This week the market posted significant gains on tame inflation and lower oil prices. The DJIA posted a gain of 2.6%, NASDAQ gained 5.2%, and the S&P gained 2.8%. Major individual gains on the week included Altria Group (MO), which rose 3.9% due to court rulings that investors view will give the company the needed strength to fuel its planned breakup. Also, Microsoft (MSFT) posted a 4.3% gain on the week due to plans to buy back shares under a previously announced plan (Microsoft was our stock of the week).
On Tuesday, the Producers Price Index (PPI) fell 0.3% in July, which was below expectations of a 0.2% rise. Even when factoring in energy and food prices the PPI still only managed a minimal 0.1% gain. These numbers where music to investors ears as it eased fears of overheating of the economy. Further, it re-enforced the idea that the Federal Reserve’s pause in rising interest rates will continue.
Oil was down for the week on news that the Israel-Lebanon conflict had at least temporarily ended on a cease-fire agreement. Crude was down 4.32% or $3.21 a barrel. Also, BP announced that partial use of their Alaskan pipeline was back online, which helped the decline in oil prices.
Stocks that declined this week included Wall Mart which posted its first quarterly profit decline in a decade. Dell fell 2.9% on the week on news of disappointing earnings and regulatory investigation of accounting practices.
As we make our way closer towards the mid-term elections, we can expect volatility as we have seen in the past few months. Continue to select your stocks according to Benjamin Graham’s policy of value investing looking for undervalued securities that meet your individual investing criteria. Have a productive and profitable week!
-Ben and Jon