Investors found new reasons to be thankful in the week heading into Thanksgiving. Improved reports on small business and on manufacturing, along with work in Washington on tax simplification and lower corporate tax rates, helped motivate stock buying. A strong showing in stock markets Thursday was just part of a full week lift for area shares, leading to a 23.16 full-week gain for our Quad-City Times Key 15 to close at 2,276.35 (1).
Indeed, small business input was important to investors. With many more of these than big multinationals, and with smaller companies being more reliant on U.S. business, their observations are key. The National Federation of Independent Business noted in a Wednesday release that its small business optimism index climbed from 103.0 in September to 103.8 in October. This is a strong reading, in fact in the top 7 percent of all readings historically, the federation noted. One year ago in October, before national elections, the index reading was much lower at 95.0.
What’s it mean? The federation explained, “More small business owners last month said they expect higher sales and think that now is a good time to expand.” Also, “Owners became much more positive about the economic environment last month, which suggests a longer-run view,” according to NFIB Chief Economist Bill Dunkelberg. If smaller businesses are gaining more optimism, it surely is because of improvement they are seeing and foreseeing.
Manufacturing output is growing, too, according to the Federal Reserve. Its Thursday release puts the October output of goods nationwide up an impressive 1.3 percent over September, impressive because it is the largest one month gain since year 2010. Understandably, it is also a rebound from some September hurricanes related curtailment. But, nicely, the October output, counted in units of manufactured goods, not dollars, was up a healthy 2.7 percent over one year ago, again encouraging to investors.
Thursday’s passage of a tax overhaul bill by the House of Representatives promises lower corporate tax rates and fewer tax brackets for individuals as well as simplification in filing, again encouraging. Importantly, however, the Senate still needs to debate and pass any such measure. And if there are differences with the House approved tax bill, compromise would need to be negotiated and voted. But, House passage was regarded as progress on a bill that includes motivating corporations to bring foreign-earned profits back to the U.S. with more favorable taxation.
Monday morning’s earnings release from Tyson Foods shared earnings that beat analysts’ consensus estimates. With pork operations in Columbus Junction, Iowa, and beef operations in Joslin, Illinois, Tyson reported fourth fiscal quarter sales that climbed an impressive 10.8 percent to $10.1 billion compared with last year’s $9.2 billion. Profits rose yet more impressively, up 49 percent from $.96 per share one year ago to $1.43. The company’s commentary was enthusiastic, noting “Our Beef and Pork segments delivered outstanding returns for the quarter and for the year, again generating significant cash to fuel investments in our Chicken and Prepared Foods segments.”
Tyson benefits from lower cost animal feed during these times of corn prices remaining below $4.00 per bushel. And, investors last week bid Tyson shares up on the news, and up 3.80 for the week to 77.98 (1).
Arconic, with extensive aerospace and automotive aluminum operations here, reported on Wednesday, that it has entered into a multi-year agreement with Airbus for cooperative research. Together, they will develop customized processes and parameters to produce, and qualify for usage, large, structural 3D printed components, such as pylon spars and rib structures for construction of Airbus jetliners. Those components will be sizable ones, up to one meter, or approximately 3 feet in length.
The agreement is regarded by investors as a further recognition of Arconic’s continued research to push for more efficient and reliable alloy-based parts for aerospace. Arconic shares gave up .39 to 23.85 (1).
And, just in time for investors to think about heading to the malls for holiday shopping, Macerich on Wednesday reported that it was awarded the prestigious 2017 “Leader in the Light” award for environmental achievements for an unprecedented fourth year. Macerich owns both NorthPark and SouthPark malls here in the Quad-Cities. The award is given by NAREIT, the National Association of Real Estate Investment Trusts. Macerich CEO Arthur Coppola explained the company’s commitment to sustainability, to investing in energy assets including solar and fuel cell technology, along with conservation measures. Macerich shares finished the week off .15 to 64.23 after big gains the prior week.
Thanksgiving this week will provide a rest for investors. They, along with you and me, will be thankful for the blessings of living in a land of so much opportunity and security for our families. God bless America on this truly American holiday.