|Day's Range||2,800.01 - 2,809.70|
|52 Week Range||2,417.35 - 2,872.87|
All four of these names have very strong cash flows that allow them to not only pay better than 3% dividends, but also to buy back stock. Two are consumer staples, a sector that's been the S&P 500's second-best performer over the past month (up 3.83%). The others are in health care, which has been the S&P 500's No. 3 best sector (+3%) during the past month.
As tech companies continue to dominate Wall Street, with four now standing alone with valuations of more than $800 billion, gigantic growth is priced in and expected. All the drama is in the forecasts.
A recent survey by Bank of America Merrill Lynch found that more than 80% of professional fund managers say that a trade war is their biggest concern, yet you would not notice it by the performance of the U.S. equity markets.
In fact, all recessions since the 1970s have been preceded by term spread turning negative (an inverted yield curve). As we enter the 108th month of the current expansion, the second longest in U.S. history, and the yield curve flattens to levels not seen since 2007, it's logical for investors to fear a recession may be on the horizon. Using the last five recessions as our guide, we calculated the average time-span between term spreads falling below 50 basis points and inverting, and the average time-span between inversion and the start of a recession.
Trump also said the strong gains in the stock market since his election give him the opportunity to wage a trade war, noting: “We’re playing with the bank’s money.” U.S. Treasury yields rose on Friday as investors ignored criticism of U.S. Federal Reserve monetary policy by President Trump.
Tariffs are starting to bite big manufacturers and Wall Street could get another bout of caution and uncertainty from major industrial companies when a swath of reports comes in over the next week. Investors are worried about the impact on earnings should the United States' trade war with China and other major trading partners escalate. "If today's political rhetoric intensifies and translates into actual protectionist policies, it will be a negative for all businesses in the U.S. and abroad, including ours," Hamid Moghadam, chief executive of supply chain management company Prologis, warned on a conference call on Tuesday.
The S&P 500 has been a bit flat during the week, as we continue to dance around the 2800 level. This is an area that will have a lot of psychological importance attached to it, but I think at this point the overall attitude is one of persistence, so that may win out in the end.
The S&P 500 was very choppy in the week on Friday, reaching just above where we opened in the CFD market. As I record this, it looks as if the 2810 level is going to offer significant resistance. I think that resistance extends higher, so at this point I don’t think the market is quite ready to take off.
Investors seeking income have frequently found it in the S&P 500’s telecom sector, which was recently yielding 5.8%. The revamped telecom sector, which will be renamed communications services, will add companies such as Alphabet (GOOGL) and Facebook (FB). Part of the idea is to offer a sector that more accurately reflects the big changes in telecom companies as they blend with content providers.
We've had an interesting first half of 2018 in the books, but now as we look ahead to the balance of the year, what can we expect? Joe Fahmy of Zor Capital gives us a preview.