“Don’t write this down, but I find Milton probably as boring as you find Milton.” -Professor Jennings, Animal House, 1978

By David B. Armstrong, CFA | Nov 22, 2010 | Weekly Market Commentary

There was a lot of action last week but by the end, the equity markets were basically flat… which some people would say is boring.  However, it was nice to see good earnings from some tech companies as well as the news that Nike decided to raise their dividend.

We also saw some good news in the labor markets, consumer spending, manufacturing and exports – all which has led many to believe that Q3 GDP could be revised up to around 2.7%.  That’s nice – certainly better then revised down! Oh, and there was that big car company IPO too.

Of course this is the week that leads up to “Black Friday” and the new emerging, “Cyber Monday,” which will set the tone for early estimates on the holiday retail sales.

In all, we like the good Q3 earnings and we like dividends.

The equity markets, while still positive, were mostly flat for the week.  The Dow Jones Industrial Average (DJIA) rose 0.10% last week to finish at 11,204, the S&P 500 Index rose 0.04% to end at 1,200 and the Nasdaq Composite Index was flat to finish at 2,518.  The Russell 2000, which measures smaller capitalization stocks, rose 0.71%% to finish the week at 724.36.

Q3 earnings are just about finished, with just a few companies left to report.  Barring any massive surprises, it looks like just 56% of companies in the S&P 500 beat top-line (revenue) forecasts and 75% beat their bottom-line (net income or earnings per share).

The former was weaker than we would have liked to see for the quarter (we have been saying for most of the year that it was important for us to see good revenue growth since cost cutting could not go on forever).  However, 56% of the companies beat the expectations for revenue, so it’s not like it was a terrible quarter for revenue – it’s just that we would have liked to have seen it be 75% like the earnings number.

The earnings number was solid though, with the technology sector boasting the best results of all 10 S&P 500 sectors in terms of the highest percentage of companies to beat their earnings expectations.

A few weeks ago we wrote about the stock market becoming the stimulus our country needs to get back on our feet.  Perhaps we are starting to see signs of the market rally translating into business confidence.  We liked the big IPO last week as well as some merger news and a lot of corporate bonds being sold as well.

Enjoy your Thanksgiving this week.  Call us for help or if you have any questions.

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. Precious metal investing is subject to substantial fluctuation and potential for loss. The fast price swings of commodities will result in significant volatility in an investor’s holdings.

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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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