Despite a week of uncertainty, stocks fell slightly on Friday and were off just a fraction for the week. On Friday the Dow Jones Industrial Average fell less than 0.1%, and the S&P 500 and the Nasdaq dropped the same. The Russell 2000 rose a fraction.
The weekly totals were much like Friday’s slight declines. To most investors, that was a good response to news that usually puts stocks in a tailspin, including a massive rocket attack by the U.S. on a Syrian airbase, weak car sales, a weaker-than-expected March jobs report and the March Federal Reserve meeting indicating an intent to cut their balance sheet later this year.
Oddly, while U.S. Treasury bonds closed higher in price, another “safe-haven,” utility stocks, fell more than other indices on Friday. The Dow Jones lost 0.5%, advancing just 0.2% for the week.
On Friday the defense sector rose, including Raytheon Company (NYSE:RTN), manufacturer of the Tomahawk cruise missile, and Lockheed Martin Corporation (NYSE:LMT), up 1.5%, and 1.2% respectively.
At the close, the Dow Jones Industrial Average fell 7 points to close at 20,656, the S&P 500 lost 2 points at 2,356, the Nasdaq fell a point to 5,878, and the Russell 2000 had a slight gain, closing at 1,365. The NYSE’s primary exchange traded 752 million shares with total volume of 3 billion shares, and the Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 1.2-to-1, and on the Nasdaq, decliners led by a small amount. Blocks on the NYSE fell to 6,168 from 6,558 on Thursday.
On Friday, the Dow Jones Utility Average reversed on a CBR Sell signal from my proprietary indicator. The close, at $699.22, came within a tiny fraction of penetrating the first level of support, the 20-day moving average at $699.11.
Conclusion: The utilities, as a group, are the largest borrowers of any general sector. Thus, their negative reaction to Friday’s rumor that the probability of a Fed rate hike in June has risen to 70%-plus makes perfect sense.
Investors who require income and are waiting for an opportunity to put it to work should not view utility stocks as a possibility. Like all stocks, even they can be volatile. Waiting for a better opportunity could pay off, and bonds of short duration may be a better investment for those seeking lower risk income.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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