Up-and-Down Week ends on an Up Note for U.S. Markets

For the week of Monday, June 11, 2012 through Friday, June 15, 2012

• Standard & Poor’s 500 Index: 1.30%
• Dow Jones Industrial Average: 1.70%
• NASDAQ Composite: 0.50%

The stock markets experienced another topsy-turvy ride this week, with each new headline dominating the news. Worries about Europe, Sunday’s Greek elections, and next week’s Federal Reserve Open Market Committee meeting all fed the uncertainty that caused stocks to volley in both directions throughout the week. U.S. Stocks saw gains on Thursday on hopes the Fed will discuss stimulus efforts.

Unfortunately, next week may be much of the same, as investors worldwide will be watching the outcome of Greece’s elections and how the European Central Bank handles both Italy and Spain.
However, if investors feel that European policy makers can determine a way to stem the crisis, then, perhaps they’ll realize stocks look really cheap.

Economic Data

• Chain Store Sales Snapshot:
  • The chain store sales index’s recent decline of 0.7% was the seventh in the last nine weeks.
  • This week year-over-year growth inched up to 2.9%.
  • Dollar store and wholesale clubs saw an increase in traffic.
  • Cool weather was a negative for sales, offset by the continued decline in gasoline prices.
• MBA Mortgage Applications Survey:
  • The mortgage applications composite index rose 18% in the week ending June 8.
    • The spike was led by large gains in both the purchase and refinance indices.
    • The refinance index was up 19.2% from the previous week, as mortgage rates hovered near all-time lows.
    • The purchase index gained 12.8% and broke a four-week-long losing streak.
    • The purchase index has now been trending slightly higher over the past couple months.
• Producer Price Index:
  • Sharply underperforming weak consensus expectations, producer prices fell 1% in May.
  • Prices of goods at the earliest stage of production fell even more sharply.
    • This confirms the outlook for further disinflation in consumer prices in the coming months.
  • The year-ago change in headline producer prices declined for the eighth straight month, dropping well below 1%.
• Retail Sales:
  • Retail sales fell 0.2% in total in May.
    • Customers have cut back spending in recent months.
    • This decline matches the April decline that was revised downward from the 0.1% gain initially reported.
  • Declines have been led by gasoline stations and building supply stores.
    • The former is price-related and good news for consumers.
    • The latter weather-related so underlying spending is not as weak as it appears.
  • Year-over-year growth slowed to 5.3%.
• Jobless Claims:
  • Initial claims increased from 380,000 to 386,000 for the week ending June 9.
  • The increase in claims suggests businesses are becoming skittish, as the U.S. economy has softened and worries about Europe have intensified.
  • Continuing claims fell 33,000 for the week ending June 2.
• Consumer Price Index:
  • The consumer price index fell 0.3%
    • This was a sharper decline than the 0.2% that was expected.
    • The index is 1.7% higher than May 2011.
  • A sharp decline in the energy index was responsible for the weakness.
  • Core CPI advanced 0.2% for the third straight month.

Earnings & Company News

• Kroger (NYSE:KR)
  • The Kroger Company, reports that it earned $439.4 million, or $0.78 per share its most recent quarter compared with $432.3 million, or $0.70 a share a year ago.
  • Analysts on average expected a profit of $0.72 per share.
  • For the quarter, Kroger said revenue at stores open at least a year rose 4.2%, marking the 34th straight quarter of growth.
    • Total revenue for the quarter was $29.06 billion, up from $27.46 billion, but still shy of expectations of $29.16 billion.
  • The company is forecasting a better than expected year, as their customer loyalty programs help to boost net income.
  • The company raised it outlook for the year, based on the first quarter, to $2.33 to $2.40 per share, up from the previous $2.28 to $2.38 per share.
  • Analysts expected $2.32 per share.
• Nokia Slashes 10,000 Jobs:
  • Nokia Corp. announced a management shake-up and 10,000 job cuts, as its earnings outlook was cut for the third time in a little over a year on Thursday.
  • Nokia has struggled to keep up in the smartphone market.

Interest Rates

• Treasury rates remain low, as Eurozone fears pushed investors into the U.S. safe havens.
• The two-year Treasury rate remained flat at 0.26%.
• The five-year Treasury rate fell two basis points, dipping to 0.71%, still below the one-year average of 0.98%.
• The 10-year Treasury rate lost six basis points falling to 1.61%, still trading below its six-month average.
• The 30-year Treasury yield also fell three basis points to 2.72%.

Disclosures

This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.