October 21, 2019 BARRON’S M3
The Trader
The Dow Finds a Way to Waste a Good Week
By Ben Levisohn
WHY CAN’T WE HAVE NICE THINGS? THE
week contained enough good news to drive
just about any market higher, but instead
ended with the Dow Jones Industrial Aver-
age lower for the fourth time in five weeks.
The Dow fell 46.39 points, or 0.2%, to
26,770.20 this past week, while the S&P
500 index rose 0.5%, to 2986.20, and the Nasdaq Composite
advanced 0.4%, to 8089.54.
When we say good news, we really mean good news. The
European Union and the United Kingdom agreed to a draft
deal on that elusive Brexit that now needs to be approved
by the U.K. Parliament. UnitedHealth Group (ticker:
UNH) jumped after beating forecasts, helping to juice the
health-care sector, while banks like JPMorgan Chase
(JPM) and Citigroup (C) not only reported better-than-ex-
pected numbers, but signaled that the U.S. economy might
not be heading for a recession.
None of it was enough. It seemed that every good tiding
was met with an equal and opposite slice of bad. Turkey in-
vaded Syria. China’s gross domestic product grew at its
slowest rate since the 1990s. U.S. retail sales fell by 0.3% in
September instead of growing by a like amount, raising con-
cerns about the strength of the U.S. consumer. And Netflix
(NFLX), which jumped more than 10% in after-hours trad-
ing after reporting earnings on Wednesday, finished Thurs-
day up just 2.5% and dropped 6.2% Friday.
At least the S&P 500 and Nasdaq managed to hold on to
weekly gains. The Dow was hit by a triple whammy of Boe-
ing (BA), Johnson&Johnson (JNJ), and IBM (IBM). Boe-
ing dropped 8.3%, to $344, on the week after emails showed
an employee may have unintentionally misled the Federal
Aviation Administration, while Johnson & Johnson slumped
3%, to $117.47 after the Food and Drug Administration found
asbestos in its baby powder. IBM simply reported disappoint-
ing sales, but dropped 6.1% to $134.09 anyway.
And once again the S&P 500 ended the week this close
to its all-time high of 3025.86. Yet, pessimism abounds. Low-
volatility stocks, perceived by some as the market’s safest,
continue to outperform, says Chris Harvey, head of equity
and quant strategy at Wells Fargo Securities, while inves-
tors remain positioned for lower interest rates and a possi-
ble global slowdown. “We have not seen real institutional op-
timism in some time,” Harvey says. “Consequently, the ‘pain
trade’ is for higher stock prices.”
Might the market get some help from the U.S. dollar? Af-
ter flirting with its highest levels since 2017, the U.S. Dollar
Index dropped 1.2% to 97.14 this past week, its lowest level
“Wehavenotseen
realinstitutional
optimisminsome
time,”saysone
strategist.
22200
23250
24300
25350
26400
O N D J F M A M J J A SODow Jones Industrials CLOSE 26770.20
PERCENTAGE CHANGE: 52-Wk +5.21 YTD+14.76 Wkly–0.17
2375
2550
2725
2900
O N D J F M A M J J A SOS&P 500 CLOSE 2986.20
PERCENTAGE CHANGE: 52-Wk +7.89 YTD+19.12 Wkly +0.54
6225
6775
7325
7875
O N D J F M A M J J A SONasdaq Composite CLOSE 8089.54
PERCENTAGE CHANGE: 52-Wk +8.60 YTD+21.92 Wkly +0.40
570
610
650
690
O N D J F M A M J J A SOBarron’s 400 CLOSE 681.99
PERCENTAGE CHANGE: 52-Wk –2.49 YTD+11.86 Wkly +1.01
Source: Barron’s Statistics