Friday’s Rally Not Enough to Push Markets into the Green

Markets

For the week of Monday, September 29, 2014 through Friday, October 3, 2014:

• Standard & Poor’s 500 Index: -0.72%
• Dow Jones Industrial Average: -0.57%
• NASDAQ Composite: -0.78%

After a relatively calm three months, investors closed out the quarter in a state of heightened alert stemming from tensions with Russia, unrest in the Middle East and protests in Hong Kong. Despite the geopolitical uncertainty, many investors are still optimistic about U.S. stocks. Stocks ended Tuesday lower, but major benchmarks still posted gains for the third quarter. The S&P 500’s quarterly gain marked its seventh in a row, the longest period of gains since a 14-quarter winning streak that ended in 1998. However, on Wednesday, stocks tumbled to their lowest levels since mid-August. Trading volume of 8.1 billion shares was the fifth-highest for any session this year.

Indices closed Thursday’s session with mixed results. The Dow Jones Industrial Average shed some points while the S&P ended fractionally in green territory. Trading ended flat for the most part amid a variety of economic news. Friday’s session closed in positive territory. Labor Department data showed the economy added 248,000 jobs in September, well exceeding expectations of 215,000. Additionally, the unemployment rate dipped below 6% for the first time in six years.

Economic Data

Personal Income:

• Both personal income and spending accelerated in August.
  • Income rose 0.3%, which was better than July‘s increase of 0.2%; however, it was the second slowest growth of the year.
    • Wage income growth accelerated to 0.4%.
  • Real spending rose 0.5%, lifted by a surge in vehicle sales
  • Real durable goods spending posted the largest increase.

Chain Store Sales:

• For the week ending Sept. 27, the Chain Store Sales Index fell 0.2%, marking its second decline in the last three weeks.
  • Warmer than anticipated weather likely halted the pace of fall apparel sales.

Case-Shiller Home Price Index:

• The 10-city composite index is up 6.7% from last year.
• The 20-city composite index is also up only 6.7% over the same period.
  • On a not seasonally adjusted month-to-month basis, the 10- and 20-city composite indices both increased 0.6%.
  • On a seasonally adjusted month-to-month basis, the 10- and 20-city composite indices both retreated by 0.5% in July.

Conference Board Consumer Confidence:

• The Conference Board Consumer Confidence Index tumbled 7.4 points to 86 from a final August reading of 93.4.
  • The decline in September was larger than anticipated.
  • This pulled the index to its lowest level since May.

MBA Mortgage Applications Survey:

• The composite index fell by 0.2% for the week ending Sept. 26.
• Refinance applications lost 0.3%, while purchase activity remained unchanged.
• The MBA’s purchase index is stuck near a 19-year low.

ISM Manufacturing Index:

• The ISM manufacturing index fell more than expected to 56.6 in September from 59.
  • It remains comfortably above its expansionary threshold of 50.
• New orders fell 6.7 points to 60.
• Backlog orders fell below 50.
• The employment index dropped from 58.1 to 54.6.

ADP Jobs Report:

• Based on payroll records, the private sector gained 213,000 jobs in September.
  • September’s gain is roughly equal to the average of the past 12 months of 208,000.
• The Manufacturing and Trade/Transportation/Utilities industries added the most jobs.

Jobless Claims:

• For the week ending Sept. 27, initial claims for unemployment insurance fell 8,000 to 287,000.
• The four-week moving average fell 4,250 to 294,750, its second-lowest level since early 2006.

Factory Orders:

• Orders for manufactured goods fell 10.1% in August.
  • This was a sharp reversal of July’s 10.5% increase.
• Durable goods orders declined 18.4% as a result of a 42.2% drop in transportation orders.
• Capital goods orders declined 34%.
• Core capital goods orders (non-defense, ex-aircraft) rose 0.4%.

Earnings:

Cal-Maine Foods (NASDAQ: CALM)

• Cal-Maine’s earnings rose sharply, earning $27.7 million, or $1.14 a share, versus $8.8 million, or $0.36 a share, last year.
  • Earnings were helped by strong demand for specialty eggs and higher average selling prices.
• Sales rose about 12% from last year to $356.9 million

Cintas (NASDAQ: CTAS)

• Cintas earned $0.93 a share beat analysts’ expectations of $0.75 per share.
• Revenue was in line with estimates for the period at $1.1 billion.

Walgreen Company (NYSE: WAG)

• The pharmacy’s sales rose 6.2%, helped by a 9.3% rise in higher prescription sales.
• Total revenue rose to $19.06 billion from $17.94 billion last year.
  • Excluding one-time items, Walgreens earned $0.74 a share in the latest quarter.

Constellation Brands (NYSE: STZ)

• Constellation Brands earned $196 million, or $0.98 a share.
  • Adjusted EPS came to $1.11, which missed analysts’ estimates of $1.15.
• Sales rose 10% to $1.608 billion, versus expectations of $1.643 billion.

McCormick & Co (NYSE: MKC)

• McCormick earned $122.9 million, or $0.94 a share, versus $104.4 million, or $0.78 a share, last year.
  • Excluding one-time items, the spice company earned $0.95 per share.
• Sales rose 3% to $1.04 billion.

Interest Rates

• The two-year Treasury rate dropped six basis points to 0.52%, reaching its lowest level in several weeks.
• The five-year Treasury rate sank 12 basis points to 1.68%, bringing its two-week drop to 15 basis points from 2014’s high.
• The 10-year Treasury rate fell 12 basis points to 2.41%.
• The 30-year Treasury yield slid eight basis points to 3.13%, landing slightly above its low of 3.07% hit in August.

Disclosures

This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.