Stocks finished out the trading week with a weak volume uptick as the Dow closed higher by 53 points to 18,570. Utilities were the leading sector which is not a group usually viewed as “quality leadership” since they usually only do well in times of stress. For the week the Dow gained about 25 basis points. With markets near record highs after a recent breakout it appears that stocks are wrestling with mixed earnings reports and fears of stress in Europe.
Bloomberg reports that analyst David “DeeDee” Doyle of Macquarie Capital, wrote a note to clients about the “$13 Trillion gorilla” aka the US consumer. In the note he said recent data shows that the American consumer may have just posted its best quarter of consumption since 2006 estimating the growth to be north of 4%. DeeDee said that wage growth has finally started to rise and together with low oil prices and low interest rates is fueling the trend. He also notes however that with current high inventory levels of goods the rise in consumption will not be felt by the rest of the global export economy.
General Electric reported earnings and they were the best quarterly numbers since 2011 as GE beat both top and bottom line estimates with a 64% gain in profits and a 15% jump in sales. GE saw strength in its digital, power and renewable segments while the oil and gas business continued to fall. New orders across various lines fell however and this news overshadowed the positive tone of the report sending shares lower in another case of “Wallstreetitis” where good results don’t result in good results.
I will be on another Boy Scout hike next week. Cleo will be in the office ready to handle any service issues, questions, comments or jokes you might have.