UP, UP AND AWAY?

DJIA: 52-wk: +14.18% YTD: +2.81% Wkly: +0.4%

S&P 500: 52-wk: +22.89% YTD: +5.38% Wkly: +1.37%

NASDAQ: 52 wk: +36.46% YTD: +6.52% Wkly: +2.31%

Russell 2000 Index: 52-wk: +4.75% YTD: -0.84% Wkly: +2.41%

LAST WEEK:

Wall Street closed out its latest winning week with another milestone, the S&P 500’s first close above 5,000.

S&P 5000 CAN’T MASK THE CHAOS BENEATH THE CALM:

There’s chaos beneath the stock market’s calm–a calm that could be ready to break. On the surface, everything looks copacetic. The S&P 5000 INDEX gained 1.4% for the week to notch its first close above 5000. It also closed higher for the 14th week out of the past 15, something that last occurred in 1972. The calm, however, is only surface deep. Nowhere is that more true than in shares of companies that have reported their fourth-quarter results. As of Thursday, the median S&P 500 stock has moved 3.6% after reporting, according to Dow Jones market data, nearly a point higher than the 2.7% median over the past 10 years.

These large swings are happening because the outlook for companies is far less certain than what it appears to be for the overall market. The S&P 500 trades at 20.4 times 12-month forward earnings-make its way higher while seeming to ignore the possibility that economic growth could decelerate, disinflation could peter out short of the Fed’s target, or that rates remain right where they are. “You’ve got investors on edge, so they’re reacting somewhat more intensely to these results, ”Sevens Report’s Tom Essaye.

THE YIELD ON THE 10-YEAR TREASURY:

Rose to 4.17 percent from 4.15 percent late Thursday. Earlier this month, it was just 3.85 percent.

2024 ALREADY FEELS LIKE A UNIQUE YEAR TO BE AN INVESTOR:

There are two ongoing wars with simmering geopolitical tensions, which threaten deeper U.S. involvement. The Federal Reserve appears poised to cut interest rates in 2024, but the timeline is far from certain. And perhaps most obviously, there are critical elections happening across the developed world, the most consequential of which is the U.S. presidential election.

In terms of Fed policy, Mitch Zacks thinks there’s too much emphasis being placed on predictions about rate cuts in 2024. Investors are too focused on when and how many times the Fed will cut rates in the new year, grossly underappreciating the most important takeaway of all: that the Fed is poised to cut rates during an economic expansion. Historically, that’s quite rare.

Finally, there’s the election year. The primary contests are ongoing, but if the U.S. gets a Biden- Trump rematch in the general election, it will be the first time since 1892 that the two parties’ candidates have already been president. That last time was Cleveland versus Harrison.This is an interesting fact, sure. But in Mitch Zacks view, it’s also a very important insight for markets. It means there’s already a reasonably good understanding of policy positions and proposals from each candidate, which could theoretically equate to fewer uncertainties about taxes, property rights, and the business environment no matter who wins. Fewer uncertainties are a good thing.

CAN DIVIDEND INVESTING RISE FROM THE DEAD?

The once-blockbuster strategy of picking big payers has been battered by growth-focused tech titans, but the right approach could bring it back.

THE BUREAU OF LABOR:

Statistics releases the consumer price index for January. Consensus estimate is for the CPI to rise 2.9% year over year, half a percentage point less than in December.

TUESDAY FEBRUARY 13 NEWS:

8:30 am (ET) Consumer price index Jan. 0.2% 0.3%

8:30 am (ET) Core CPI Jan. 0.3% 0.3%

8:30 am (ET) CPI year over year 2.9% 3.4%

8:30 am (ET) Core CPI year over year 3.7% 3.9%

Proceed with caution here.

― Richie

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