After the rollercoaster ride during the first two weeks of the year, it was nice to see investors come back from the Martin Luther King, Jr. holiday weekend in better spirits. The S&P 500 put in its first weekly gain of the year last week, climbing nearly 2%.
Some companies had really big wins last week such as Delta Air Lines, Inc. (NYSE:DAL), Southwest Airlines Co (NYSE:LUV) and Skyworks Solutions Inc (NASDAQ:SWKS); all three of which posted fourth-quarter financial results that beat the consensus estimate (more details in a moment).
In fact, DAL shares climbed 10% last week, LUV shares surged more than 13% and SWKS shares rallied 10%.
Aside from strong earnings, the market spurred higher with the European Central Bank’s (ECB) decision to implement a quantitative easing (QE) program. Last Thursday, the ECB announced that it would buy 60 billion euros ($68.4 billion) in bonds per month, starting in March and concluding in September 2016.The QE program will total 1.1 trillion euros ($1.3 trillion).
The QE program will keep interest rates ultralow (0.05%), which, in turn, will give banks more money for lending and hopefully produce more economic growth in the eurozone. The eurozone economy is expected to grow less than 1% in 2014, as deflation and a poor jobs market have hindered economic growth.
With interest rates near zero or negative in the eurozone, Japan, Switzerland and around the world, the S&P 500 is currently yielding more than a bank and money is flooding back into the U.S. And all of this foreign capital is causing a major shift in the market.
A lot of the big multinational companies like Caterpillar Inc. (NYSE:CAT), McDonald’s Corporation (NYSE:MCD) and The Coca-Cola Co (NYSE:KO) are struggling as the stronger U.S. dollar pinches profits. These companies are now getting paid in depreciating currencies. So, the sweet spot of the market is shifting to the mid-cap stocks arena, to domestic companies, especially those that pay fat dividends.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
