MARKET OVERVIEW
After a difficult February, the first week in March turned out to be the worst week in 6 months. The Dow Jones Industrial Average was down 2.4% for the week, while the S&P 500 was down 3.1% and the Nasdaq was down 3.5%. On a personal note, I am sad to report that my Mother passed away on March 4. She was 95, a wonderful woman and will be sorely missed.
Some items of note: DoorDash, TKO Group Holdings, Williams Sonoma and Expand Energy will join the S&P 500 before the start of trading on March 24. Departing the S&P 50 will be Teleflex, Borgwarner, Celanese Corp. and FMC Corp. Palantir, Intuitive Surgical and ServiceNow are joining the S&P 100 replacing Dow Chemical, Kraft Heinz and Ford Motor. Honda and Nissan have ended their merger talks, Chevron plans to lay off nearly 20% of its staff, a Qatari group is eyeing a bid for Papa Johns, Southwest Airlines plans to lay off 15% of its corporate staff, Intel is being eyed by TSMC and Broadcom while EV maker Nikola filed for Ch. 11 bankruptcy.
ECONOMIC SUMMARY
Friday’s Nonfarm Payroll Report was weaker than forecast as 151,000 jobs were added vs. the estimate of 160,000. Economists at major firms said the weaker number was unlikely to push the Federal Reserve to cut interest rates when it meets March 18-19. The unemployment rate rose slightly to 4.1% marking the 10th straight month the rate has been at 4% or higher. The U-6 rate jumped to 8%. The December and January payroll figures were reduced by a total of 2,000 jobs while average hourly earnings rose by 4% year over year. Meanwhile, the closely watched Labor Participation Rate dropped slightly to 62.4% in February, down from 62.6% in January.
FEDERAL RESERVE
The Fed kept rates steady at its meeting back on January 28-29 and many economists doubt the Fed will cut rates when it meets again on March 18-19. The economy remains strong so there does not appear to be a reason to provide added stimulus to the economy. Meanwhile, the central banks of the United Kingdom, Canada and the European Union all cut rates by a quarter point at their most recent meeting.
STOCKS TO WATCH
According to a recent study by Hartford Funds, 85% of the S&P 500’s total return from 1960 through 2024 came from the growth of reinvesting dividend payments. This return is bolstered even more by selling covered calls against these dividend paying stocks. The key here is to focus on companies with a history of growing their profits, revenues and dividends. For example “Dividend Aristocrats” are companies that have increased their dividend at least 25 consecutive years, while “Dividend Kings” have increased their dividend at least 50 straight years. Clearly, dividend paying stocks can really colster an investor’s total return,
My weekly radio show is now on holiday and should return soon on WWPR 1490 AM. My prior radio shows and columns are available on our website (www.amescapmgmt.com).
If you are unhappy with the returns now offered by money market funds, feel free to contact us.
Written by Don Ames
Ames Capital Management
