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Weekly Market Update for March 9, 2018

by JM Hanley

The Dow was down up 1.8% Friday, rising 441 points to close at 25,336. For the week, the Dow rose 3.25% (SP500 +3.54%) and year-to-date is now up 2.49%% (SP500 +4.22%). Tech companies, banks, and industrial firms all performed well. Utility stocks did poorly. The yield on the 10-year Treasury, an important interest-rate indicator, rose seven basis points, closing at 2.87%.

The President signed a 25% tariff on imported steel and a 10% tariff on imported aluminum into law on Thursday. Investors had been concerned that these duties could provoke retaliatory tariffs. Yet the measures won’t apply to Canada and Mexico, and could permit further exemptions. Moreover, steel and aluminum account for only 1.6% of American imports.

Domestic economic indicators this week proved mixed. Markets were most interested in today’s jobs report. Payrolls increased by 313,000 last month. Analysts had expected job growth to maintain a healthy pace, and were most concerned about wage growth. Bigger paychecks are good for Main Street but increase inflation. Interest-rate hikes often follow. Yet wages barely increased from January. The unemployment rate was unchanged. However, more Americans started looking for work, and those with jobs worked longer hours. More of the population is now employed than at any point since the Recession.

The price of crude oil rose 1% this week to $62 a barrel – up 3% YTD. US crude stockpiles showed a larger-than-expected build this week – of 2.6m barrels – while product inventories of gasoline (-0.8m bls) and diesel (-0.6m bls) both fell. Oil prices were down through Thursday as news that the largest refinery in the US (Motiva Port Arthur) was delaying the restart of its major crude distillation unit. Then prices spiked $2 per barrel higher on Friday as the refinery solved the problem and resumed processing crude oil, a positive for the crude oil demand picture. Our equity position in Devon performed well this week after the company announced an increased dividend, a share buyback program, and a targeted debt paydown.

Almost all companies have now reported their fourth-quarter earnings. Shares of Nutanix rose after analysts at the investment banks Stifel and JMP Group increased their estimates of the company’s future growth.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

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