Wyatt Research Week in Review: Aug. 16-22

It was a tough week for the markets.
On Thursday, the Dow Jones Industrial Average fell 358.04 points, or 2.1%. The S&P 500 shed 43.88 points, also down 2.1%. The Nasdaq fared even worse, posting a loss of 141.56 points, or 2.8%.
For the Dow, it was the first time it closed below 17,000 since October 2014. Thursday’s decline marked the blue chip benchmark’s worst daily performance since February 2014. Both the Dow and the S&P 500 fell into the red for the year.
A perfect storm of macro and micro factors coalesced to cause the carnage.
On Wednesday, the minutes of the Federal Reserve’s July policy meeting were released. There weren’t any bombshells buried in the text, but the overall tone was one of indecision regarding the timing of an interest rate hike. When the diary of the nation’s most distinguished monetary minds reads like a “Hamlet” soliloquy, investors get nervous. If the Fed would just make up its mind on when to raise rates, the markets could react and then move on.
Oil also weighed on anxious traders’ trigger fingers, with the price of West Texas Intermediate crude sliding to $40.80 a barrel Wednesday – a six-year low. The skid in the benchmark U.S. crude price can be at least partially attributed to the continued chaos in China, the world’s second-largest oil consumer. China’s move to devalue the yuan last week heightened fears that decreased Chinese oil consumption will exacerbate an already bulging global oil glut.
Twenty-nine of the Dow 30 stocks lost money on Thursday. The lone winner was consumer staples stalwart Johnson & Johnson (NYSE: JNJ), which managed a meager 0.23% gain.
The worst Dow offender was The Walt Disney Co. (NYSE: DIS), which fell 6% to close Thursday’s trading session at $100.02 – roughly the midpoint of its 52-week range.
Friday was even worse.
The Dow officially entered correction territory. It lost 530.94 points, or 3.12%, to close at 16,459.75. The S&P 500 leaked 64.84 points, or 3.19%, to finish at 1,970.89. The tech-heavy Nasdaq was once again the biggest loser, finishing the day at 4,706.04, a 3.52% decline. All 30 Dow stocks closed in the red. Oil dipped below $40 intraday.
In an attempt to relieve the summer stock market doldrums, the Wyatt Investment Research team has decided to accentuate the positive. Next week we’ll feature a series of articles on the Oracle of Omaha himself, Warren Buffett, who recently completed the biggest deal of his career.
Buffett turns 85 on Aug. 30, providing an ideal opportunity to highlight the investment precepts of a man who’s witnessed Wall Street during the best and worst of times – and who probably didn’t even break a sweat during the recent market bloodbath.
Until next time, here are my favorite Wyatt Research articles from the past week:
Time to Pounce on Select German Stocks – The German DAX index peaked in April and has been trending downward ever since. But Germany also has the best economic growth of any of the developed countries. Its growth is expected to average 1.3% in the 2007-2016 period, according to the International Monetary Fund. And in the wake of China’s currency devaluation, certain German stocks are looking like bargains.
Top 3 Alcohol Stocks to Drink Up – Some of the biggest alcohol stocks are thriving with the shift toward greater consumer interest in premium alcoholic beverages. And studious income investors aren’t afraid to indulge a little when it comes to their dividends. Click here for the top three booze stocks to get drunk on this summer.
An Overlooked Soda Stock Gets Sporty – A significant stake in a relatively unknown sports drink company could provide a refreshing boost of energy to an often underappreciated soda stock, which pays a quarterly dividend of $0.48 a share and upped its share repurchase plan in February by $1 billion.
A Growth ETF That Has Outperformed by 200% – Most investment advisers will tell you that small-cap stocks are riskier than large-cap stocks. And on an individual basis, that’s likely true. Picking the best small caps takes a fair amount of work. But there’s a growth ETF that is highly likely to outperform the Russell 2000 small-cap index over the long term.
The Best Small-Cap Dividend Grower You Can Buy Today – This cyclical small-cap dividend stock has paid a dividend since 1972, and each year the dividend has increased. What’s more, that dividend – now yielding 2.8% – is supplemented every few years with special dividends.
Project Titan: Here Comes the Apple Car – As far back as April we saw reports that Apple (NASDAQ: AAPL) had assembled a team of more than 1,000 engineers to produce some kind of car – likely autonomous and almost certainly electric. Now, through documents obtained by the British newspaper The Guardian which suggest that Apple is actively seeking testing grounds in California, it seems certain that the company is nearing the completion of the first Apple car prototypes.
A $1.6 Billion Bet on a Food Stock Turnaround – An activist investor has taken a 7.1% stake in a food distribution company that has been beset in recent years by bloated fundamentals and a failed merger. But the company authorized a $3 billion stock buyback plan in June, and with a strong balance sheet that can be leveraged to increase returns to shareholders, further share repurchases could follow.
This Oil Segment Continues to Perform – To understate the obvious, weak oil prices have been a challenge for most oil producers over the past year. But one segment of the oil market has been spared the pain.
Have a great weekend!