By Ryan O'Rourke on March 1, 2024

Happy Friday March 1st!

Moderating stock returns and moderating inflation.  Strong Q4 earnings boosts technology, communication services and industrial sectors. Leap Day the new Y2K?  “Pawgwarts” — Ravenpaw, Slobberin, Gryffindog and Hufflefluff – a Florida animal rescue sorts dogs by personality, not breed.

#1 – Weekly Market Recap – Stock returns were muted during the final week of February as Q4 earnings season wound down and inflation data was in line with expectations.  Through Thursday’s close, the NASDAQ rose +0.5%, the S&P was up +0.1%, and the Dow Jones fell -0.3%.

It was a relatively quiet week for both stocks and economic news.   This week’s earnings releases and economic updates were essentially in line with expectations.  Investors were somewhat anxious heading into Thursday’s PCE inflation report. The report was as anticipated, and stocks rose marginally as a result. 

Next week brings labor market updates, with February’s employment report due out Friday morning. Currently, forecasters are predicting that the US economy added a healthy 193,000 jobs in January.

#2 – Inflation Insights – Investors breathed a sigh of relief as the latest inflation report aligned closely with expectations.

Thursday morning the Personal Consumption Expenditures (PCE) price index, the inflation measurement favored by the Federal Reserve, was released. The report was in line with estimates showing a +0.3% increase in January and a +2.4% increase from last year. 

“Core” PCE, which excludes food and energy, rose +0.4% in January and is up +2.8% from a year ago.  While both the PCE and Core PCE readings surpassed the Fed’s 2% target, they showed continued signs that inflation continues to moderate.

Source: Wall Street Journal (2/29/2024)

#3 – Earnings Season Winds Down – This week marked the unofficial end of Q4 company earnings releases with 98% of S&P 500 companies having reported earnings.  Overall, S&P 500 corporate earnings were strong with 74% of companies beating estimates, well above the 25-year average of 62%.  

As shown in the chart below technology, staples, industrial and health care companies had the highest percentage of companies exceeding earnings expectations.

Conversely, materials, communication services and real estate companies had the lowest percentage of companies exceeding earnings expectations.

As seen in the graphic below, the S&P 500 index returned an impressive +6.5% during January and February. The technology, communication services and industrials sectors posted the highest returns with 9.7%, 8.3% and 7.7% returns respectively.   

On the other hand, consumer staples, real estate and utilities had the lowest returns with 2.3%, -1.2% and -2.5%.

#4 – Leap Day the New Y2K? – Each year it takes approximately 6 hours longer than 365 days for the Earth to orbit the sun. To keep the calendar in sync with annual events like equinoxes and solstices, we add February 29th every 4 years.  Without this added day, the seasons would eventually rotate throughout the year.

For those of you who were born before 1990, you most likely remember the anxiety and angst leading up to the calendar flipping from 12/31/99 to 1/1/00 – Y2K.  The world was concerned that computers would interpret 1/1/00 as 1900 and come to an abrupt stop.   As we know, computers didn’t stop working, the world didn’t end, and lots of babies were born!   

Believe it or not, February 29th is causing similar issues to Y2K.   

New Zealand, one of the first countries to experience each new day, was the first to experience issues on February 29th.  A number of gas pumps at New Zealand stations stopped working because the payment system did not recognize February 29th – the leap year date.

John Scott, Chief Executive of Invenco Group which provides the payment software, said the system had stopped working due to a “leap year glitch”. Sweden also reported that payment terminals at grocery stores failed to process transactions reportedly due to a leap day bug. Some smart watches manufactured by Titan Watches appear to have had problems displaying the date and time on February 29th, freezing at 11:59pm on February 28th.   And computer systems that issue drivers licenses in Japan stopped working on February 29th.

If your birthdate is on a leap day in a leap year, that sounds cool, but from a paperwork perspective, February 29th can be a pain. Some governments forms and government issued IDs don’t recognize a leap year birthdate and require either February 28th or March 1st.  Although technology seems to have smoothed most of this over, clearly some glitches still exist. 

At DSG Advisors, we celebrated Leap Day by dressing up.  We had quite a mixture of costumes ranging from frogs to baseball players to Tom Cruise!  That’s the great thing about Leap Day…there are no guidelines so anything goes!

Source: CodeOfMatt.com

Source: Reuters

#5 – “Pawgwarts” For Dogs – A Florida animal rescue has been inspired by Harry Potter’s wizard school, Hogwarts, to classify their rescue dogs according to personality rather than breed.

According to the Pet Alliance of Greater Orlando, research has shown that without a doggie DNA test, assessment of dog breeds is incorrect more than 70% of the time. “We wanted to do something where people would focus more on the dog’s personality traits rather than what breed they perceive the dog to be,” said executive director Stephen Bardy. To encourage people to adopt based on a dog’s personality, the shelter has stopped using the breed labels altogether. 

Rescue pups at the Pet Alliance begin their stay at “Pawgwarts”, before being placed into one of four distinct “doghouses”. A behavior specialist assesses each dog using toys, activities and by observing their style of play, determining which “doghouse” best fits their personality.

As in the popular Harry Potter series, each of the 4 “doghouses” is assigned core traits that are listed for adopters. For example, a “Ravenpaw” dog is smart and quick to learn obedience cues. A dog that is a pack leader, active and ambitious is a “Slobberin”. A “Gryffindog” is brave, athletic and likes to try new things. Finally, most dogs have some of this trait, but the most affectionate, friendly, happy-to-know-you dog is a “Hufflefluff”.

Bardy says Pet Alliance of Greater Orlando is a no-kill animal shelter with roughly 3,500 dogs coming through their doors each year. It seems that the magical way of identifying dogs is working, as the average dog is in their care for eight days before being adopted.

If you’re curious to learn what “doghouse” your 4-legged friend falls into, follow the link to take the shelter’s online quiz. Pet Alliance Quiz

Source: Today

Have a great weekend!

Denver & the DSG Team

DSG Advisors
3033 Excelsior Blvd, Suite 530
Minneapolis, MN, 55416
(612) 293-9700
dgilliand@dsgadvisors.com