Stock Market This Week
Stock Market This Week – 01/21/23
The stock market had an up-and-down week but finished strong on Friday. Inflation is showing signs of cooling but probably not enough for the Fed to ease up on rate hikes. However, investors are buying more growth-oriented names, with many of these stocks coming off their lows.
As shown by data from Stock Rover*, only the Nasdaq had positive returns for the week. The S&P 500 Index, Russell 2000, and Dow Jones Industrial Average (DJIA) had negative returns. The Dow 30 performed the worst, continuing a reversal of last year’s trends. Oil rebounded, and the VIX gained.
Three of the eleven sectors posted gains for the week. The Communications Sector led the way, followed by Technology and Energy. Conversely, the worst-performing indices were Consumer Defensive, Industrials, and Utilities.
Source: Stock Rover*
The Nasdaq is performing the best for the year, followed by the Russell 2000. But all the major indices are up. In addition, all nine of the 11 sectors are up year-to-date. Only more defensive sectors, like Healthcare, Utilities, and Consumer Defensive, were down.
Source: Stock Rover*
The dividend growth investing strategy has performed relatively well, with positive returns. The table below shows their performance by category. All categories are now in positive territory.
Dividend Increases and Reinstatements
Search for a stock in the list of dividend increases and reinstatements. This list is updated weekly. In addition, you can search for your stocks by company name, ticker, and date.
Dividend Cuts and Suspensions List
The dividend cuts and suspensions list was most recently updated at the end of November 2022. As a result, the number of companies on the list has risen to 602. Thus, well over 10% of companies that pay dividends have cut or suspended them since the start of the COVID-19 pandemic. The list is updated monthly.
Thirteen new additions indicate companies are starting to experience headwinds in December 2022.
Stock Market Valuation This Week
The long-term means of these two ratios are approximately 16X and 17X, respectively.
The market is still overvalued despite the recent correction and a bear market and rebound. Earnings multiples of more than 30X are overvalued based on historical data.
Stock Market Volatility This Week – CBOE VIX
This past week, the CBOE VIX measuring volatility ended at 19.85. The long-term average is approximately 19 to 20. The CBOE VIX measures the stock market’s expectation of volatility based on S&P 500 Index options. It is commonly referred to as the fear index.
Economic News This Week
Provided by Stock Rover*.
The Commerce Department reported advance U.S. retail and food services sales were down 1.1% to $677.1B in December. It was the second consecutive monthly decline and the fourth negative reading in the past six months. Retail sales, which are adjusted for seasonal shifts but not inflation, were up 6.0% year over year. Total sales for October 2022 through December 2022 were up 6.7% year over year. Sales declines were broad-based, with home furnishings (-2.5%), auto dealers (-1.2%), electronics and appliance stores (-1.1%), internet retailers (-1.1%), and clothing stores (-0.3%), all dropping in December. Department stores were especially hard-hit, plummeting (-6.6%), while gasoline stations fell (-4.6%). Restaurants, the only services category, declined (-0.9%) for the month and is up (+12.1%) year over year. Sales at garden centers rose (+0.3%), grocery (+0.1%), and sporting goods, hobby, musical instrument, and bookstores were up slightly (+0.1%). Core retail sales, which excludes spending on autos, gasoline, building materials, and food services, decreased by (-0.7%) in December.
The Labor Department reported that the Producer Price Index for final demand declined by an adjusted 0.5% in December. This follows increases of (+0.2%) in November and (+0.4%) in December. The PPI index was up 6.2% for 2022 after climbing 7.3% for the 12 months ending in November. The monthly decline was driven by a (-1.6%) drop in prices for final-demand goods, with energy and food leading the way. Nearly half of the decrease in the index for final demand goods is attributable to a (-13.4%) decline in gasoline prices, as the index for final demand energy dropped (-7.9%). The indexes for diesel fuel (-27.0%) and jet fuel (-17.7%) also fell significantly. Food prices dropped (-1.2%), led by declines in fresh and dry vegetables (-9.4%), and fresh fruits (-7.8%), while prices for chicken eggs (+24.5%) skyrocketed. The index for final demand services edged up (+0.1%), the smallest increase since April. The services increase can be traced to margins for final demand trade services (+0.3%). The final demand transportation and warehousing services index declined (-0.2%), while prices for final demand services less trade, transportation, and warehousing were unchanged. Excluding food, energy, and trade services, the so-called core PPI increased (+0.1%) in December, up 4.6% from a year ago. The core PPI increased (+0.3%) in November.
The U.S. Census Bureau reported housing starts dropped 1.4% to a seasonally adjusted annual rate of 1.382M units in December. Single-family housing starts, which account for the largest share of homebuilding, slid (-1.4%) to a rate of 1.382M units, down (-21.8%) from a year ago. Starts of five units or more slumped (-18.9%) to a rate of 463K units, down (-16.3%) from a year ago. New residential building permits, a proxy for future construction, fell (-1.6%) to a seasonally adjusted rate of 1.330M units. New residential building permits are running (-29.9%) below their December 2021 level. Single-family permits were down (-6.5%) from November’s revised 781K, while multifamily permits increased (+7.1%) to 555K. Leading the decline in building permits was the Midwest (-15.6%), followed by the Northeast (-2.5%) and the South (-1.7%). Only the Midwest saw an increase (+9.3%). Single-family housing completions at 1.005M were (-8.0%) below November’s revised reading, while multifamily completions were up (+12.1%) to 385K. The number of houses approved for construction but has yet to start dropped (-3.7%) to 285K units, with the backlog for single-family housing dropping (-4.9%) to 137K.
Curated Weekend Reading From Around The Web
Portfolio Management and Investing
How Do Stocks & Bonds Perform Following Big Down Years? (A Wealth of Common Sense)
Inflation Comes Down Despite the Fed (The Big Picture)
The Returns Conundrum: Is Your Strategy, Right? (Larry Swedroe, YouTube Video)
How much do you need for a decent retirement? (This is Money)
Nine Retirement Myths (Humble Dollar)
Key Insights from the Longest Study on Happiness (Art of Manliness, Podcast)
Talking to Children About Money (The Money Takes)