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%.
- Retail sales rose 0.1% in April, despite lower gasoline prices.
- 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.
- Producer prices fell 0.7% in April.
- 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%.
- The Consumer Price Index fell more than forecast, falling 0.4% in April.
- 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%.
- Housing starts fell in April to 853,000 units, a 16.5% decline from March.
- 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.
- Cisco reported earnings increased 14%, with revenue from all four divisions rising for the first time in a year and a half.
- 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.
- 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.
- 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.
- Macy’s profit increased 20%, earning $217 million, or $0.55 a share, versus $181 million, or $0.43 a share, a year ago.
- 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.
- Wal-Mart earned $3.78 billion, or $1.14 a share, versus $3.74 billion, or $1.09 a share, last year.
- 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.
- Kohl’s reported earnings of $147 million, or $0.66 a share, versus $154 million, or $0.63 a share, last year.
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%.