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Last Updated on December 9, 2023 by Prakash Kolli
Stock Market This Week
Stock Market This Week – 12/09/23
Oil prices keep falling despite attempts by OPEC+ to prop up prices. However, demand is down, and more supply is coming online. Lower prices mean countries need to increase oil output to keep revenue flat. In turn, low oil prices are causing gas prices to decline. It’s a fortuitous cycle because gas prices are a volatile inflation component.
That said, many global economies are struggling, but the data shows the United States is performing well. In fact, it is performing better than before the pandemic. According to the Bureau of Labor Statistics, two million more jobs exist than before the pandemic. The U.S. real GDP keeps rising and is greater than predicted. A lot can be traced to the massive amounts of stimulus that stoked demand and kept people employed during the pandemic.
At the risk of sounding like a broken record, the Utility sector is undervalued. However, the recent recovery in the sector has caused prices to rise and yields to fall. That said, plenty of deals still exist.
For more on Utilities, sign up for Stock Rover* (14-day free trial) and run a screen for Utility stocks or create a watch list. After, check the Stock Ratings and click the dividend panel. Check the overall ratings and dividend industry percentiles.
Stock Market Overview
Data from Stock Rover* shows that the stock market had yet another positive week, the sixth one in a row. That said, the week was volatile. The Russell 2000 finished first, followed by the Nasdaq Composite, the S&P 500 Index, and the Dow Jones Industrial Average (DJIA).
Six of the 11 sectors increased this week. The top performers were the Consumer Cyclical, Communication Services, and Technology sectors. However, the Consumer Defensive, Basic Materials, and Energy sectors were the worst performers. The Energy sector had an abysmal week because of lower oil prices.
Oil prices continued falling and finished the week at ~$71. In general, demand remains weak, supply is strong, and the quantity in storage is increasing. Even though the United States economy is performing well, many other countries face challenging times. Further, China’s demand for oil is weaker, while the U.S. is pumping a record amount of oil. This is translating to lower gasoline and other fuel prices.
The VIX is still well below its long-term average. After rising the past few weeks, gold fell to $2,021 per ounce.
The Nasdaq is performing the best for the year, followed by the S&P 500 Index, the Dow 30, and the Russell 2000. The Nasdaq and the S&P 500 are in a bull market, defined as 20%+ gain. The DJIA and Russell 2000 are both 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 Healthcare, Energy, 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. All the categories now have positive returns for the year. The table below shows their performance by category.
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Stock Market Valuation This Week
The S&P 500 Index trades at a price-to-earnings ratio of 25.44X, and the Schiller P/E Ratio is about 31.15X. 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
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Here are my recommendations:
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- 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.
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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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