Markets
For the week of Monday, March 4, 2013, through Friday, March 8, 2013:
- Standard & Poor’s 500 Index: 2.22%
- Dow Jones Industrial Average: 2.23%
- NASDAQ Composite: 2.38%
The week began strong with the Dow Jones Industrial Average edging closer to an all-time high. Investors flocked to utilities, consumer discretionary and financial stocks. Only energy and industrial sectors lost ground. By Tuesday, the Dow closed at its highest level ever, finally overcoming the losses tied to the financial crisis. Blue-chip stocks continued to climb to new heights on Wednesday, as a result of a better-than-expected reading on the labor market. However, tech giants Apple, Inc. (NASDAQ: AAPL) and Google, Inc. (NASDAQ: GOOG) dipped to pull the NASDAQ into negative territory.
U.S. stocks began higher on Thursday after jobless claims fell to a six-week low and the European Central Bank kept its benchmark rate unchanged. Stocks closed higher on Friday, sending the Dow deeper inside record territory. This came after the Labor Department reported the nation’s jobless rate fell to 7.7% from 7.9%. The news followed better-than-expected private-sector data that ADP released midweek.
Economic Data
- Chain Store Sales Snapshot:
- The ICSC Chain Store Sales Index rose 0.2% in the latest week, but year-over-year growth was down 1.8%.
- Winter storms and cold weather across the South likely kept sales down.
- Institute for Supply Management Services Index:
- The February ISM Nonmanufacturing Index increased from 55.2 to 56.
- New orders rose 3.8 points to 58.2, and
- The inventory index moved back above 50.
- The ISM Non-manufacturing and Manufacturing surveys for February suggest the economy strengthened midway through the first quarter.
- The February ISM Nonmanufacturing Index increased from 55.2 to 56.
- MBA Mortgage Applications Survey:
- Mortgage Applications rebounded rising 14.8%, after three consecutive weeks of falling.
- Refinance and purchase activity were both up, as mortgage interest rates dropped.
- Beige Book:
- The Federal Reserve’s March Beige Book, covering the middle of January to the end of February, reported that economic activity expanded.
- The mostly modest to moderate pace expansion was spread across most of the Federal Reserve districts, with Boston’s and Chicago’s districts the only ones to report slow growth.
- Factory Orders:
- Manufactured goods orders declined 2% in January.
- The previous figures for growth in durable goods were revised up from a 5.2% decrease to a 4.9% decrease.
- Shipments of durable goods fell 1.2%.
- Unfilled orders declined 0.2%.
- Inventories grew 0.5%.
- The previous figures for growth in durable goods were revised up from a 5.2% decrease to a 4.9% decrease.
- Core capital goods orders grew an impressive 7.2%.
- Manufactured goods orders declined 2% in January.
- Jobless Claims:
- Initial claims for unemployment insurance fell 7,000 to 340,000.
- Continuing claims rose slightly to 3.1 million.
- The four-week moving average fell 37,500 to 3.12 million.
- The insured unemployment rate held at 2.4%.
- Initial claims for unemployment insurance fell 7,000 to 340,000.
- International Trade:
- The foreign trade deficit widened to $44.4 billion, worse than consensus estimates.
- December’s revised deficit narrowed slightly to $38.1 billion from $38.5 billion in the previous month.
- Exports fell by 1.2%, while imports grew 1.8%.
- The real goods deficit also widened to $48 billion.
- Productivity & Costs:
- Non-farm business productivity was down 1.9% for the fourth quarter 2012 on a seasonally adjusted basis.
- Both output and hours worked were revised up, barely improving the productivity measure.
- The forecast and consensus expected slightly larger upward revision.
Earnings:
- Brown-Forman Corporation (NYSE: BF.A)
- Brown-Forman Corp. reported fiscal third quarter results, including a 7% increase in sales to $1.03 billion.
- Operating income increased 15% to $237 million in the quarter.
- For the first nine months of the year, Brown-Forman reported net sales increased 4%, while operating income increased 13%.
- PetSmart, Inc. (NASDAQ: PETM)
- PetSmart, Inc., reported earnings of $134 million, or $1.24 per share for the quarter.
- This compares to $102 million, or $0.91 per share, a year earlier.
- Revenue rose 15% to $1.88 billion compared to $1.64 billion.
- Staples, Inc. (NASDAQ: SPLS)
- Net income was down 72%, as costs related to Staples turnaround weighed on the quarter.
- Revenue rose 3% to $6.57 billion, but still missed analysts’ expectations of $6.71 billion.
- Staples lost $210.7 million, or $0.31 cents per share, for the full year.
- Last year it reported net income of $984.7 million, or $1.40 per share.
- The Kroger Co. (NYSE: KR)
- Kroger reported fourth-quarter profit that beat Wall Street expectations.
- Revenue rose 13% to $24.2 billion.
- The company earned $461.5 million, or $0.88 per share, compared to a loss of $306.9 million, or $0.54 per share, in the same quarter last year.
M&A Activity and More:
- Icahn Shaking Things Up at Dell:
- Carl Icahn is joining the fight against Dell to go private.
- Icahn sent a letter to Dell’s board to disclose his intent that hinted at years of litigation if the company proceeds with measure to sell to Michael S. Dell.
- Icahn did not disclose the exact size of his stake, describing his hedge fund’s holdings only as “substantial.”
Interest Rates
- The two-year Treasury rate rose almost two basis points to 0.25%.
- The five-year Treasury rate climbed seven basis points to 0.83%.
- The 10-year Treasury rate was up more than nine basis points to 1.97%, close to the key 2% level.
- The 30-year Treasury yield jumped nine basis points to 3.18%, nearing the 2-year average of 3.28%.