Greece’s Woes Give U.S. Markets a Little Shake-up Midweek

For the week of Monday, February 10, 2012 through Friday, February 17, 2012

• Standard & Poor’s 500 Index: 1.38%
• Dow Jones Industrial Average: 1.16%
• NASDAQ Composite: 1.65%

Greece’s debt situation still led headlines this week, as the U.S. markets began wrapping up earnings season. The market experienced a bit of volatility midweek with the Dow taking its deepest dive of 2012, as a result of problems in Greece.

Domestically, the Federal Reserve released its minutes from its last monetary policy meeting. America’s central bank is prepared to ease monetary policy if the economy begins to weaken. Friday saw stocks move higher in preparation of the three-day weekend on continued hopes that Greece’s second bailout will get finalized.

Economic Data:

• Retail Sales
  • Data released for the warmer than average month of January shows retail sales rose 0.4%.
  • Consumer necessities, general merchandise, gas stations, and grocery stores, led the gains.
  • Auto sales fell despite recent growth in new vehicle sales.
  • December’s data was revised down to flat.
  • Unfortunately, year-over-year growth fell to the weakest reading since August 2010, at 5.7%.
• Jobless Claims
  • Initial claims continued declining this week to 348,000 from 361,000.
  • Claims from two weeks ago were revised slightly higher to 361,000 from 358,000.
  • As this is the lowest level in quite some time, hopefully, the trend can continue, as the economy gains steam.

Earnings

• MetLife Inc.  (NYSE: MET)
  • MetLife reported higher profit following a rough 2010 with more than $1 billion in derivative losses.
  • Quarterly earnings increased to $1.13 billion, or $1.06 per share, from $51 million, or $0.05 per share, compared to last year.
  • For 2011, the insurer reported profit of $6.71 billion, or $6.29 per share, from $2.67 billion, or $3.00, per share.
  • Total investment revenue grew to $4.94 billion, an increase of 11%.
    Premium and fee revenue increased 23% to $11.5 billion.
• Deere & Co.  (NYSE: DE)
  • Higher demand for construction and farming equipment helped Deere & Co. grow earnings 4% for the quarter.
  • Net income was $533 million, or $1.30 per share, beating expectations of $1.24 per share and last year’s $513.7 million, or $1.20 per share.
  • Sales increased to $6.77 billion, and the company revised its net income forecast for the year up to $3.275 billion, while projecting 15% sales growth.
• Teva Pharmaceutical Industries Ltd (NASDAQ: TEVA)
  • Teva’s profit fell after higher expenses associated with acquiring Cephalon weighed down earnings.
  • Profit fell to $506 million, or $0.57 per share, against $771 million, or $0.85 per share, last year.
    • Excluding some one-time items Teva earned $1.59 per share
  • Revenue rose to $5.68 billion, an increase of 28% over last year’s $4.41 billion, beating expectations of $5.65 billion and per share earnings of $1.58.
• V.F. Corporation (NYSE: VFC)
  • Most of VF’s recent gains are due to acquiring Timberland, which helped boost the company’s net income almost fourfold.
  • VF earned $27.3 million, or $2.28 per share, over last year’s $54.2 million, or $0.49 per share.
    • The Timberland unit was responsible for $0.34 per share earnings.
  • Revenue rose to $2.88 billion, an increase of 37%, largely helped by the outdoor and action sports division.

Mergers & Acquisitions

• Kellogg Company’s (NYSE: K) plans to purchase Pringles from Procter & Gamble (NYSE: PG)
  • After a deal between P&G and Diamond Foods, Inc. (NASDAQ: DMND)  fell apart, Kellogg moved to purchase Pringles for $2.7 billion in cash.
  • The Diamond deal fell apart after an investigation of some of the company’s accounting practices.
  • The deal should be completed sometime this summer.

Interest Rates

• Rates fell a little this week, as Treasurys were purchased for safety, while Europe takes its time handling the Greek debt crisis.
• The two-year Treasury dipped one basis point to 0.27%, still unable to pierce the 0.3% level.
• The five-year Treasury fell four basis points to 0.78%, remaining under 1% for a few months.
• The 10-year Treasury slid eight basis points to 1.91% hovering right around 2%.
• The 30-year Treasury yield dropped seven basis points to 3.07%, remaining close to 3.0% for most of 2012.

Disclosures

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