Dow rises greater than 100 factors, however shares head for first down week in six

Stocks rose on Friday but are well on their way to a five-week winning streak after a hotter-than-expected inflation reading was released on Wednesday.

The Dow Jones Industrial Average rose 160 points, or 0.4%. The S&P 500 was up 0.6% and the Nasdaq Composite was up 0.8%.

Dow component Johnson & Johnson saw shares surge about 1% after the Wall Street Journal reported the company was being split in two. Johnson & Johnson is reportedly splitting its consumer health division into a separate public company.

Mega-cap technology names supported the broader market. The Facebook parent Meta rose by more than 3%. Apple, Microsoft, Amazon, and Google parent Alphabet each added more than 1%.

The main averages are well on their way, the week after hottest inflation report in 30 years. The Dow is down 0.7%, the S&P 500 is down 0.4% and the Nasdaq Composite is down 0.9%.

CNBC Pro’s Stock Picks and Investment Trends:

New data from Friday morning underscored ongoing inflation fears and labor market challenges.

Consumer sentiment in early November dropped to its lowest level in a decadethe University of Michigan reported on Friday. According to the report, many respondents cited inflation concerns.

In the meantime, Workers left their jobs in record numbers in September 4.43 million people quit, the Ministry of Labor reported on Friday. The exodus came when the U.S. had 10.44 million job openings that month, according to the report.

Despite this week’s losses, the three big averages are within striking distance of their record highs. The S&P 500 is up more than 24% in 2021.

Dow, S&P 500 fears? Worrying a few correction is flawed approach to make investments

the Dow Jones industry average and S&P 500 index just suffered five consecutive days of losses and her worst weekly performance since – wait for it – June. Investors moved into the summer to ease their stocks a bit and ended the summer on a similar sell-off. Is there more in there? Is the big one – that the stock market correction bears have been waiting for – to finally fall?

Many of the main factors cited for a potential sell-off are known to investors, which means it is harder to see at this point how they would trigger a correction at that point. There is the Delta variant. There is the Rejuvenation of the Federal Reserve and a change in central bank policy amid a sudden slowdown in employment and economic growth. There’s the latest political headline – new scramble in Washington DC on a corporation tax increase and a possible share buyback tax to fund President Biden’s spending plan.

And there’s the problem that stock has left behind with every new record during this bull market (and the bull that preceded or, depending on your view, was interrupted by the pandemic): stock valuations are high.

There are also short-term pressures to consider: the “seasonal choppiness” of autumn that market strategists believe is real, and the most recent US stock market downgrades by major Wall Street bankswhich could keep the pressure on the stocks, especially with so much money coming into the market from retail investors lately. But it’s always more likely that something investors don’t see coming (like a pandemic) will cause a historic sell-off than anything investors already know.

That makes technical market indicators and the historical performance of the S&P 500 a reasonable way to gauge whether investor confidence will survive the final round of selling.

Johannes Eisele | AFP | Getty Images

For Keith Lerner, co-chief investment officer and chief market strategist at Truist, the history of the S&P 500 suggests that the bull market is not over yet, even if profits are modest.

Since 1950, there have been 14 years in which the market rose more than 15% through August. By the end of the year, stocks had gained an average of another 4%, rising in 12 of the 14 cases.

Sales of shares are to be expected

Setbacks are to be expected. The largest pullback in 2021 was around 4%. This is not typical, according to Lerner’s review of the data. The only two years in the historical record that the S&P 500 didn’t see at least a 5% decline were in 1995 and 2017. And history goes that rapid gains must slow down. In his customer research, Lerner finds that the current bull market has increased 102% in 1.4 years, compared to the average bull market gain of 179% in 5.8 years since 1950.

But from what Lerner calls the “evidential approach” in the technical indicators and macro contexts, the message for investors – not traders looking for any short-term move – is that US stocks will still be for the next six years can rise up to 12 months.

Last week’s losing streak is, in his view, one of the strongest starts to the year in several decades, no cause for concern. Often times, when the market is moving, the automatic reaction is to end up going negative, but Lerner says investors shouldn’t be afraid of strength as long as it is supported by fundamentals. “A trend in motion is more likely to stay in motion,” he said. “The carousel of worries keeps spinning, and when one concern recedes, another emerges to take its place. There is always something to worry about … there can always be something that we don’t talk about today that can knock us aside. ”

Even if the Black Swan event doesn’t happen, that doesn’t mean there won’t be 3% to 5% corrections. “That’s the price of entry to the market,” said Lerner.

That doesn’t mean investors should never take tactical steps, but he does say that it is better for the majority of investors to focus on the next big step in the longer term than the next step the traders take.

A slowdown in economic growth is not growth

The economy may lag behind the rosiest of expectations for the Roaring 20s, but Lerner’s focus is the fact that slower expansion is still not a recession, and stocks rise 85% of the time during times of economic expansion. Stocks are highly valued, but he noted the S&P 500’s price-to-earnings ratio hasn’t hit new highs this year, despite the overall market.

“Valuations are still high, so we don’t expect strong price-earnings expansion and then earnings growth so stocks can’t grow at the same pace.” However, he added that analysts underestimated earnings power overall after the pandemic crashed.

This is what happens after recessions, it happened after 2009, he said: estimates are trimmed too far and corporate profits come back faster than expected as companies cut costs and focus on efficiency. If the economy is still fragile now, it is amid a strong rebound from lows and GDP that are driving more sales and more of those sales flowing into the bottom line. “And that’s why we have record corporate profits,” said Lerner.

One of the factors that should worry investors is the slowdown in growth. After being positive for over a year, Economic surprise index turned negative. “And deeply negative,” said Lerner. This is an indication that after a year where investors and economists underestimated strength and the numbers beat estimates, now with Covid concerns and an economic slowdown, the data was surprisingly on the downside.

But that’s not a red alert. “It just means, from our point of view, that things have caught up with expectations. But that’s a slowdown. We’re seeing a climax, but it will stabilize,” said Lerner.

Exceeding peak growth does not mean weak growth, and relative opportunities in the market remain a bigger focus than the cheapest asset. “There is no such thing as the ‘cheapest facility’ today,” he said.

The technology-oriented S&P 500 has internal problems

He sees relative opportunities within the S&P 500. The S&P 500 overall wasn’t as strong as its highly weighted tech stocks in the final leg up to the recent highs. The S&P 500 Equal Weight Index is up less than 3% since last May as mega-cap tech stocks took the lead. That was a reversal from early 2021 when inflation trading caused the cyclicals to outperform the mega-caps. And it means that stock prices have undergone major corrections as the stock market set new records.

The money hasn’t left the market that much, but has flowed back into the huge balance sheet, cash flow cows in technology that can continue to perform even in a slower economy. This is a sign that investors have become a bit more defensive even within the S&P 500. But it also means that returns in the S&P 500 can expand if the current carousel of worries doesn’t lead to a sustained negative turn in stock sentiment, known as Lerner.

“Internal rotation is healthy,” he said. “We’d rely a little on a balance between the two. It is not so clear that investors should be exclusively cyclical or growth oriented. … Expectations have been severely set back, so a little good news can go a long way. “

The earnings growth rate is likely to peak soon, and Lerner says the next year will have much more difficult earnings calculations than after a pandemic-induced economic downturn. But peak earnings growth is not the same as peak earnings. “The trajectory is higher,” he said. And instead of trying to name spike profits, he continues to focus on whether or not the earnings estimate revisions may turn negative and sees no symptom or pattern in this market.

“If we have earnings growth that is peaking and at a peak in Fed accommodation and we cannot achieve a better fiscal environment, it all indicates that the trend is higher, but with moderation, and that turns into volatility and some bigger wins and opportunities. “Below the surface instead of the headline index.”

That might be a gut check for investors driving the market as a whole higher, and this is evidence of the sales that took place last week, but Lerner advises every investor to remember what famous Fidelity Magellan Fund manager Peter Lynch was saying once said: “Investors who tried to anticipate corrections have lost far more money than they have lost in the corrections themselves.”

1 Dow Jones Inventory That Might Double Your Cash

When we think of Dow Jones stocks, we think of solid companies that have delivered steady profits and income over time. We can also think of annual dividend payments. Some stocks in the index – such as Johnson & Johnson and coke – have even increased their dividends 50 years in a row. Such investments are the backbone of many portfolios.

These stocks are usually safe bets. And that’s great. However, that doesn’t mean their stock performance is limited. In fact, there is one Dow Jones stock that could double your money. The digital business soared during the worst part of the pandemic. And the future after the pandemic looks bright. Which company are we talking about? Continue reading…

Image source: Getty Images.

Ready for the pandemic

One more tip: think of sports, brand strength, and basketball legend Michael Jordan. This Dow stock is none other than the sportswear giant Nike (NYSE: NO). The company’s timing was right when it launched a digital and direct-to-consumer plan in 2017. When the pandemic broke out, Nike was ready. Most of its stores are temporarily closed. And it missed sports-related sales – they were canceled.

But Nike’s digital sales were increasing. The company also focused on its membership program and used its apps to keep fans connected. Nike even launched products digitally through its sneakers app. All of this helped Nike recover quickly after the retailer opened its physical stores.

The company’s most recent quarter has a lot in store for us positive evidence about the future. Nike announced fourth quarter earnings last month. During the quarter, some stores in other parts of the world were temporarily closed. But North America had reopened as vaccinations increased and coronavirus cases decreased.

Quarterly revenue rose 96% year over year to $ 12.3 billion. Of course, last year’s period has been weak due to the health crisis. It is therefore useful to compare the sales figures with a time before the pandemic. And we see growth there too – sales increased 21% compared to the fourth quarter of 2019. Net income for the full year rose 126% to $ 5.7 billion. One of Nike’s greatest success stories is the Jordan brand – even 18 years after the basketball player retired. The brand had sales of nearly $ 5 billion for the fiscal year.

Keys to recovery and future growth

Nike’s digital platform was key to recovery. But it is also the key to future growth. Experts say consumer habits will stay the same when shopping online. This is great news for Nike. The company says digital sales now represent 35% of its business – that’s three years ahead of the original plan. Nike expects that number to reach 50% by fiscal 2025.

Nike’s loyalty program members will also drive growth. The company now has 300 million members. They have “proven to be a compelling driver for repeat engagement and purchases in digital and physical retail,” said CEO John J. Donahoe on last month’s conference call.

Currently, Nike stock trades at around $ 160. A look at another sportswear retailer with brand strength shows us that Nike could come a lot higher.

Lululemon Athletica, a maker of yoga-inspired clothing, sells for more than double the price of Nike. But Nike beats this company when it comes to profits and sales. And Nike is trading for less in terms of future earnings estimates. At today’s level, Nike stock looks like a bargain.

NKE Net Income (Annual) Chart

NKE net income (annually) Data from YCharts

Of course, a big surge is unlikely to happen overnight. But Nike has a lot of catalysts to be stable Gains over time – and after all, all the positive news could very well double the stock price – and your money.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

Outdated City Spring artist Jonathan Dow creates tree sculptures with shredded cash

SPRING, Texas – They say money doesn’t grow on trees, but Jonathan Dow wouldn’t agree. He is a money tree artist who opened a shop in the heart of Old Town Spring just over a year ago. Inspired by the bonsai, Dow has been creating these unique trees for some time.

He uses shredded paper to make the leaves. According to Dow, the destroyed money is available through the bureau for engraving and printing. He is allowed to use the currency for artistic purposes. Many people definitely notice it when they take a closer look at his creations.

Dow wraps the trunks and branches with hemp twine. The trees are mounted on driftwood and decorated with artificial moss for the finishing touches. The best part is that you don’t have to water them.

Dow says he got the idea years ago after receiving a small bag of shredded money as a gift. Consumers can purchase small quantities of the scraps at visitor centers in Washington, DC or Fort Worth. Dow accepted the novelty gift and created his first money tree while living in Florida. Since then, his creativity has jumped to the next level. You can buy one of its seedlings starting at $ 20, and prices go up depending on the size of the tree.

To see more of Dow’s artwork, visit his website Here