Markets
For the week of Monday, December 31, 2012 through Friday, January 4, 2013:
- Standard & Poor’s 500 Index: 4.57%
- Dow Jones Industrial Average: 3.84%
- NASDAQ Composite: 4.77%
U.S. stocks rallied Monday, ending a volatile year on a high note. Investors welcomed signs that a fiscal cliff deal was taking shape in Washington. When trading resumed on Wednesday, the markets kicked off the new year with their best day in more than a year. It was sparked by relief over the last-minute “fiscal cliff” legislation from Washington, averting some of the tax hikes and spending cuts that threatened to derail the economy’s growth.
Stocks continued to edge up on Thursday, adding to Wall Street’s biggest single-day rally from the day before. However, investors were more wary than in the previous sessions, as they turned their focus to upcoming battles in Congress, including expected bitter fights over spending cuts and raising the federal debt ceiling. December’s Jobs Report concluded 2012 by maintaining a relatively slow pace of job creation. The report showed 155,000 added to payrolls.
Economic Data
- Chain Store Sales Snapshot:
- The ICSC chain store sales index rose 0.6%.
- Although this was the third straight gain, year-over-year growth fell to 2.7%, below the 2012 average of 3%.
- Cool and snowy weather contributed to the sales of seasonal goods.
- ISM Manufacturing Index:
- Rising from 49.5 to 50.7, the ISM manufacturing index bounced back in December, barely above the neutral threshold of 50.
- New orders remained in the low 50s, and production fell from 53.7 to 52.6.
- Super storm Sandy may be the contributor of the improvement in employment, as well as the cause of backlog orders.
- MBA Mortgage Applications Survey:
- Purchase and refinance activity slowed the last two weeks of the month.
- The mortgage applications composite index fell by 11.2% and 10.4% in the weeks of December 21 and 28, respectively.
- Jobless Claims:
- Initial claims for unemployment rose 10,000 to 372,000, from the previous week’s revised 362,000.
- The prior week’s figure was revised up by 12,000.
- Continuing claims rose 44,000 to 3.25 million.
Earnings:
- Family Dollar Store Inc. (NYSE: FDO)
- Family Dollar Stores Inc. reported lower-than-expected earnings.
- The push to sell everyday items, such as, soft drinks and cigarettes, attracted more customers but hurt profits.
- Family Dollar’s profit was $80.3 million, or $0.69 a share, compared to profit of $80.4 million, or $0.68, one year ago.
- Analysts expected $0.75 a share.
- Sales rose 12.7% to $2.42 billion, while analysts had predicted $2.38 billion.
- Family Dollar Stores Inc. reported lower-than-expected earnings.
Interest Rates
- The creation of a greater number of private-sector jobs than expected in December caused Treasury prices to fall.
- The two-year Treasury rate was flat at 0.26%
- The five-year Treasury rate moved up almost five basis points to 0.78%.
- The 10-year Treasury rate rose 13 basis points to 1.87%.
- The 30-year Treasury yield climbed 17 basis points to 3.08%, above the key 3% level.