3Dollars: Markets Strong to Start July


Markets Begin Second Half of Year on High Note

On the first trading day of the second half of the year markets performed strong. Financials, oil and energy, and car makers lead the way. Monday was a good reward for investors heading into the July 4th holiday, when markets will be closed.

$1 In what seemed to be bad news, car sales dropped in June. However, big car makers like Ford ($F) and General Motors ($GM) both rose today. Ford is still well below highs of 2012-2013 and only trading at about 6 times price/earnings. Even with the bump, this stock is relatively cheap. Telsa Motors ($TSLA) also announced its first deliveries of the cheaper Model 3 will complete on July 28.

$2 The U.S. oil rig count dropped for the first time in many months, perhaps a sign that low prices are finally taking a toll. Oil’s winning streak ended at seven days as OPEC’s output reached recent highs. Oil companies around the world breathed a sigh of relief at the prolonged rebound. Sovereign and multinational producers may be in play by end of year.

$3 Financials continue to benefit from last week’s passing stress test grades and resultant dividend increases. Warren Buffett, as I mentioned last week, also gave Bank of America ($BAC) a boost by becoming its largest shareholder. This sector is regaining some of the lost momentum with the uncertainty over tax reform.

As an aside, the technology sector continues to lag the market as it had much of the previous quarter. That’s all for now.

-Joe

Leave a Reply