The market was shaky this week. Greece sparked fears in Europe by asking for further austerity measures to shore up its weak economy. As a result, the dollar gained back some ground recently lost to the euro. Economic data was mixed with unemployment rising slightly, while jobless claims fell slightly. The Producer Price Index continued a slow rise mostly as a result of higher fuel costs. Despite those numbers, retail sales grew 0.5%, the smallest level this year and 7.6% above levels seen one year ago.
The markets continue their upward trend, as our economic recovery continues to grow in spite of higher fuel prices and some inflationary pressures.
Economic Data
- Greece has been unable to meet its obligations from the bailout it received last year.
- The euro has weakened against the dollar this week as a result of fear that a Greek default will further harm the Euro Zone, and
- S&P cut the rating on Greek bonds to B from BB-.
- Jobless claims were down for the week ending May 7, to 434,000 from 478,000.
- The four-week moving average edged up about 4,500, and
- Unemployment rose to 9.0% from 8.8%.
- The U.S. Trade Deficit rose more than expected in March.
- This was mostly due to increasing oil prices; however,
- The trade gap with China narrowed to $18.1 billion.
- The Producer Price Index rose in April by 0.8%.
- Again, fuel lead the way, and
- Factoring out food and energy, the increase was only 0.3%.
- Retail Sales grew from March to April by 0.5%.
- Core sales grew only 0.2%, but
- Sales were 7.6% above last year’s numbers.
Company News
- The Walt Disney Company (NYSE: DIS) underperformed with less-than-expected net income and revenue, leading to a 5.5% plunge in the company’s stock price following the news.
- Losses from the movie “Mars Needs Moms,” theme park closures in Japan and acquisition related charges from Playdom lowered earnings $0.06 per share.
- Macy’s Inc.’s (NYSE: M) stock price climbed 7.7% after beating estimates and last year’s first-quarter numbers.
- Net income was $131 million, up from $23 million;
- Earnings per share were $0.30, up from $0.05, and
- Macy’s, Inc. quarterly dividend is being doubled, while management raised earnings and outlook for the year.
- Sysco Corp. (NYSE: SYY) increased net income by 4%, while passing through higher input costs for ingredients to consumers.
- Earnings per share were reported at $0.46, beating expectations by $0.05, and
- Shares rose 10.7% on the news.
- Toyota Motor Corp. (NYSE: TM) faced difficulties related to the Japanese earthquake and tsunami in March.
- Profit was down more than 75% from supply chain disruptions, and
- Outlook is uncertain for the rest of the year.
Commodities
- Commodities have fallen more than 5% in the past week despite a weaker dollar.
- Speculators have been driven from the market, and
- Silver lead the way, down 24.5% since Friday, April 29.
Mergers & Acquisitions Activity and More
- American International Group, Inc. (NYSE: AIG) was planning to sell stock, but the government will not sell shares at a loss.
- The Treasury needs $28.70 per share to break even.
- Microsoft Corp. (NASDAQ: MSFT) announced the purchase of Skype for $8.5 billion.
- The goal of the purchase is to integrate Skype’s technology into devices, such as, smart phones, Xbox consoles and Office software.
- At least the purchase was made with cash held overseas that would not be allowed to return to the United States without a 30% tax.
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.
