The following is the introduction to this week's weekly roundup for Stocks Under $10, a portfolio managed by David Peltier. To check out the portfolio, click here.
For a second straight week, U.S. stocks rebounded sharply on Friday to finish the week little changed. We digested a lot of weaker economic data this week, as durable goods orders and fourth-quarter GDP growth fell short of expectations. While our own Federal Open Market Committee maintained interest rates on Wednesday, Japan moved its overnight lending rate into negative territory late Thursday night.
For many investors, January was a month to forget. That said, we put a lot of cash to work in quality names that we believe can outperform in the coming quarters. We used declines earlier in the week to add to our positions in Huntington Bancshares (HBAN) and Orasure (OSUR).
We'd also consider buying more TherapeuticsMD (TXMD) on the next market pullback. The health care sector lagged the broader market this week, and we welcome the opportunity to put our above-average cash position to work in quality name, when the market allows.
We're near the midway point of earnings season, as 40% of the companies in the S&P 500 have announced quarterly results. We remain on the verge of an earnings recession, as aggregate S&P 500 earnings are trending 5.65% lower.
According to S&P CapitalIQ, only three sectors -- telecom, consumer discretionary and health care -- are expected to have positive earnings growth in the fourth quarter. That said, 69% of companies have exceeded earnings expectations to date, which is above the historical average of 66%.
Looking ahead to next week, the economic calendar will be relatively light until Friday's jobs data. The consensus estimates call for the addition of 190,000 non-farm jobs in January and for the unemployment rate to remain at 5%. Ahead of this print, fed funds futures no longer are pricing in any more U.S. interest rate hikes for 2016.
