Markets
For the week of Monday, January 21, 2013, through Friday, January 25, 2013:
- Standard & Poor’s 500 Index: 1.14%
- Dow Jones Industrial Average: 1.80%
- NASDAQ Composite: 0.48%
The holiday-shortened week started strong with better-than-expected earnings reports that helped propel blue-chip stocks to a five-year high. Stocks continued their rise on Wednesday, as lawmakers voted to extend the nation’s borrowing limit. On Thursday, the Dow industrials got a boost from a better-than-expected report on the labor market. However, technology shares lagged after a disappointing earnings report from Apple (NASDAQ: AAPL).
Stocks closed higher on Friday, sending the S&P 500 up for an eight straight session. This is its longest winning streak since November 2004. Better-than-expected earnings news from several companies helped to drive the rally, despite news December new home sales fell 7.3%.
Economic Data
- Existing Home Sales:
- Existing home sales surprised to the downside, dropping 1% from November to an annualized 4.94 million in December.
- Despite the drop in sales, existing-home sales are still at their fastest pace since beginning of 2007.
- 2012 sales were up 9% from 2011;
- Months of supply was at 4.4 months for December, and
- The median existing-house price is up 11.5% year-over-year.
- Existing home sales surprised to the downside, dropping 1% from November to an annualized 4.94 million in December.
- Chain Store Sales Snapshot:
- The ICSC Chain Store Sales Index fell 1.5% for the third straight week.
- The decline was similar to the comparable week in 2012.
- The current year-over-year growth rate of 3.2% remains above the 3% 2012 average.
- The ICSC Chain Store Sales Index fell 1.5% for the third straight week.
- MBA Mortgage Applications Survey:
- The mortgage applications composite index rose 7% for the third straight week of improvement.
- The refinance index led the gains, up 7.7% from the prior week.
- The purchase index was also up 2.5% higher.
- Jobless Claims:
- Initial claims for unemployment insurance fell 5,000 to 330,000.
- Continuing claims fell 71,000 to 3.16 million, the lowest level since July 2008.
Earnings:
- Verizon Communications Inc. (NYSE: VZ)
- Verizon reported revenue of $30.01 billion.
- This was ahead of analysts’ estimates of $29.83 billion.
- Adjusted profits of $0.38 a share were short of the analysts’ estimate of $0.50 per share.
- Considering non-cash pension items, non-operational debt retirement and other restructuring items, the company lost $1.48 a share.
- Verizon reported revenue of $30.01 billion.
- International Business Machines Corp. (NYSE: IBM)
- IBM Corp. reported net income increased $5.83 billion, back on track after a disappointing previous quarter.
- Net income increased 6.3% to $5.83 billion.
- Overall revenue declined nearly 1% to $29.3 billion.
- Google Inc (NASDAQ: GOOG)
- Google beat fourth quarter earnings forecasts, but fell short on revenue, as a result of the ongoing integration of Motorola Mobility.
- Google earned $10.65 a share excluding items, compared to $9.50 a year ago.
- This also beat analyst estimates of $10.47.
- Revenue grew 39.5% to $11.34 billion; however, analysts expected $12.34 billion.
- Coach, Inc. (NYSE: COH)
- Coach, Inc. missed analysts’ estimates for the quarter citing a “challenging” holiday season.
- Stores open at least a year were down 2% for the quarter, and
- Overall lower North American demand hurt the company’s bottom line.
- Net income rose 1.5% to $352.8 million, or $1.23 a share, from $347.5 million, or $1.18, a year earlier.
- Analysts projected $1.28 a share.
- Revenue rose 3.8% to $1.5 billion, which was also below the estimated $1.6 billion.
- Coach, Inc. missed analysts’ estimates for the quarter citing a “challenging” holiday season.
- McDonald’s Corporation (NYSE: MCD)
- McDonald’s Corp. reported profits rose 1% to almost $1.4 billion, or $1.38 a share, compared to $1.38 billion, or $1.33 a share, a year-ago.
- Sales rose 2% to $6.95 billion, beating analysts’ estimates of $1.33 a share.
- Apple Inc. (NASDAQ: AAPL)
- Apple reported a record quarterly profit at $13.1 billion last quarter.
- This was the second highest quarterly profit by a U.S. corporation.
- Strong iPhone and iPad sales contributed to the quarterly gains.
- The company sold 47.8 million iPhones during the past quarter.
- However, the popularity of cheaper versions of its mobile devices pinched the company’s profits.
- Apple reported a record quarterly profit at $13.1 billion last quarter.
- Netflix, Inc. (NASDAQ: NFLX)
- Netflix surprised reporting net income of $7.9 million, compared to $35.2 million a year ago.
- Analysts had forecast a loss of $0.13 cents.
- Revenue rose 8% to $945.2 million, beating the $934.5 million estimate average.
- The service added 2 million subscribers during the quarter, which pushed it to a profit for the final three months of 2012.
- Netflix surprised reporting net income of $7.9 million, compared to $35.2 million a year ago.
Interest Rates
- Yields slid slightly lower over the past week.
- The two-year Treasury rate fell two basis points to 0.25%.
- The five-year Treasury rate dropped one basis point to 0.78%, just above the one-year average.
- The 10-year Treasury rate lost one basis point to 1.87%.
- The 30-year Treasury yield fell one basis point to 3.06%, staying above the key 3% mark.