Last week’s market action was simply stunning, as wave after wave of better-than-anticipated corporate earnings lifted the Dow by over 300 points in the three days after Monday’s scary 140-point drop. At 12,506, the Dow is now at its highest level since June 2008, while the tech-heavy Nasdaq did even better last week, rising 2% versus 1.3% for the Dow and S&P 500. The Nasdaq was led by earnings reports from Intel (NASDAQ: INTC), Apple (NASDAQ: AAPL), F-5 Networks (NASDAQ: FFIV) and Qualcomm (NASDAQ: QCOM), among others. Are cyclical stocks next to rise? 2 Best Investments in a Weak-Dollar Scenario
The two best investments in a weak U.S. dollar environment are commodities — since they are universally priced in U.S. dollars — and multinational stocks, which reap windfall profits from being paid or priced in appreciating foreign currencies.
Let’s take stocks first. Last quarter’s stellar corporate earnings were fueled by stronger-than-expected sales, upbeat company guidance and a weak U.S. dollar, which boosts the earnings of many multinational companies. Since the average technology company is multinational in scope, they benefit from a weak dollar. Last week, we saw better-than-expected earnings from semiconductors like Intel, cloud computing like VMware (NYSE: VWM) and networking firms like F5 Networks. Read