Stock Market This Week - Saturday, April 6

Stock, Trading, Monitor, Business

Image source: Pixabay

The largest company by market capitalization in the mid-1990's was General Electric (GE). It held the position until the dot-com boom when Microsoft (MSFT) surpassed it. After the dot-com crash, General Electric retook the number one spot. General Electric was number one and occasionally number two until rising oil prices caused Exxon Mobil (XOM) to surpass it.

Although known as an industrial conglomerate, General Electric had significant financial operations in GE Capital. It also owned NBC and many other companies. General Electric made many millionaires and was a dividend growth stock.

Because of its financial operations, the company’s fortunes turned during the subprime mortgage crisis and the Great Recession. Demand for many of its industrial and consumer products plunged. The company’s market capitalization fell, and the dividend was cut. General Electric was a Dividend Aristocrat, but lost its status. 

However, the end of the Great Recession did not stop the firm’s travails. General Electric faced years of sub-par performance because of complexity, overpaying for acquisitions, and a lack of strategic focus. The stock price recovered, but failed to regain its previous highs before falling, and the dividends were cut again in 2017 and 2018.

We discuss General Electric because the company has returned. It recently split into three corporations: GE Aerospace, GE HealthCare Technologies, and GE Vernova. The legacy firm is GE Aerospace. The stock price is the highest since about 2016. Moreover, the dividend was boosted 250% to $0.26 per quarter from $0.08. It will be many years before General Electric returns to its former dividend glory, but it has a path to get there now.


Stock Market Overview

Recent data from Stock Rover illustrated a mediocre week for the stock market. All the main indexes were negative. The Nasdaq Composite led the way, followed by the S&P 500 Index, the Dow Jones Industrial Average, and the Russell 2000.

2 of the 11 sectors witnessed positive returns this week. The Energy, Communication Services, and Basic Materials sectors were the top performers of the week. Energy has been performing well because of rising oil prices. However, the Consumer Defensive, Real Estate, and Healthcare sectors were the worst performers of the past week. Real Estate has once again been hit by climbing interest rates.

Oil prices rose to ~87. The VIX climbed 23.6%+ to 16.03 on geopolitical risks, but it is still below its long-term average. Gold ended the week at ~$ $2,349 per ounce. People have gravitated to the metal because of higher energy costs and geopolitical risks.

Stock Market Returns This Week

(Click on image to enlarge)

Image Source: Stock Rover

Despite the recent turmoil, the markets have continued to move upward overall because of the American economy’s strength and the bull market’s continuation. The S&P 500 has led the way since the start of the year, followed by the Nasdaq, the DJIA, and the Russell 2000.

10 of the 11 sectors have positive returns thus far this year. The top performers in 2024 have been Energy, Communication Services, and Industrials, while the Utilities, Consumer Cyclical, and Real Estate sectors have been generally trailing. Only the Real Estate sector has seen a negative return overall because of high-interest rates.

YTD Stock Market Returns

(Click on image to enlarge)

Image Source: Stock Rover

Our dividend growth investing strategy started the year down. Overall, larger market capitalization stocks have been performing better than smaller ones. The table below shows their performance by category. However, it should be noted that dividends and passive income streams have continued to grow.

Image Source: Stock Rover


Stock Market Valuation This Week

The S&P 500 Index trades at a price-to-earnings ratio of 28.25X, and the Schiller P/E Ratio is about 34.55X. These multiples are based on trailing twelve months (TTM) earnings. The long-term means of these two ratios are approximately 16X and 17X, respectively. 

Overall, the market is still overvalued despite the recent correction, the bear market, and the recent rebound seen in the markets. Earnings multiples of more than 30X are overvalued based on historical data.


More By This Author:

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Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. We are not providing you with individual investment advice on this site. Please consult with ...

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