the market makes history, which can trigger some selling on the new.
Comments |
Just discovered your newsletter - terrific - also enjoy your show on Fox - Hoping, with the information you provide, to make the right stock choices. Patricia Heng on 8/22/2018 12:08:31 PM |
Charles, & FBN, We thank you good sir,& ALL at FBN. You keep reporting on the FACTS, real NEWS, & the TRUTH . Sheeple socialist propaganda fake news are all trying to collapse, (& failed COMPLETELY) the USA ECONOMY. We thank you Charles, FBN, & president Trump, We are All 100% supporters . Life is great, be invested. Ed on 8/22/2018 2:21:35 PM |
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