Markets
For the week of Monday, October 1, 2012, through Friday, October 5, 2012:
- Standard & Poor’s 500 Index: 1.41%
- Dow Jones Industrial Average: 1.29%
- NASDAQ Composite: 0.64%
The markets began the fourth quarter with a slow rise throughout the week. The Dow Jones Industrial Average started with a solid gain, as stocks received a boost from an unexpected expansion in September’s factory activity. The Standard & Poor’s 500-stock index saw a rise in Consumer Staples and Healthcare shares, while the Utilities and Telecommunications sectors pulled back. On Tuesday, stocks opened higher, fueled in part by a news report that Spain was nearer to requesting funds from the European Central Bank. Gains deflated after Spanish Prime Minister Mariano Rajoy denied that a bailout request was imminent.
By midweek, shares of Telecommunication stocks helped nudge stocks higher after readings on private-sector hiring and service-sector activity bested expectations. U.S. stocks rose sharply Thursday, with the S&P 500 index reaching a fourth session of gains. Jobless claims rose a bit less than expected last week, and the European Central Bank held its key interest rate unchanged. Friday, the indices were mixed, but all three ended the week in positive territory.
Economic Data
- ISM Manufacturing Survey:
- U.S. manufacturing remains weak, but September’s Institute for Supply Management Manufacturing Index suggests a bottom is near.
- The manufacturing index increased from 49.6 to 51.5 for September.
- This was more than anticipated, and the first time it has reached 50 since May.
- The employment index was also positive, rising almost three points in September to 54.7.
- For the fourth consecutive month, new export orders were below the 50 threshold, a negative sign for manufacturing.
- All told, manufacturing is poised for another weak quarter, but the latest ISM survey suggests the odds of a hard landing have fallen.
- U.S. manufacturing remains weak, but September’s Institute for Supply Management Manufacturing Index suggests a bottom is near.
- ISM Services Index:
- The ISM nonmanufacturing index unexpectedly rose in September, but the important details were mixed.
- The composite index rose from 53.7 to 55.1, against expectations of a small decline.
- The index is above its second quarter average, consistent with a modest acceleration in real GDP growth.
- New orders increased four points to 57.7, the strongest since March.
- Business activity also improved.
- The trade and employment details were lower in September.
- All told, the September ISM nonmanufacturing survey suggests services ended the third quarter on a positive note and have a little momentum heading into the final three months of the year.
- The ISM nonmanufacturing index unexpectedly rose in September, but the important details were mixed.
- Jobless Claims:
- After bouncing around the past several weeks, initial claims are settling down.
- New filings rose 4,000 to 367,000 for the week ending September 29.
- Last week was revised down to 22,000.
- The four-week moving average was unchanged at 375,000, which suggests the job market did not improve much in the latter half of September.
- Continuing claims remained at 3.281 million for the week ending September 22.
- After bouncing around the past several weeks, initial claims are settling down.
Earnings
- Mosaic Co. (NYSE: MOS)
- Several factors hurt Mosaic Co., as the company reported earnings fell 18%, and revenue fell 19%, in fiscal first quarter.
- The fertilizer producer’s sales declined, because it had production problems and weak demand in China and India.
- Weak demand for potash in China and India caused the company to slow.
- Mosaic said revenue was weakened by lower sales volumes and prices for phosphate, its biggest source of revenue.
- Sales at Mosaic were further hurt by low Mississippi River levels, which slowed fertilizer shipments.
- Mosaic reported net income of $429.4 million, or $1.01 a share, versus the $526 million, or $1.17 a share, a year earlier.
- Revenue fell to $2.51 billion from $3.08 billion a year ago, lower than the $2.68 billion expected by analysts.
- Several factors hurt Mosaic Co., as the company reported earnings fell 18%, and revenue fell 19%, in fiscal first quarter.
- Family Dollar Stores, Inc. (NYSE: FDO)
- Family Dollar Stores met analysts’ expectations with a high quarterly profit report.
- Increased sales of food and other basic goods brought shoppers into the stores and did not pressure margins as much as expected.
- The discount chain said it had earned $80.9 million, or $0.69 per share, compared to $79.8 million, or $0.66 per share, one year ago.
- Sales rose 10.8% to $2.36 billion.
- Sales rose 5.4% at stores open at least a year.
- Family Dollar Stores met analysts’ expectations with a high quarterly profit report.
Interest Rates
- Treasury prices remained relatively flat over the last week.
- The two-year Treasury rate was flat again at 0.24%.
- The five-year Treasury rate fell one basis point to 0.61%, almost 50% below the 2012 high of 1.20%.
- The 10-year Treasury rate changed very little at 1.64%, still above the 1.39% touched in July.
- The 30-year Treasury yield rose two basis points to 2.85% just above its 6-month average of 2.82%.
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.
