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Stock Market This Week
Stock Market This Week – 04/08/23
In a week of surprises, oil rebounded, and job growth remained strong. West Texas Intermediate (WTI) crude oil surged because of oil output cuts by OPEC. Oil prices had fallen to about $65 a barrel and are now at $80.50 per barrel. Whether the cuts hold or non-OPEC producers hold back production is questionable.
In addition, job growth remained strong, with another 236,000 added in March 2023. Unemployment was constant at 3.5%. Despite the job reductions in the tech sector, anyone who wants a job can find one. The numbers indicate a robust United States economy and up the likelihood of another rate increase by the Federal Reserve.
Stock Market Overview
Investors are seemingly more upbeat, and stocks continue to trend upward.
As shown by data from Stock Rover*, the major indices had a positive week except the Russell 2000. The Dow Jones Industrial Average (DJIA) performed the best, followed by S&P 500 Index on the strength of tech and energy stocks. The Nasdaq was up, too, but the Russell 2000 declined as investors stayed away from small caps.
In addition, oil prices recovered by 8%+, reaching $80+ per barrel. The VIX rose but is still near its long-term average. Gold is now above $2,000 per ounce.
Eight of the 11 sectors had positive returns for the week. Healthcare, Utilities, and Communications were the top three sectors for the week. While the Basic Materials, Consumer Cyclical, and Industrials trailed.
Source: Stock Rover*
The Nasdaq is performing the best for the year, followed by the S&P 500 Index and Dow 30. The Russell 2000 is trailing with negative returns. In addition, 7 of the 11 sectors are up year-to-date. The three best-performing sectors are Communication Services, Technology, and Consumer Cyclical. The worst-performing sectors are Healthcare, Energy, and Financial Services.
The dividend growth investing strategy has struggled with negative returns as banks and energy stocks declined. The table below shows their performance by category. Only the Dividend Aristocrats are in positive territory.
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Dividend Increases and Reinstatements
Search for a stock in the list of dividend increases and reinstatements. This list is updated weekly. In addition, you can search for your stocks by company name, ticker, and date.
Dividend Cuts and Suspensions List
The dividend cuts and suspensions list was most recently updated at the end of March 2023. As a result, the number of companies on the list has risen to 628. The list is updated monthly.
Twelve new additions indicate companies are starting to experience headwinds in March 2023.
Stock Market Valuation This Week
The S&P 500 Index trades at a price-to-earnings ratio of 21.94X, and the Schiller P/E Ratio is about 29.27X. These multiples are based on trailing twelve months (TTM) earnings.
The long-term means of these two ratios are approximately 16X and 17X, respectively.
The market is still overvalued despite the recent correction and a bear market and rebound. Earnings multiples of more than 30X are overvalued based on historical data.
Stock Market Volatility This Week – CBOE VIX
This past week, the CBOE VIX measuring volatility ended at 18.40. The long-term average is approximately 19 to 20. The CBOE VIX measures the stock market’s expectation of volatility based on S&P 500 Index options. It is commonly referred to as the fear index.
Economic News This Week
Provided by Stock Rover*.
Manufacturing
The ISM® (Institute for Supply Management®) Manufacturing PMI® reported 46.3% for March as business activity fell 1.4 percentage points from the previous month. A value below 50% is indicative of a shrinking economy. “This is the fifth month of contraction and the continuation of a downward trend that began in June 2022. Of the five subindexes that directly factor into the Manufacturing PMI®, none were in growth territory. This month, the PMI® registered its lowest reading since May 2020 (43.5%),” said Timothy Fiore, the ISM® Manufacturing Business Survey Committee chairman. Of the six largest manufacturing industries, only petroleum & coal products and machinery recorded growth in March.
All three sub-indices – new orders, prices, and employment reported below 50. The index for new orders contracted for the seventh month, tumbling 2.7 percentage points to 44.3%. The Prices Index, which measures what companies pay for raw materials and other supplies, increased by 2.1 percentage points to 49.2%. The Employment Index declined 2.2 percentage points to 46.9%. Finally, the Backlog of Orders Index dropped 1.2 percentage points to 43.9% and has now contracted for the sixth consecutive month following 27 months of expansion.
Job Openings
The U.S Bureau of Labor Statistics Job Openings and Labor Turnover Survey, or JOLTS, reported 9.9 million job openings on the last day of February, 632,000 lower than January’s downwardly revised 10.6 million reading. This is the first reading in 9 months where job openings were reported below the 10 million level. Industries contributing to the decrease included professional and business services (-278,000), health care and social assistance (-150,000), and transportation, warehousing, and utilities (-145,000). Job openings increased in construction (+129,000) and in arts, entertainment, and recreation (+38,000). The number of people who voluntarily left their jobs increased slightly (+146,000) to 4.0 million from the 21-month low of 3.9 million in January.
The number of people who quit their jobs for other opportunities made up 2.6% of the workforce in February, little changed from the previous month. Quits increased in professional and business services (+115,000), accommodation and food services (+93,000), wholesale trade (+31,000), and educational services (+18,000). The number of hires decreased slightly (-164,000) to 6.2 million in February. The hiring rate decreased by 0.1% to 4.0%. There were 1.7 available jobs for each unemployed person in February, down from 1.9 in January.
Job Growth
The U.S. Bureau of Labor Statistics reported 236,000 jobs were added as the unemployment rate dropped to 3.5% in March from 3.6% the previous month. January and February’s employment readings were revised for a combined (-17,000) jobs. As a result, the number of unemployed workers dropped slightly to 5.8 million. Leisure and hospitality added (+72,000) jobs, followed by government (+47,000), professional and business services (+39,000), health care (+34,000), and transportation and warehousing (+10,000). Employment declined in retail trade (-15,000).
Among the unemployed, the number of permanent job losers increased (+172,000) to 1.6M, and the number of reentrants to the labor force declined (-182,000) to 1.7M. The labor force participation rate increased slightly to 62.6% from 62.5%, leaving it below the pre-pandemic level of 63.4%. Average hourly earnings increased by 0.3% in March. At $33.18, average hourly earnings are up 4.2% from a year ago.
Curated Weekend Reading From Around The Web
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.
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