Market Rally Slipped on Friday

Markets

For the week of Monday, March 11, 2013, through Friday, March 15, 2013:

• Standard & Poor’s 500 Index: 0.66%
• Dow Jones Industrial Average: 0.89%
• NASDAQ Composite: 0.16%

Stocks started the week by climbing higher on Monday, as the Dow Jones Industrial Average achieved its seventh-straight advance. Blue-chip stocks capped their longest streak of gains in a year. On Tuesday, blue chips eked out a slim gain to continue their recent run, while other major indexes declined. Investors seemed to take a break following mixed economic reports at home and abroad.

A surprisingly resilient report on U.S. retail sales nudged the Dow Jones Industrial Average to its ninth straight day of gains on Wednesday. This was the index’s longest winning streak in 16 years. The S&P 500 also closed 11 points away from its all-time closing high of 1565.15, which it hit on Oct. 9, 2007. Wall Street opened higher on Thursday, and the Dow extended its recent winning streak to 10 days in early trading. Economic data showed the labor market recovery was gaining traction. The rally came to a halt on Friday, when stocks closed lower. U.S. economic reports showed consumer prices rose 0.7% in February. The University of Michigan’s Consumer Sentiment Survey slipped to 71.8 in March from 77.6 in February.

Economic Data

• Chain Store Sales Snapshot:
  • The Chain Store Sales Index rose 0.7%, marking its fourth consecutive weekly gain.
  • Year-over-year growth was unchanged at a modest 1.8%.
    • Receding gasoline prices slightly boosted sales, but
    • Blizzard conditions slowed consumers in the Midwest and Mid-Atlantic.
• MBA Mortgage Applications Survey:
  • The composite index fell by 4.7% during the week ending March 8.
    • The purchase index fell 2.5%, and
    • Refinance activity declined 5.2%.
  • Mortgage rates rose significantly last week, with the 30-year fixed rate now at its highest level in six months.
• Retail Sales:
  • Far surpassing expectations, retail sales jumped 1.1% in February.
    • High prices resulted in a surge in sales at gasoline stations.
    • Excluding gas station sales, sales rose 0.6%.
  • Auto dealers posted strong sales growth.
  • Core sales rose 0.4%.
    • Results varied widely across segments with large declines at furniture, department, sporting goods stores and restaurants.
• Jobless Claims
  • Initial claims for unemployment insurance fell 10,000 to 332,000.
  • The four-week moving average fell 2,750 to 346,750, marking a new post-recession low.
  • Continuing claims fell 89,000 to 3 million in the week ending March 2.
• Produced Price Index
  • Producer prices rose 0.7% in February, slightly below forecast and in line with consensus.
    • The advance was largely caused by a surge in energy prices.
  • Core producer prices, excluding food and energy, eked out a modest gain.

Earnings:

• Casey’s General Stores, Inc. (NASDAQ: CASY)
  • Casey’s General Stores reported $0.40 per share for the third quarter of fiscal 2013.
  • The company made $0.43 per share in the same period a year ago.
  • Year-to-date diluted earnings per share were $2.26 versus $2.44 for the same period last year.
  • The company cited a challenging cigarette environment affected sales.
• Dick’s Sporting Goods Inc. (NYSE: DKS)
  • Dick’s Sporting Goods reported lower-than-expected fourth-quarter results.
    • Misjudging the mild winter start, the company was unable to take advantage of colder weather in January because it had already cut stocks of winter gear.
  • Net income rose to $129.7 million, or $1.03 per share, from $111.1 million, or $0. 88 per share, a year earlier.
  • Revenue rose 12% to $1.8 billion, short of analysts’ average forecast of $1.86 billion.
• Urban Outfitters Inc. (NASDAQ: URBN)
  • Urban Outfitters’ fiscal fourth-quarter net income more than doubled on stronger sales but fell just short of market expectations.
    •   Sales rose to $2.79 billion from $2.47 billion.
  • The apparel company earned $82.5 million, or $0.56 per share, compared to  $39.3 million, or $0.27 per share, in the same quarter a year ago.
  • Beating expectations, its revenue increased to $856.8 million from $730.6 million.
    • The company’s Free People, Urban Outfitters and Anthropologie brands posted stronger revenue.
  • For the year ended Jan. 31, 2013, Urban Outfitters made $237.3 million, or $1.62 per share, compared with $185.3 million, or $1.19 per share, in the previous year.
• Costco Wholesale Corp. (NASDAQ: COST)
  • Costco lured shoppers with low prices on everything from produce to gasoline in the latest quarter.
  • A membership fee hike helped the warehouse club discount retailer report revenue from membership fees climbed 15% to $528 million.
  • The company earned $547 million, or $1.24 a share, compared with a profit of $394 million, or $0.90 a share, a year earlier.
  • Costco said its U.S. same-store sales increased 5% last quarter, while international sales jumped 6%.
• The Men’s Wearhouse Inc. (NYSE: MW)
  • The Men’s Wearhouse posted a larger-than-expected loss for its fiscal fourth quarter, as a result of weak sales.
  • The company lost $3.4 million, or $0.07 a share, for the quarter.
    • In the same period a year earlier, it lost $3.8 million, or $0.07 a share.
  • Its revenue rose 8% to $608.4 million.
    • Analysts had forecast a loss of $0.05 a share in the most recent quarter on revenue of $610 million.
  • The Men’s Wearhouse announced plans to explore the sale of one of its weaker performing units.

Interest Rates

• Treasury prices continued to increase, as the equity markets rallied.
  • The two-year Treasury rate rose two basis points to 0.27%.
  • The five-year Treasury rate climbed four basis points to 0.90%.
  • The 10-year Treasury rate rose five basis points to 2.05%, just below its two-year average of 2.12%.
  • The 30-year Treasury yield continued its climb rising three basis points to 3.24%, holding well-above its one-year average of 2.93%

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