Stock Market This Week – 11/11/23

Stock Market This Week

Stock Market This Week – 11/11/23

Chairman Powell of the United States Federal Reserve made more difficult what was otherwise a good week. It’s apparent that the Fed is probably done raising interest rates. But he indicated that the Fed may raise them again.

That said, inflation is trending down globally. The readings are at the lowest in some countries in a few years. Moreover, in America, the economy is booming, fueled by the spending of retirees, military expenditures, the Chips Act, and infrastructure investing. The fact that interest rates have risen so far in such a short period and the economy and employment have remained resilient is a statement about the U.S. economy. That said, opinion polls disagree, but the data is the data.

However, dividend stocks have struggled because investors receive a risk-free return of 5% in U.S. Treasury bonds. That said, some sectors and industries have a decade-high yield and the lowest valuation in years. I have recently been a buyer of UPS, CLX, and HRL. I tend to buy when Dividend Kings, Aristocrats, and Contenders are a deal.

Stock Market Overview

As shown by data from Stock Rover*, the stock market had a mixed week. The Nasdaq Composite performed the best, followed by the S&P 500 Index and the Dow Jones Industrial Average (DJIA). The Russell 2000 had a negative week, down more than 3%.

Six of the 11 sectors had positive returns. Technology, Industrials, and Communication Services were the top three sectors. But the Real Estate, Utilities, and Energy sectors were the bottom three with negative returns.

Oil prices were flat for the week at ~$77 per barrel and continue to trend down as demand weakens. The VIX fell another 6% to below its long-term average. Gold decreased to $1,943 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. Despite recent weakness, the Nasdaq remains in a bull market, recovering much of its losses earlier this Fall. The Russell 2000 returned to negative territory for the year. In addition, six 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 Real Estate, Healthcare, and Utilities.

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.

Category	YTD Return (%)
Dividend Kings	-4.66%
Dividend Aristocrats	-0.75%
Dividend Champions	-3.36%
Dividend Contenders	-0.51%
Dividend Challengers	-2.06%

Stock Market Valuation This Week

The S&P 500 Index trades at a price-to-earnings ratio of 24.39X, and the Schiller P/E Ratio is about 29.89X. 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.

Economic News This Week

Provided by Stock Rover*.

Trade Deficit

The U.S. Bureau of Economic Analysis reported a $61.5 billion trade deficit in September, an increase of $2.9B (+4.9%) over August’s $58.7B – the lowest reading since September 2020. The September increase in the trade deficit reflected an increase in the goods deficit of $1.7B to $86.3B and a decrease in the services surplus of $1.2B to $24.8B. September exports increased (+2.2%) to $261.1B, nearing an all-time high. Exports of goods increased (+3.1%) to $176.7B, with exports of services increasing (+0.4%) to $84.4B. Imports of goods and services reported up (+2.7%) to $322.7B, with services imports rising (+2.6%) to $59.6B.

Imports were at their highest level since February 2023. For the first nine months of 2023, the U.S. trade deficit has contracted by 20% ($147.4B) compared to the same period in 2022. Exports increased 1.0% ($22.7B), while imports decreased 4.2% ($124.8B). The trade deficit with China reached $28.44B in September, a (+9.5%) increase over August’s $25.95B. Imports from China increased (+9.6%) to $40.28B, while exports to China increased (+9.9%) to $10.76B.

Energy Outlook

The U.S. Energy Information Administration (EIA), in its November 2023 Short-Term Energy Outlook (STEO), expects U.S. crude oil production to end the year at 12.9 million barrels per day (bpd) and to increase 1.2M bpd to 13.15 million bpd in 2024. The EAI forecast that the Brent crude oil spot price will average $90 per barrel (b) in Q4 2023 and average $93.00/b next year; it is anticipated that OPEC+ production cuts will offset production growth from non-OPEC countries. The EIA projected U.S. gasoline prices to average $3.40 per gallon (g) for the rest of 2023, resulting in an average of $3.51/g for 2023 and $3.60/g for 2024. U.S. gasoline consumption is projected to decline by 1% in 2024.

U.S. natural gas inventories are projected to end the winter heating season (November–March) at almost 2,000 billion cubic feet, 21% above the five-year average. Contributing factors include higher production and an anticipated warmer winter season. The Henry Hub spot price is expected to average $3.20 per million British thermal units (MMBtu) in November, a drop of nearly 53% from a year earlier, resulting in an average of $2.67 MMBtu for 2023 and $3.25 MMBtu for 2024. U.S. coal exports are expected to rise to 97 million short tons (MMst) in 2023. However, U.S. coal production is projected to fall by more than 100 MMst in 2024 due to reduced demand from the electric power sector.

Jobless Claims

The Labor Department reported a decrease in initial jobless claims for the week ending November 4th. The seasonally adjusted initial claims reported at 217,000, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 to 220,000. The four-week moving average, which smooths out volatility, was 212,250, an increase of 1,400 from the previous week’s revised average. Of the 53 states and U.S. territories that report jobless claims, 35 reported increases, and 18 reported declines. California (+3,416), New York (+2,457), and Pennsylvania (+1,677) led the growth in initial claims, while Oregon (-2,844), North Carolina (-700), and Florida (-392) saw the most decreases. 

For the week ending October 28th, the number of people continuing to claim unemployment, also known as the insured unemployment rate, was 1.2%, unchanged from the prior week. Continuing claims reported at 1.834M, up 22,000 from the previous week’s downwardly revised level; this marks the seventh straight week of increase. The continuing claims 4-week moving average was 1,789,000, an increase of 32,250 from the previous week’s downwardly revised level. For the week ending October 21st, 1,599,616 people were receiving jobless benefits through state or federal programs, an increase of 1,962 from the previous week’s level. There were 1,263,105 weekly claims filed for the comparable week in 2021.

Resources

• Stock Market Holidays
• Dividend Stock Lists
• Investor Relations Guides
• Checking and Savings Account Resources
• Dividend Investing Resources
• Reviews

Curated Weekend Reading From Around The Web

Portfolio Management and Investing

• Asset Allocation Isn’t Magic (Oblivious Investor)
• Buy when there is blood on the streets (The Italian Leather Sofa)
• 11 Things I Learned About Investing  (The Alchemy of Money)

Retirement

• We Need to Talk About Your Retirement ‘Spending’ (Morningstar)
• Aging at Different Speeds (Next Avenue)
• More than a million over-65s keep working rather than relax in retirement (This is Money)

Financial Independence

• A Few Laws of Getting Rich (Morgan Housel)
• Many Couples Do Not Coordiante 401(k) Matches (Center for Retirement Research)
• How to Avoid Death By Comfort (The Art of Manliness)