The week was up slightly despite the up and down movement mid week. Economic data showed manufacturing slowing and housing continuing to suffer. Earnings were mostly positive this week showing that growth is continuing, but at a slower than expected pace. Interest rates have begun to rise slightly and will be expected to gradually climb as the Fed ends its quantitative easing program (QE2). Oil has fallen to just under $100 a barrel, which will help the recovery continue.
Economic Data
- Federal Open Market Committee hinted that it would allow interest rates to creep up slowly.
- QE2 ends next month, and the Fed will begin slowly selling treasuries, and
- The Fed has not mentioned raising the Fed funds rate yet.
- Initial jobless claims were down 69,000 this week to 409,000.
- The labor market is slowly recovering, and
- Continuing unemployment claims are down slightly to 3.71 million.
- Fuel prices have slowly dropped from highs a few weeks ago.
- Gasoline was down $0.10 this week, and
- Oil is down around 12% from its high at the end of April.
Company News
- Hewlett-Packard Company (NASDAQ: HPQ) reported a slight increase in profit and beat estimates.
- A leaked memo from the CEO said that HP was facing a tough quarter forced shares down 7%.
- Dell, Inc. (NASDAQ: DELL) tripled profit from lower input costs and sales growth of certain products.
- Dell earned $945 million, or $0.49 per share, beating the forecast of $0.43 per share.
- Dell is losing consumer sales to tablet PCs, but saw an increase in corporate sales and service.
- Lowe’s Companies (NYSE: LOW) profit was down 6%, while net income fell to $461 million from $489 million.
- Earnings were $0.34 a share, just below the expected $0.36 per share, and
- Same store sales were down 3.3%, outlook was lowered, and the stock fell 3.6%.
- The Home Depot, Inc. (NYSE: HD) beat expectations for the quarter and raised its profit forecast, sending shares up 1% on news.
- HD beat Lowe’s by cutting expenses, and
- Outlook for the year was raised 2.5%, and predicts earnings of $2.24 per share.
- Wal-Mart Stores, Inc. (NYSE: WMT) grew profit by 3%, but the earnings were mostly from overseas sales and from Sam’s club.
- Unfortunately for the past eight quarters, same stores sales have declined.
- Target Corporation’s (NYSE: TGT) profit was up 2.7%.
- Retail sales have declined;
- The increase in earnings is due to its credit card unit, and
- Same store sales were up 2.2% in the first quarter while the stock price was down 1.6%.
- Deere & Company’s (NYSE: DE) profit grew 65% as a result of higher commodity prices helping farmers purchase upgraded agricultural equipment.
- DE upgraded its forecast revenue for 2011, expecting sales to increase around 21%.
Mergers & Acquisitions Activity and More
- The Justice Department opposed the NASDAQ/ICE bid for NYSE, and threatened a law suit to block the merger.
- Deutsche Boerse is now the only candidate bidding for the exchange, and
- Shares of NYSE were down 13% on the news.