“Off The Wall” Blog
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Bernanke speaks…News – he does not say anything new…
By David B. Armstrong, CFA | May 02, 2011 | Weekly Market Commentary
To sum it all up, Chairman Bernanke made it clear that the Federal Reserve will keep rates low. In other news, 1st quarter GDP was released and showed that the U.S. only grew at a 1.8% (annualized) rate, which is lower than expected. Many analysts are attributing the lower number to poor weather. Earnings news was really good as well.
Small cap indices, the Dow Jones Transportation Average and gold reached all time highs last week, while the S&P 500 reached a high not seen since the financial crisis started. Finally, the NASDAQ had its highest close since December of 2000.
The equity markets we track were all winners last week. The Dow Jones Industrial Average (DJIA) gained 2.44% to finish at 12,811, the Standard & Poors (S&P 500) Index gained 1.96% to finish at 1,364 and the Nasdaq Composite Index gained 1.89% to finish at 2,874. The Russell 2000 index, which tracks the performance of small capitalization stocks, gained 2.32% to finish at 865.
The month of April was good across the board with the DJIA up 4% for the month, the S&P 500 Index up 2.9%, the Nasdaq up 3.3%, and the Russell 2000 index up 2.6%.
With two-thirds of S&P 500 companies having reported, the revenue and profit numbers have been impressive – especially compared to recent quarters. The percentages of companies beating estimates may have fallen, but they remain solid at 70% beating revenue projections and 76% beating profit expectations on the top and bottom lines.
The number of companies that have reaffirmed or even raised their outlook despite many of the global challenges (such as Japan, higher input costs and some slower economic growth in developed economies) has been a big surprise to the markets. We suspect that this news has been a major contributor to fueling stock market gains in April.
So far, materials, industrials, consumer discretionary, and technology have posted the best earnings numbers relative to expectations thus far. As you know, we still favor the consumer discretionary and technology stocks.
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Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC
**Standard Compliance Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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