Dow and S&P Indices Continue Setting New Records

Markets

For the week of Monday, May 13, 2013, through Friday, May 17, 2013:

• Standard & Poor’s 500 Index: 2.14%
• Dow Jones Industrial Average: 1.67%
• NASDAQ Composite: 1.88%

The Dow Jones Industrial Average finished down on Monday after rallying to an all-time high on Friday of last week. Investors’ attitudes changed again on Tuesday sending stocks to new records. The Dow finished at a record for the 19th time this year, while the S&P 500 had its eighth record close in nine days. Financial, Energy, Materials and Industrial stocks—sectors most closely tied with an improving economy—led the rally, on a day when all 10 of the S&P 500 sectors ended higher. Stocks continued their upward climb on Wednesday, continuing their push into uncharted, record territory. The Consumer-Staples and Financial sectors led the S&P 500 higher. Stocks took a little tumble on Thursday, as a result of a series of weaker-than-forecast economic reports. This put the markets’ recent hot streak in jeopardy. Better-than-expected economic data on Friday sent the Dow and S&P new record highs. Leading the rally were, once again, the Industrial and Financial sectors.

Economic Data

• Retail Sales:
  • Retail sales rose 0.1% in April, despite lower gasoline prices.
    • Auto sales provided strong support.
    • Building supply stores, non-store retailers, and apparel stores were also strong spots in the report.
    • Sales fell at grocery stores and drugstores.
  • Core sales rose 0.6%.
• Chain Store Sales:
  • The Chain Store Sales Index slid 2% in the latest week.
  • The comparable week’s year-over-year growth fell to 1.2%.
• Industrial Production:
  • Industrial production declined 0.5%, with weak manufacturing details.
  • Utilities production declined 3.7%.
  • Manufacturing production fell 0.4%.
• MBA Mortgage Applications Survey:
  • Mortgage application activity declined 7.3%.
  • The refinance index fell 8.1%, while the purchase index fell 4.1%.
  • However, mortgage interest rates are still near record lows, despite last week’s increase.
• Producer Price Index:
  • Producer prices fell 0.7% in April.
    • Finished energy and food prices fell.
  • Core prices inched up.
• Consumer Price Index:
  • The Consumer Price Index fell more than forecast, falling 0.4% in April.
    • Gasoline prices were the main contributor to the negative decline.
  • The core CPI rose 0.1%.
• Housing Starts:
  • Housing starts fell in April to 853,000 units, a 16.5% decline from March.
    • The March reading was revised down, but still remains above 1 million.
  • Housing starts are 13.1% above this time last year.
    • Single-family and multifamily starts declined month-month, with single-family starts dropping 2.1%.
    • Housing completions were down 14.3% month-over-month.
    • Permits increased 14.3%.
• Jobless Claims:
  • Initial jobless claims were up 32,000 to 360,000.
  • The four-week moving average increased 1,250 to 339,250.
  • Continuing claims fell by 4,000 to 3.01 million.

Earnings:

• Cisco Systems, Inc. (NASDAQ: CSCO)
  • Cisco reported earnings increased 14%, with revenue from all four divisions rising for the first time in a year and a half.
    • Cisco earned $2.5 billion, or $0.46 a share, up from $2.2 billion, or $0.40 a share, a year ago.
    • Excluding one-time items, Cisco earned $0.51 a share, and revenue of $12.2 billion.
  • Analysts expected $0.49 a share and $12.2 billion in revenue.
• Deere & Company (NYSE: DE)
  • Deere reported almost a 3% increase in earnings, with income of $1.08 billion, or $2.76 a share, versus $1.06 billion, or $2.61 a share, year-over-year.
    • Analysts expected $2.71.
  • Equipment sales rose 9% to $10.27 billion.
  • Including financial services, sales rose 9% to $10.91 billion.
• Macy’s, Inc. (NYSE: M)
  • Macy’s profit increased 20%, earning $217 million, or $0.55 a share, versus $181 million, or $0.43 a share, a year ago.
    • Analysts expected $0.53 a share.
    • The retailer met expectations with revenue of $6.4 billion.
  • Macy’s increased its dividend 25% to $0.25.
  • The company also announced an additional $1.5 billion in stock buy backs.
• Wal-Mart Stores Inc. (NYSE: WMT)
  • Wal-Mart earned $3.78 billion, or $1.14 a share, versus $3.74 billion, or $1.09 a share, last year.
    • Sales rose 1% to $113.43 billion.
    • Analysts expected $1.15 a share on revenue of $115.78 billion.
  • Wal-Mart reported a 1.4% drop in same-store-sales.
    • This was the first drop in about 18 months, citing the tax rate increase as a major contributor.
  • Wal-Mart’s U.S. business same-store-sales fell 1.2%, missing analysts’ expectations of a 0.4% increase.
• Kohl’s Corp. (NYSE: KSS)
  • Kohl’s reported earnings of $147 million, or $0.66 a share, versus $154 million, or $0.63 a share, last year.
    • Sales fell to $4.20 billion.
  • Analysts expected earnings of $0.56 a share, and revenue of $4.26 billion.

Interest Rates

• The two-year Treasury rate was flat at 0.24%.
• The five-year Treasury rate fell one basis point to 0.80%.
• The 10-year Treasury rate increased one basis point to 1.91%.
• The 30-year Treasury yield rose two basis points to 3.12%.

Disclosures

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