Markets Ended Week on Positive Note After Four Days of Closing Down

Markets

For the week of Monday, December 2, 2013, through Friday, December 6, 2013:

• Standard & Poor’s 500 Index: 0.01%
• Dow Jones Industrial Average: -0.35%
• NASDAQ Composite: 0.08%

Stocks started their four-day tumble, as investors focused on the possibility that the Fed would pull back stimulus efforts. Mixed results from the Thanksgiving shopping weekend added to the markets’ lackluster performance. Tuesday’s descent marked three consecutive down days for the Dow Jones Industrial Average, its first such streak of losses since September. Better-than-expected economic reports increased investors’ expectations that the Fed could start trimming its easy-money policies as soon as this month. This sentiment was further bolstered by Thursday’s gross domestic product and labor market readings. The week ended on a positive note, with stocks closing solidly higher, pushing the Dow above 16,000 once again. Signs hearkening the end of quantitative easing continued to come in the form of a strong jobs report. The Labor Department reported an addition of 203,000 jobs for November. The unemployment rate declined to 7%. This is the first time it has been that low since the beginning of the Great Recession.

Economic Data

• ISM Manufacturing Index:
  • The November ISM Manufacturing Index increased from 56.4 to 57.3.
    • Production, new orders and employment all increased.
    • The trade details also showed new export orders rose and imports fell.
    • Inventories fell from 52.5 to 50.5
    • The customer inventory index fell two points to 45.
• Chain Store Sales Snapshot:
  • The chain store sales index fell 2.8%.
  • Black Friday sales helped the rate not dip any lower.
• MBA Mortgage Applications Survey:
  • The mortgage applications composite index fell 12.8%.
    • This was the fifth consecutive weekly decline, but it was a holiday-shortened week.
  • Purchase activity fell 4.1%
  • Refinance applications fell 17.5%.
• International Trade:
  • The U.S. trade deficit narrowed to $40.6 billion in October.
    • The value of nominal exports rose to $192.7 billion, beating the revised estimate of $189.3 billion in September.
    • Nominal imports also increased to $233.3 billion from $232.3 billion.
• New Home Sales:
  • New-home sales units for September and October were 354,000 and 444,000, respectively, meeting expectations.
    • October increased 25.4% from September and 21.6% year-over-year.
    • However, August’s rate was revised downward to 379,000.
  • The months’ supply rate declined to 4.9.
• Jobless Claims:
  • Initial claims fell from 321,000 to 298,000; however, this time of year is typically volatile.
  • For the second time this year, claims are below 300,000.
    • This will likely be temporary.
  • The four-week moving average fell from 333,000 to 322,250.
  • Continuing claims fell 21,000 to 2.744 million.
• Gross Domestic Product:
  • According to the second estimate, real GDP grew 3.6% in the third quarter.
    • The initial third quarter reading was 3.1%.
  • Second quarter growth was 2.5%.
• Factory Orders:
  • Manufactured goods orders fell 0.9% in October following September’s 1.8% increase.
    • Durable goods orders were revised up from a 2% decline to a 1.6% decline.
    • Durable goods shipments were revised up from 0.2% to 0.4%.
    • Unfilled orders rose 0.4%.
    • Inventories were up 0.1%.

Earnings: 

• Krispy Kreme Doughnuts, Inc. (NYSE: KKD)
  • Krispy Kreme reported earnings rose 34%.
  • The doughnut maker earned $6.8 million, or $0.09 a share, compared to $5 million, or $0.07 a share last year.
    • Revenue increased 7%, to $114.2 million.
    • Analysts expected $0.15 a share on revenue of $114.1 million.
  • Same store sales rose 3.7%.
• Aeropostale, Inc. (NYSE: ARO)
  • Aeropostale reported a loss of $25.6 million, or $0.33 a share, compared to a profit of $24.9 million, or $0.31 a share, last year.
    • Revenue fell 15% to $514.6 million.
  • Analysts expected a $0.25 a share loss on revenue of $514.5 million.
• Jos. A Bank Clothiers, Inc. (NASDAQ: JOSB)
  • Jos. A. Bank reported a profit increase of 2%, boosted by sales promotions.
    • Sales increased 6.3% to $247.5 million, although same-store sales fell 0.1%.
  • Jos. A Bank reported profits of $13.6 million, or $0.49 a share, compared to $0.47 a share, a year ago.
• The Kroger Company (NYSE: KR)
  • Kroger reported earnings of $299 million, or $0.57 a share, compared to $317 million, or $0.60 a year ago.
    • Removing adjustments, Kroger earned $0.53 a share, compared to $0.46 last year.
    • Analysts expected $0.53 a share.
  • Same-store sales increased 3.5%, excluding gasoline sales.

Interest Rates

• The two-year Treasury rate rose two basis points to 0.30%.
• The five-year Treasury rate increased 10 basis points to 1.47%.
• The 10-year Treasury rate jumped 11 basis points to 2.86%.
• The 30-year Treasury yield increased 10 basis points to 3.91%, only one basis point below 2013’s high.

Disclosures

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