THE WEEK ON WALL STREET
Stocks reached new all-time highs last week as markets staged a strong rebound
from the previous week's declines. The Dow Jones Industrial Average rose 3.44%
while the Standard & Poor's 500 picked up 2.74%. The Nasdaq Composite index
increased 2.35%. The MSCI EAFE index, which tracks developed overseas stock
markets, gained 0.97%
STOCKS CLIMB
Stocks rallied on the first day of trading last week and gained further momentum on
Thursday and Friday. Despite some discouraging data on housing and initial jobless
claims, stocks management to set new highs, as investors cheered an agreement
between President Biden and a group of senators that appeared to pave the way for the
passage of a $1 trillion infrastructure bill. Positive results from the Federal Reserve's
stress test of banks, which raised the prospect of banks raising their dividend payouts
and share buybacks, and a key inflation measure coming in at market expectations
provided impetus for further gains. The S&P 500 had it best week since February and
ended the five-trading days at a record high.
HOUSING HEADWINDS
Historically low mortgage rates, the COVID-19 pandemic, and a flush consumer
have contributed to a very strong housing market in recent months. Last week's
housing data for May, however, showed that housing may be running into head-
winds. The rising cost of materials and labor led to a 5.9% decline in new single
home sales in May even as the median price hit an all-time high. Meanwhile,
sales of existing homes fell 0.9%, the fourth-straight month of declines, owing
to a very low inventory. High demand, coupled with a depressed supply, led to a
23.6% increase in the median price of an existing home.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Consumer Confidence.
Wednesday: ADP (Automated Data Processing) Employment Report.
Thursday: Jobless Claims. ISM (Institute of Supply Management) Manufacturing
Index.
Friday: Employment Situation Report. Factory Orders.
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS
Wednesday: Micron Technology, Inc. (MU), Constellation Brands, Inc. (STZ),
General Mills, Inc. (GIS).
Thursday: Walgreens Boots Alliance, Inc. (WBA), McCormick & Company Inc. (MKC).
FINAL THOUGHTS
We sometimes make a distinction between "investment" and "speculation". The
investor seeks long-term value, while the speculator shoots for short-term profits.
We believe there is value left to conquer as we continue the recovery cycle of our
economy. We leave the glitz of day-trading to others. Patience, discipline and
focusing on fundamentals remain the preferred strategy to a positive breakout
towards new highs.
Have a great week!
