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S&P 500 Hits 12-Month High
From the lows set last October to the close on Friday, the Standard & Poor’s 500 Index (S&P 500) moved up more than 24% and hit a 12-month high. Not bad. The Dow Jones Industrial Average (DJIA) crossed 13,000 a few times intraday and the Nasdaq Composite Index closed at a level not seen since December of 2000. Not too shabby.
Also, for those counting, we are at 21 straight weeks of better economic data but we recognize that a $6 surge in Brent crude prices to $125 will have some impact on U.S. real Gross Domestic Product (GDP). Most estimates for 2012 real GDP remain at 2.5% and they’d probably be higher than that were it not for oil and gasoline prices climbing.
For the week, the DJIA gained 0.26% to 12,983, the S&P 500 gained 0.33% to 1,366, and the Nasdaq Composite Index gained 0.41% to 2,964. The Russell 2000 Index, which tracks the performance of small capitalization stocks, lost ground this week, shedding 0.21% to finish at 827.
Earnings season for the S&P 500 is pretty much wrapped up with 467 companies having reported. Overall, the stock market did very well over the reporting period but the revenue and earnings news were rather lackluster. 56.7% of the companies beat their revenue estimates – this is below the historical average of 62%. Additionally, 60.4% beat their earnings estimates – also below the historical average of 62%.
According to Bespoke Research, if you subtract the number of companies that lowered their earnings guidance for next quarter from the number of companies that are raising their earnings guidance, that number is negative for the second straight quarter.
U.S. consumer net worth (CNW) seems to be on track for a new high in the first quarter of 2012 primarily due to higher stock prices. First quarter CNW is on track to increase at almost a +20% q/q annualized return ‒ a new recent high and not far below its 2007 record high. Higher CNW is partially offsetting rising gasoline prices; however it’s hard to know by exactly how much.
We recommend investors stay invested for growth and keep their eye on energy prices. It’s not prudent to try to hedge against a crisis with Iran – that’s a coin flip.
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Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC
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 is an unmanaged index generally comprised of 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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