Published May 10, 2024

The U.S. stock market took a breather in April from its seemingly relentless upward momentum. A technical indicator that signals conditions in the stock market are “overbought” — a term traders use to describe when stocks are trading above fair value — had been flashing for four months. This price momentum indicator moved to overbought in November 2023 and stayed that way through March. The previous record of 60 straight overbought closes was reached in April 1998.

The combination of higher-than-expected inflation rates, below-expectation GDP numbers and the highest levels of interest rates in 23 years raised fears of a slowing U.S. economy — even the possibility of stagflation in coming months — and spooked the market. The S&P 500 was down 4.16 percent in April, bringing its year-to-date return to 5.57 percent, after having posted its best first-quarter performance since 2019. The Nasdaq and Dow dropped 4.4 percent and 5 percent, respectively, for the month.

In April, the U.S. Commerce Department reported that economic growth was much weaker than expected in the first quarter, and prices rose at a faster pace. Gross domestic product (GDP) increased at a 1.6 percent annualized pace, adjusted for seasonality and inflation, according to the Bureau of Economic Analysis. Economists surveyed by Dow Jones had been looking for an increase of 2.4 percent following the 3.4 percent gain in 2023’s fourth quarter and 4.9 percent in its third quarter. First-quarter growth in 2023 was 2.2 percent, so seasonality is a factor in the lower number year to date.

On May 3, the April jobs data — nonfarm payroll increases — came in at 175,000 versus 240,000 expected and followed […]

Looking for Clues in Q2 Earnings Calls
After a rough second quarter, corporate financial results will be weak. Investors will be listening closely to executives for signs of hope in the future

By Ben Steverman  July 9, 2009

http://www.businessweek.com/investor/content/jul2009/pi2009079_487206.htm

Investing
Entering the crucial midyear earnings season, investors are a befuddled bunch.
Financial markets—much improved from four months ago—suggest the economy is stabilizing and could recover soon. But corporate profits continue to fall, and more and more Americans are losing their jobs.

That’s why, investors say, they’ll be listening very closely as companies unveil second-quarter results—and not just to the results themselves, but to what executives say about the future. […]

Market Snapshot May 23, 2009, 12:01 a.m. EST Wavering rally faces GM failure, slew of housing data By Laura Mandaro , MarketWatch

SAN FRANCISCO (MarketWatch) — A nearly three-month rally in stocks will square off against a possible General Motors Corp. bankruptcy and a round of new housing data during the holiday-shortened trading week.

How this tussle turns out will help shape the ongoing debate about whether the stock market’s 33% gains since its March low represent a sustainable rally or just a bounce in a bear market.

Though they ended last week higher, the benchmark indexes fell back for four of the five sessions, weighed down by a growing sense that investors had overbid for shares given what’s likely to be a slow, jagged economic recovery.

“The market’s had a big run-up, now it’s running out of steam,” said William Rutherford, president of Rutherford Investment Management in Portland, Ore., and the state’s former treasurer.

He noted that even though the stock market has continued to rise, it’s done so on lighter volume. “That shows it’s getting a bit tired.”

U.S. markets are closed Monday for Memorial Day.

Investors may return from the beach to witness the bankruptcy of General Motors (GM 1.43, -0.47, -24.74%) , the nation’s largest auto company.

Such a failure is largely baked into the broader market, say analysts. “It won’t be a surprise, it may even big a relief once it actually happens,” said Robert MacIntosh, chief economist and a portfolio manager at Eaton Vance.

But such a large collapse — involving tens of thousands of workers, closed dealerships and a hit to U.S. manufacturing output — has the power to shock even expectant markets.

On Friday, benchmark indexes skidded to a […]

Hello friends:

As promised last week, attached please find a PDF reprint of our Forbes feature, with my compliments. If you would like to receive a hard copy, please “reply” with your name and address and we’ll mail you a glossy reprint immediately.

Enjoy the read and please share it with your friends and colleagues. Let us know your thoughts.

Thank you for your time. I look forward to hearing from you,

William Rutherford

RUTHERFORD INVESTMENT MANAGEMENT LLC

503.452.1210 | wrutherford@rutherfordinvestment.com | www.rutherfordinvestment.com

Rutherford Investment Management, LLC.

The Serious Investor’s Personal Investment Manager

Forbes-Feature

Hello friends:

As the market tries to rebuild investor confidence, a logical place to start is through investment management services that demonstrate

* individualized client attention with separately managed accounts, * transparency in fee and investment processes, and * audited performance.

Those are the qualities that you have come to expect from Rutherford Investment Management.

Rutherford Investment Management will be featured in the May 25 issue of ForbesR magazine, in a special section called Oregon Financial. If you are a current Forbes subscriber, please watch for our profile. We will be sending you a reprint of the feature on or around May 12, directly to your email inbox. We will also be featuring this profile on our website. www.rutherfordinvestment.com.

Please watch for it, share it with your friends and colleagues, and let us know your thoughts.

Thank you,

William Rutherford

RUTHERFORD INVESTMENT MANAGEMENT LLC.

503.452.1210 | wrutherford@rutherfordinvestment.com

Bill Rutherford is featured in the upcoming print edition of BusinessWeek – “Inside Wall Street” column.

May 4, 2009 Issue (posted online April 22, 2009)

Article link: http://www.businessweek.com/magazine/content/09_18/c4129insidewal190116.htm? chan=magazine+channel_personal+business

In mid-2007, holding stock in financial outfits became taboo at Rutherford Investment Management, whose composite growth portfolio has snagged a five-star rating from Morningstar (MORN ) for the past five years. But a year later, Rutherford hopped back into financials. It bought shares of JPMorgan Chase (JPM ), the global banking giant with assets of $3.2 trillion and operations in more than 50 countries. JPMorgan now offers what a long-term growth investor like Rutherford requires for its portfolio: a cheap, “best in class” bank and a “fortress” company with huge potential, says the firm’s president, William Rutherford. JPM’s global franchise will help it “come out stronger” from the financial crisis, he adds. Like most other banks, JPM shares have been battered-falling to 14.96 on Mar. 6, down from a 52-week high of 50.63 last Oct. 3. Its strong investment banking unit helped it post better-than-forecast first- quarter profits, and it had climbed to 31.90 by Apr. 22.

As JPMorgan “continues to take market share in most of its businesses, we view it as one of the group’s better performers,” notes Jason Goldberg of Barclays Capital (BCS ) (it has done banking for JPM). He rates the stock overweight, with a 12-month target of 42. Goldberg expects earnings of $1.75 a share in 2009 and $3 in 2010, vs. 2008’s $1.40.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

by […]

Gene Marcial’s Stock Picks April 22, 2009

Marcial: Finding Comfort in Clothier Warnaco Despite a recent runup, shares of the maker of popular Calvin Klein, Speedo, and intimate apparel lines remain promising

By Gene Marcial

Most investors are torn between pursuing a defensive strategy in these recessionary times and scouting for beaten-down shares of growth companies, many of which stumble during economic downturns.

To bridge the gap, long-term growth investor William Rutherford, president of Rutherford Investment Management, invests in companies that have consistent records of growth and, at the same time, possess defensive characteristics.

One company that tops Rutherford’s list: Warnaco (WRC), a leading global apparel maker, whose popular brands include Calvin Klein, Speedo, and Chaps. What distinguishes Warnaco from many other clothing companies is that it specializes in intimate apparel for both men and women. It also manufactures sportswear, such as jeans, and Speedo swimwear.

Demand for intimate apparel has been hot, helping propel Warnaco’s stock higher, to 27 a share on Apr. 21, from a 52-week closing low of 12.22 on Nov. 21. Despite the stock’s rise, it is well below its 52-week high of 53.89 reached on Aug. 11, 2008.

how much higher?

Regardless of the economic cycle, demand for intimate apparel remains strong, making it a good defensive play, notes Rutherford. So he expects Warnaco to participate in any consumer-spending recovery. At the same time, he adds, the company demonstrates an impressive growth profile, with a record of rising sales and earnings since it emerged from Chapter 11 bankruptcy proceedings in 2003. (It filed for bankruptcy protection on June 11, 2001.) New management took over and restructured the company.

There is concern, however, among some analysts that the stock may have little upside after its rapid advance.

Not true, says […]

article online at: http://www.businessweek.com/investor/content/apr2009/pi20090420_886105.htm

April 21, 2009, 12:01AM EST

Earnings: Good News or Bad News? If trends continue, first-quarter profits might beat expectations?barely?for the first time in several quarters

By Ben Steverman

Amid a deepening recession and credit crisis, investors have gotten used to companies’ earnings going from bad to worse. Now, based on the first of a wave of first-quarter results, earnings might be going from worse back to just bad.

But that’s small comfort. While the first two weeks of the current earnings season, which kicked off with Alcoa’s ( AA) release on Apr. 7, do not confirm the pessimists’ worst fears, the tidings are still pretty grim. Based on analyst predictions and the first 58 companies to report in the first quarter, Standard & Poor’s estimates that the 500 in the broad S&P 500 should see operating earnings drop 26% from a year ago.

Reflecting the serious concerns embedded in such a drop in profits, stocks sold off on Apr. 20. The S&P 500 fell 3.5% despite from financial giant Bank of America ( BAC). (Of course, a gloomy forecast on BofA’s future loan losses might have had something to do with the market’s malaise.)

But, after a six-week market rally, the S&P 500 remains 22% above its early-March lows.

Above the Water Line

One reason is the first quarter’s projected operating earnings on the S&P 500 index of $12.29 per share, which are a marked improvement from the disastrous last quarter of 2008, when operating earnings were actually a negative 9¢ per share.

“It’s miles apart from the fourth quarter of last year,” when “we really hit bottom,” says Ashwani Kaul, Thomson Reuters (TRI ) director of research.

After last quarter, Robert W. Baird […]

http://www.businessweek.com/investor/content/apr2009/pi20090410_940389.htm

Investing April 13, 2009, 12:01AM EST Stocks: Is the Rally on Sound Footing? Almost everyone has been surprised by the stock market’s month-long run. But keeping the momentum going could be tricky By Ben Steverman

Recession? Financial crisis? Never mind. The stock market just finished an extraordinary month, a big surprise for even the most optimistic observers.

Stocks, measured by the broad Standard & Poor’s 500-stock index, hit a low for the current bear market on Mar. 9. A month later, by the close on Apr. 9, the S&P 500 was 26.6% higher.

If this March-April advance were a calendar month, it would be the best month for the S&P 500 since 1933.

“The rally has been surprising in its length and how far it’s come,” says William Rutherford, president of Rutherford Investment Management. Stock gains are boosting confidence, not just among investors but in the U.S. economy as a whole, he says.

“There is a lot of upward momentum here,” says Richard Sparks of Schaeffer’s Investment Research. “A lot of buyers are stepping in.”

Notes of Cautious Optimism First-quarter earnings season, which began on Apr. 7, threatened to trip up the market rally. After all, amid a global recession and financial crisis, earnings for the S&P 500 are expected to drop 38%, according to Thomson Reuters (TRI).

But an early earnings announcement from Wells Fargo (WFC) sparked a rally, when the bank reported profits that were double expectations.

“Expectations for earnings season are so low that it’s going to be hard to disappoint,” says James King, president and chief investment officer at National Penn Investors Trust.

The fact that good news arrived from the financial sector was especially significant.

“If the positive trend continues with other banks-helped by mark-to-market […]