Stock Market This Week – 02/18/23

Stock Market This Week

Stock Market This Week – 02/18/23

The stock market had a mixed week, with some indices finishing up and some down. Monthly wholesale inflation was higher than expected. The Producer Price Indexes (PPI) was up 0.7%. But the annual rate was down. Investors’ fear further increases.

As shown by data from Stock Rover*, the major indices had mixed returns, with the Russell 2000 and the Nasdaq up but the S&P 500 Index and the Dow Jones Industrial Average (DJIA) declining. Oil fell, and the VIX rose. But the VIX is still near its long-term average.

Five of the eleven sectors again posted gains for the week, two were flat, and four dropped. The Consumer Cyclical sector performed the best, followed by the Utilities and Industrials. The Energy sector performed the worst, followed by the Real Estate sector. 

The Nasdaq is performing the best for the year, followed by the Russell 2000. But all the major indices are up, with the Dow 30 trailing the pack. In addition, 7 of the 11 sectors are up year-to-date. The three best-performing sectors are Consumer Cyclical, Communication Services, and Technology. Only more defensive sectors, like Healthcare, Utilities, and Consumer Defensive, were down. The Energy sector performed the best in 2022 but did the worst in 2023.

The dividend growth investing strategy has performed relatively well, with positive returns. The table below shows their performance by category. All categories are now in positive territory.

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 January 2023. As a result, the number of companies on the list has risen to 610. Thus, well over 10% of companies that pay dividends have cut or suspended them since the start of the COVID-19 pandemic. The list is updated monthly.

Eight new additions indicate companies are starting to experience headwinds in January 2023.

Stock Market Valuation This Week

The S&P 500 Index is trading at a price-to-earnings ratio of 21.8X, and the Schiller P/E Ratio is about 29.63. 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 20.02. 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*.

The U.S. Bureau of Labor Statistics reported the consumer price index increased by 0.5% in January, an accelerated pace over the (+0.1%) and (+0.2%) posted for the prior two months. Over the last 12 months, the all-items index is up (+6.4%) before seasonal adjustment compared to (+6.5%) in December. This marks the seventh month of a cooling in the annual inflation rate since it peaked at 9.1% in June. The index for shelter was the most significant contributor to the monthly all-items increase, accounting for nearly half of the 0.5% monthly reading and 60% of the 6.4% annual inflation rate. The shelter index increased (+0.7%) in January. The indexes for food (+0.5%), gasoline (+2.4%), and natural gas (+6.7%) also contributed. The indexes for transportation (+0.9%), apparel (+0.8%), electricity (+0.5%), and new vehicles (+0.2%) all saw increases. Indexes for user cars and trucks (-1.9%) and medical services (-0.7%) decreased. Core CPI inflation rose (+0.4%) in January, equaling the upwardly revised (+0.4%) for the previous month. The annual rate of core CPI inflation is now at 5.6%, down slightly from 5.7% in December. The shelter index is up 7.9% year over year and accounts for nearly half the total increase in Core CPI.

The Commerce Department reported advance U.S. retail and food services sales surged 3.0% to $697.0B in January, a reversal from the (-1.1%) and (-0.6%) readings for the prior two months. January’s advance was the largest since March 2021, when a third round of stimulus checks was released. Retail sales, which are adjusted for seasonal shifts but not inflation, were up 6.4% year over year. Total sales for November 2022 through January 2023 were up 6.1% year over year. Sales increased in virtually all categories, with department stores (+17.5%), restaurants (+6.9%), and auto dealers (+5.9%) leading the way. In addition, home furnishings (+4.4%), electronics and appliance stores (+3.5%), miscellaneous retail (+2.8%), clothing (+2.5%), health and personal care (+1.9%), and internet retailers (+1.3%) all saw increases. Sales at gasoline stations were flat. Excluding autos and gasoline, sales were up (+2.6%) for the month. Excluding autos, sales increased (+2.3%). Core retail sales, which excludes spending on cars, gasoline, building materials, and food services, increased (+1.7%) in January.

The Labor Department reported that the Producer Price Index for final demand increased by a seasonally adjusted 0.7%in January. This follows revised (-0.2%) and (+0.3%) reported for the prior two months. The PPI is seen as a bellwether for inflation as it measures what suppliers charge businesses. The PPI index continued decelerating to an annualized (+6.0%) in January. This follows (+6.5%), (+7.3%), and (+8,2%) reported for the prior three months. The high-water mark was set in March 2022 at (+11.7%). Final demand prices for goods advanced 1.2%, the most in seven months, significantly contributing to the headline number. Nearly one-third of that increase was attributable to a (+6.2%) increase in the price of gasoline. The final demand index for food fell (-1.0%), as the cost of eggs (-12.7%) and fresh and dry vegetables (-33.5%) both dropped significantly. Year over year, food prices moderated to an annualized (+11.6%). Final demand prices for services increased (+0.4%), matching December. A significant factor behind the rise in service prices was the hospital outpatient care index, which jumped (+1.4%). Excluding food, energy, and trade services, the so-called core PPI increased (+0.6%) in January, the most considerable monthly rise since March 2022. The core PPI continued decelerating to an annualized (+4.5%) in January. This follows (+4.7%), (+4.9%), and (+5.5%) reported for the prior three months. The high-water mark was set in March 2022 at (+7.1%).

Curated Weekend Reading From Around The Web

Portfolio Management and Investing

• Why a diversified portfolio needs more than just bonds (Monevator)
• Where Do Millionaires Keep Their Money (Of Dollars and Data)
• Wise Words on Investing Mistakes (Novel Investor)

Retirement

• How to Build a Retirement Paycheck from Your Investments (The Retirement Manifesto)
• How Closely Do Index Funds Track Their Benchmarks (Morningstar)
• How to Retire at 38 (Humble Dollar)

Financial Independence

• Use the 90/10 Rule to Decide Where You Live (Art of Manliness)
• Erasing Authors, Google and Bing’s AI Bots Endanger Open Web (tom’s Hardware)
• Fodor’s Top Ten Regions to Consider (Fodor’s)