The stock market took a hit in October, with all the major indices down. In fact, most are now down for the year.
The NJCU New Jersey 50 Index, a fund representing 50 of the largest publicly traded companies in the state, and thus a barometer for the New Jersey economy, fared a little better.
The NJ 50 was down 5 percent in October, but it is still up 1.74 percent for the year – a better showing than the Dow, S&P, NASDAQ and the Russell 2000.
Christopher Versace, chief investment officer of Tematica Research and the faculty adviser to the NJCU student investment management group, which was instrumental in creating the index, said the tough month proved the strength of the index and thus the New Jersey economy.
“The NJCU New Jersey Index exited the month up 1.74 percent for the first 10 months of 2018, ahead of both the S&P 500 and the Dow for the same time frame,” he said. “That outperformance in both the tumultuous month of October and year to date performance speaks to the diverse nature of the index as 21 of its 50 constituents beat out the major market indices for the month.
“The majority of those companies have more defensive business models, such as that at water utility American Water Works (AWK), located in Voorhees; consumer product company Church & Dwight (CHD), headquartered in Ewing; and animal health and nutrition company Phibro Animal Health (PAHC), based in Teaneck.
“The positive performance of those and the other 18 companies in the index held in check the greater than market October declines associated with biopharmaceutical and life science companies evidenced in share price moves for Plainsboro-based Intergra Lifesciences (IART), East Rutherford-based Cambrex Corp. (CBM) and Summit-based Celgene (CELG).”
Officials at the New Jersey City University School of Business have said they created the index as a way to take a snapshot of the New Jersey economy.
“New Jersey is home to a wide variety of publicly traded corporations, from huge global pharmaceuticals to technology innovators, consumer goods companies and retailers,” School of Business Dean Bernard McSherry said.
“The NJCU New Jersey 50 contains a diverse group of stocks that can be effectively used to gauge how well businesses in New Jersey are succeeding.”
Since its inception in September 2017, excluding dividend payments, the NJCU New Jersey 50 Index was up 8.7 percent at the end of October 2018.
ROI-NJ will offer a monthly look at its results, but you can follow it daily at under the ticker NJCU50PR.
Versace offered a look at what’s ahead for the index.
“We are just over halfway through the September quarter earnings season, which means there are ample companies left to report and issue updated guidance,” he said. “Candidly, those reports could push or pull the market either higher or continue the October pain. There are still ample risks in the market to be had as the current earnings season winds down. These include the mid-term elections; Italy’s next round of budget talks with Brussels; upcoming Trump-China trade talks, which have led to another round of tariff preparations; and Fed rate hikes vs. the slowing speed of the global economy.
“As we navigate that pathway to the end of the year, we will also be entering the 2018 holiday shopping season, which per the National Retail Federation’s annual consumer spending survey should rise more than 4 percent year-over-year. That bodes rather well for several NJCU New Jersey 50 Index constituents including Ascena Retail Group (ASNA), Burlington Stores (BURL), J&J Snack Foods (JJSF), Movado Group (MOV) and Children’s Place (PLCE).