Stock Market Forecast – Technology Shares Continue to Rally

Stocks close mixed, Boeing weighs on Dow Industrials
David Becker
S&P 500 daily chart, March 12, 2019

 

US equity markets were mixed on Tuesday, as Apple shares continued to offset declines in Boeing. Several more country’s announced on Tuesday that they would ground their 737 Max Boeing planes until the investigation into this weekend’s crash was resolved. The FAA stood by the Boeing plane and US carriers continue to use that jet for service. The EU as a whole has now refused to let that plane fly in its airspace. The Nasdaq 100 was up 0.44%, the S&P 500 climbed 0.31% and the Dow Industrials bucked the trend declining by 0.35%. Gold prices were higher on Tuesday helping to lift gold miners.

Most Sectors Were High Driven by Energy And Healthcare

Sectors were also mixed on Tuesday. Energy and healthcare were the best performers, while Industrials and consumer staples weighed on the broader indices. The best performing stock in the S&P 500 was Newmont mines following news that it would merge its assets with Barrick gold in Nevada. This would create a new JV that would produce more than 4.1 million ounces using 2018 data.

Seasonals Point to a Rebound in the Dow

The Dow Industrials are down 1.35% month to date in March, but the seasonals point to a rebound in returns. Over the past 20-years, the Dow Industrials have been higher 65% of the time for an average gain of 1.5%. April is even a better month for the Dow Industrials on average. During the month of April the Dow usually notches up returns of 2.3%, 80% of the time. The Dow has been weighed down by Boeing in March.

Boeing Undertaking Huge Software Restructure

The Wall Street Journal is reported that Boeing is undertaking an extensive change to the flight-control system that is used on the 737 Max aircraft which is the plane that came down. The change in the software is a huge shift from the initial design in the stall prevention option in the aircraft. Boeing stock dropped for a second day declining 6.35%.

US Consumer Price Rose for the First time in 2019

US CPI increased for the first time in more than a quarter. This was the smallest annual increase in more than 30-months. According to the US Labor Department, US Consumer Prices increased by 0.2% month over month was driven by gains in gasoline and food. This was in line with expectations. On a year over year basis, headline CPI increased by 1.5% which was the smallest increase since September of 2016. Excluding food and energy, CPI increased by 0.1% month over month which is the smallest increase in 9-months. Expectations had been for core CPI to increase 0.2%. On a year over year basis, core CPI rose by 2.1%. The Fed’s target for inflation is 2%. The use the core personal consumption expenditures figure as opposed to CPI. Currently, core PCE is running at a rate of 1.9% year over year.

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