Markets
For the week of Monday, September 15, 2014 through Friday, September 19, 2014:
- Standard & Poor’s 500 Index: 1.27%
- Dow Jones Industrial Average: 1.73%
- NASDAQ Composite: 0.27%
The week began with Technology and Small-Cap stocks falling, as investors turned defensive ahead of the Fed’s decision on interest rates. Adding to the cautious tone was weak economic news from China, jitters about the Scottish independence vote and the closely watched IPO from Alibaba. However, upbeat trading in the broad market masked sharp declines in tech stocks and shares of small companies. Stocks rallied Tuesday, with the Dow closing just short of a record, as investors weighed the likelihood the Fed will continue to emphasize low interest rates coming out of its policy-setting meeting Wednesday.
The dollar jumped to a six-year high against the yen on Wednesday, after the Fed took tentative steps toward unwinding its historic easy-money policies while reassuring investors that rates will remain low even as the economy expands. While stocks rose, U.S. Treasury bond prices fell, sending yields higher. The Dow and S&P 500 closed in record-level territory on Thursday. The Dow closed the week at another record level in the wake of the Alibaba debut. Shares of the e-commerce giant tacked on 38.07% to $93.89. Meanwhile, Apple swept some profits as the iPhone 6 hit the streets. On another note, Scotland will remain within the United Kingdom. Scotland’s secession vote ended with a “NO” decision.
Economic Data
Industrial Production:
- Industrial production declined 0.1% in August.
- Factory output increased 0.1% excluding autos.
- Mining and utilities output increased 0.5% and 1%, respectively.
Chain Store Sales Snapshot:
- The Chain Store Sales Index slid 2.6%.
- Year-over-year sales growth declined from 4% to 3%.
Producer Price Index:
- Producer prices were flat in August.
- Declines in goods prices offset gains in services categories.
MBA Mortgage Applications Survey:
- The MBA Mortgage Application composite index rose 7.9%.
- Refinance applications increased 10.3%.
- Purchase activity rose 4.8%.
Consumer Price Index:
- The consumer price index declined 0.2% in August.
- Large declines in energy weighed on the headline number.
- Headline and core inflation fell well below 2% year-over-year.
Jobless Claims:
- Initial claims for unemployment insurance benefits fell 36,000 to 280,000 last week.
- This is in conjunction with the Labor Day holiday, so the decline should be taken lightly.
- The four-week moving average fell to 299,500.
- Continuing claims fell 63,000 to 2.429 million.
- The insured unemployment rate fell from 1.9% to 1.8%.
Earnings:
FedEx Corporation (NYSE: FDX)
- FedEx earned $606 million, or $2.10 a share, compared to $489 million, or $1.53 a share, last year.
- Revenue increased to $11.7 billion.
- Analysts expected $1.96 a share on revenue of $11.48 billion.
- FedEx credited e-commerce with helping first-quarter growth in its ground segment.
Lennar Corp. (NYSE: LEN)
- Lennar earned $177.8 million, or $0.78 a share, compared to $120.7 million, or $0.54 a share, last year.
- Lennar’s profit increased 47%, while revenue increased 26% to $2.01 billion.
- Deliveries increased 9% to 5,457 homes.
- The average home sales prices increased to $333,000, a 14% rise.
- Analysts expected $0.67 a share on revenue of $1.96 billion.
General Mills, Inc. (NYSE: GIS)
- General Mills earned $345.2 million, or $0.55 a share, compared to $459.3 million, or $0.70 a share, last year.
- Adjusted earnings per share were $0.61 a share compared to $0.70 last year.
- Net sales declined 2.4% to $4.27 billion.
- Analysts expected $0.69 a share on revenue of $4.38 billion.
Interest Rates
- The two-year Treasury rate increased three basis points to 0.59%, a 2014 high.
- The five-year Treasury rate rose four basis points to 1.86%, also a 2014 high.
- The 10-year Treasury rate rose one basis point higher to 2.62%.
- The 30-year Treasury yield increased two basis points to 3.36%.
Disclosures