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Stock Market This Week
Stock Market This Week – 11/25/23
Happy Thanksgiving! The stock market extended its gains for the fourth straight week on lower inflation expectations, the U.S. Federal Reserve holding rates constant for the second consecutive meeting, lower oil and gas prices, sub-4% unemployment rates, and decent Gross Domestic Product (GDP) growth. Whether we are in the sweet spot for a bull market is tough to say because investors remain tentative. Fears of a future recession that has not yet arrived outweigh belief in the current economy.
That said, the data is the data, and future inflation will probably go lower. With immigration returning to normal after COVID-19, labor costs should normalize. Moreover, the Producer Price Index (PPI) was negative in October. If producer costs are dropping, one can expect consumer prices to follow.
The net result is positive news for income investors. Inflation and high interest rates have hammered the utilities, consumer defense, real estate, and healthcare sectors. Consequently, as a group, they are undervalued, and I have been buying. I added to Medtronic (MDT) during the market correction, which was briefly yielding 4%. The stock has bounced back on good third-quarter results. But it’s still undervalued, and the dividend yield is 3.5%.
Stock Market Overview
Data from Stock Rover* shows that the stock market had a positive week, the fourth one in a row. The Dow Jones Industrial Average (DJIA) led the way after lagging most of the year. Its performance was followed by the S&P 500 Index, the Nasdaq Composite, and the Russell 2000.
All 11 sectors had gained for the second week in a row. The Healthcare, Consumer Defensive, and Communication Services were the top three sectors. However, the Industrials, Utilities, and Energy sectors finished at the bottom but with positive returns.
Oil prices continued to trend lower before reaching ~$75.50 per barrel. Demand remains weak, supply is strong, and the quantity in storage is increasing. These trends suggest oil prices will remain under pressure. In addition, OPEC+ is having difficulties agreeing to output levels. As a result, gas prices are 10% less than last year in the United States.
The VIX fell nearly 10% to well below its long-term average. Traders are obviously bullish. Gold advanced broke $2,000 per ounce on a weaker dollar.
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The Nasdaq is performing the best for the year, followed by the S&P 500 Index, the Dow 30, and the Russell 2000. Bullish sentiment is still strong for technology and growth stocks. The Nasdaq Composite has recovered almost all its losses in the recent correction. The S&P 500, DJIA, and Russell 2000 are all positive year-to-date. In addition, seven of the 11 sectors are up year-to-date. The three best-performing sectors are Technology, Communication Services, and Consumer Cyclical. But the worst-performing sectors are Consumer Defensive, Healthcare, and Utilities. Lower interest rates are causing the Real Estate sector to bounce back.
The dividend growth investing strategy has returned to positive results across all categories. The recent market volatility has lowered returns, but the trend has reversed. The table below shows their performance by category.
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Portfolio Insight has 9,000+ stocks and ETFs in its database. You can get access up to dozens of metrics, 20-years of financial data from S&P Global, and our Dividend Quality Grade.
The Portfolio Insight platform gives users access to portfolio management, charting, screening and ranking, investment news, SEC fillings, stock analyses, etc. Try it free for 14-days.
Stock Market Valuation This Week
The S&P 500 Index trades at a price-to-earnings ratio of 25.19X, and the Schiller P/E Ratio is about 30.86X. 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.
Resources
Curated Weekend Reading From Around The Web
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Here are my recommendations:
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- Simply Investing Report & Analysis Platform or the Course can teach you how to invest in stocks. Try it free for 14 days.
- Sure Dividend Newsletter is an excellent resource for DIY dividend growth investors and retirees. Try it free for 7 days.
- Stock Rover is the leading investment research platform with all the fundamental metrics, screens, and analysis tools you need. Try it free for 14 days.
- Portfolio Insight is the newest and most complete portfolio management tool with built-in stock screeners. Try it free for 14 days.
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*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.
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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