6 !!!!!! – Monday Morning Market Memo – February 4, 2019

Good morning,

For all of our football fans out there, and more specifically New England Patriots fans, the six in this title probably makes you think about six Super Bowl wins for Tom Brady, Bill Belichick (as head coach), and the Patriots. As much as we like to talk football, the six we are referencing here has to do with the stock market! The Dow Jones Industrial Average posted its sixth straight weekly gain, as it rose 1.3% to close last week at 25,063. Market moving news included some key economic data, Federal Reserve policy statements, and corporate earnings.

The U.S. economy added 304,000 jobs last month according to the Department of Labor, which was well ahead of market expectations for a figure of around 170,000. In other data last week, the ISM (Institute for Supply Management) Index final reading for January came in stronger-than-expected. Perhaps most important to the equity market last week however, was the tone set by the Federal Reserve.

The Fed statement was Dovish (accommodative) and its easy language was tonic for stocks. Another factor in trading last week were earnings reports. While the headlines were somewhat mixed, the overall feeling to the reports feels like one of relief, as results seem better than Wall Street was expecting, and certainly better than many of the worst fears, as investors were uncertain how some global slowing and trade disputes would impact the bottom line.

Some big name Dow stocks that moved higher after beating on earnings included Chevron, Merck, and Exxon Mobil. Overall, fourth quarter earnings are expected to increase 15.5% from the fourth quarter of 2017 – and of the 234 companies in the S&P 500 that have already reported earnings for the fourth-quarter of 2018, 70.9% have reported earnings above analyst expectations, which is above the long-term average of 64%, according to I/B/E/S data from Refinitiv.

All the best,

Southport Station Financial Management, LLC