A slowing economy and mixed political signals are leaving investors ambivalent about stocks.
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Since bolting out of the gate in the new year, the major stock indexes have leveled off in the last ten days amid growing signs of an economic slowdown. The Dow index was down 0.27 percent today, while the S&P 500 and Nasdaq Composite indexes were down 0.28 percent and 0.29 percent respectively. The Entrepreneur Index™ outperformed the broader market, rising 0.18 percent on the day.
The economy is officially slowing. The Bureau of Economic Analysis reported this morning — one month late because of the government shutdown — that GDP growth for the fourth quarter was 2.6 percent. That's significantly less than the previous two quarters but better than the 2.2 percent that economists were expecting.
Meanwhile, the political news has been all over the map. President Trump's meeting with North Korea's Kim Jong-un was cut short without an agreement; nuclear powers Pakistan and India have renewed hostilities and Economic Advisor Larry Kudlow said that the trade talks with China were showing "fantastic" progress. There is also the question of whether Michael Cohen, President Trump's former personal attorney, calling the President "a racist, a con and a cheat," has any significance to Mr. Trump's political future.
Universal Health Services had the biggest gain on the Entrepreneur Index™ today, rising 4.18 percent. The operator of acute care facilities reported fourth quarter earnings after the market close yesterday, beating earnings estimates slightly and destroying revenue forecasts. The stock is up 19.3 percent this year.
L Brands had the biggest decline on the index after it reported earnings and another bad quarter for flagship brand Victoria's Secret lingerie. Earnings were slightly better than expected, but sales missed estimates and the company issued forward guidance below expectations. Same-store sales for Victoria's Secret were down three percent in the quarter and the company said it would close 53 stores this year. The stock was down more than eight percent in the morning but closed the day down 4.6 percent. It has plunged 47 percent in the last twelve months.
The technology sector was quiet once again today. The four FAANG stocks on the Entrepreneur Index™ have been in the doldrums lately. Alphabet Inc. (0.35 percent) had the only gain of the four today. Facebook and Netflix were down 0.84 percent and 1.31 percent respectively. TripAdvisor Inc. had the biggest decline in the sector, dropping 1.77 percent. Twitter, up 1.22 percent, had the biggest gain.
Other notable gains were posted by Capital One Financial, (1.6 percent), Tesla (1.96 percent) and REITs Extra Space Storage (1.67 percent) and Macerich Company (1.73 percent). Retailer Gap Inc. reported earnings after the market close and announced a major restructuring of the company. The stock was up sharply in after-hours trading.
Other declines on the Entrepreneur Index™ included homebuilder D.R. Horton Inc. (-2.87 percent), healthcare IT services provider Cerner Corp. (-1.82 percent), and food-maker J.M. Smucker Company (-1.54 percent).
The Entrepreneur Index™ collects the top 60 publicly traded companies founded and run by entrepreneurs. The entrepreneurial spirit is a valuable asset for any business, and this index recognizes its importance, no matter how much a company has grown. These inspirational businesses can be tracked in real time on Entrepreneur.com.