CWS Market Review – March 1, 2024
“There are only two kinds of forecasters—those who don’t know, and those who don’t know they don’t know.” – John Kenneth Galbraith
The S&P 500 closed at another all-time high on Thursday (5,096.27!), but what really made news is that so did the Nasdaq Composite. That index had not made a new high since November 2021. The tech-heavy index went 569 trading days without making a new high.
We’re now two months into 2024, and it’s looking like a good year for stocks. The three major indexes are off to their best start to an election year since 2012. Since October 27, the S&P 500 has rallied 23.8%.
This is great, but I urge investors to be pleased with the results, but don’t get carried away. The market can change quickly. Of course, if we were to add inflation to the mix, then the S&P 500 is still well short of the high it made more than two years ago.
Inflation is still being stubborn. On Thursday, the government said that the core PCE price index rose by 0.4% last month. That’s not as bad as some people feared. The PCE is important because this is what the Fed prefers to follow for inflation. The PCE represents what people actually buy.
Over the last year, the core PCE is up by 2.8%. Service prices increased 0.6% in January, while goods fell by 0.2%. The non-core rate increased by 0.3% last month, and it’s up 2.4% over the past year. It still looks as if the Fed may cut interest rates in June, but not any sooner.
We’re nearing the end of Q4 earnings seasons, and the results have been OK, but not great. The S&P 500 is on track to report earnings growth of 4%. All told, 74 companies in the index have issued negative guidance. The long-term average is 62 companies.
The Q4 earnings-beat rate is running at 73%. The long-run average is 77%. (On Planet Wall Street, beating expectations isn’t enough. One must beat expectations by more than expected.)
We had two Buy List earnings report recently, and both were quite good. Farmer Mac and Heico beat Wall Street’s consensus. Farmer Mac also hiked its dividend by 27%. This was its 13th consecutive annual dividend increase.
Another stock that’s been looking up recently is Silgan Holdings. The container folks increased their dividend by 5.6%. This was Silgan’s 30th dividend hike in a row.
There’s a lot to get to this week, so let’s first take a look at our nearly-complete Earnings Calendar for Q4.