Markets Set New Records Despite Mixed Economic Data

Markets

For the week of Monday, June 2, 2014 through Friday, June 6, 2014:

  • Standard & Poor’s 500 Index: 1.40%
  • Dow Jones Industrial Average: 1.28%
  • NASDAQ Composite: 1.89%

The week began with the ISM releasing its twice-revised monthly manufacturing index, after finding errors in the so-called seasonal adjustments that give economists and investors a better view of long-term trends. The revisions set off a series of market reversals that briefly roiled stock and bond prices on an otherwise quiet day. The Dow Jones Industrial Average fell 35 points following the release of the factory data, only to surge 30 points on initial reports ISM was correcting its figure. After the early day roller coaster, both the S&P 500 and the Dow closed up for the day.

Tuesday was a bit calmer, but stocks edged lower, with the S&P 500 failing to hit a record high for the first time in four sessions. The markets reversed that fate Wednesday when the S&P hit a record high, while investors weighed mixed data on the economy. Thursday began with the Dow on course to hit another record high, after the European Central Bank lowered interest rates, and said it was prepared to provide more stimulus to promote economic growth. More record moves were made on Friday, with both the Dow and S&P 500 hitting new heights. The jobs number for May showed payrolls ticked up by 217,000, which was slightly ahead of a consensus estimate of 215,000. April’s number was downwardly revised  to 282,000. Additionally, the unemployment rate held steady at 6.3%, versus an anticipated rise to 6.4%.

Economic Data

ISM Manufacturing Index:

  • The ISM manufacturing index rose from 54.9 to 55.4 in May.
    • New orders rose 1.8 points to 56.9.
    • The production index increased to 61.
  • The employment sub-component fell.
  • Inventories were unchanged at 53, opposite the typical May decline.

Chain Store Sales Snapshot:

  • The ICSC Chain Store Sales Index rose 2.9%.
    • However, the comparison is against the Memorial Day shortened week.
  • On a year-ago basis, the index gained 3.1%.

Factory Orders:

  • Manufactured goods orders rose 0.7% in April.
    • Durable goods orders rose 0.6%, while shipments only rose 0.3%
    • Capital goods orders increased 3%, a 39.3% increase in defense goods contributed heavily.

MBA Mortgage Applications Survey:

  • The Mortgage application composite index fell 3.1% for the holiday-shortened week.
    • Purchase activity slid 3.6%
    • Refinance activity fell 2.9%.

Productivity and Costs:

  • For the first quarter, non-farm business productivity slipped 3.2%.
  • Output was revised down, while hours worked were revised up.

International Trade:

  • The U.S. Foreign Trade Deficit for April widened to $47.2 billion, in sharp contrast to the consensus forecast, from $44.2 billion in March.
    • Exports dipped slightly to $193.4 billion from $193.7 billion in March.
    • Imports rose to $240.6 billion from an upwardly revised $237.8 billion.
  • The goods deficit widened to $65.8 billion from $62.5 billion in the prior month.
  • The services surplus increased to $18.6 billion from $18.3 billion.
  • The April trade data reinforces our view that the U.S. economic recovery is proceeding at a sturdy pace.
    • However, our export picture adds some ambiguity to the global recovery story.

Jobless Claims:

  • Initial jobless claims were 312,000
    • The four-week moving average remained at 310,000.
    • The previous week’s claims were revised up to 304,000 from 300,000.
  • Continuing claims fell from 2.62 million to 2.6 million.

Earnings:

Krispy Kreme Doughnuts, Inc. (NYSE: KKD)

  • Krispy Kreme earned $9.65 million, or $0.14 a share, compared to $7.99 million, or $0.11 a share, last year.  
    •  Excluding one-time items, Krispy earned $0.23 a share.
    • Krispy Kreme’s revenue was $121.58 million, shy of analysts’ estimates of $126.68 million.

Dollar General Corporation (NYSE: DG)

  • Dollar General earned $222.4 million, or $0.72 a share, compared to $220.1 million, or $0.67 a share, a year ago.
    • Sales increased from $4.23 billion to $4.52 billion.
    • Analysts expected $0.73 a share on $4.56 billion in sales.
      • Same-store sales increased 1.5%.

PVH Corp. (NYSE: PVH)

  • PVH earned $35.3 million, or $0.42 a share compared to a loss of $10.3 million, or $0.13 a share, last year.
    • Much of the loss was attributed to the purchase of competitor Warnaco Group for $2.9 billion.  
    • Excluding one-time costs, PVH earned $1.47 compared to $1.91 last year.
    • Revenue increased from $1.91 billion to $1.96 billion.
      • Analysts expected $1.49 a share on $1.98 billion in revenue.  

The J. M. Smucker Company (NYSE: SJM)

  • Smucker’s reported earnings of $118.5 million, or $1.16 a share, compared to $130.3 million, or $1.22 a share, year-over-year.
    • Excluding one-time items, Smucker’s earned $1.21 a share.
    • Net sales declined 8% to $1.23 billion, which was attributed to lackluster coffee sales. 
      • Analysts expected $1.16 a share on $1.24 billion in sales.

Interest Rates

  • The two-year Treasury rate increased two basis points to 0.39%.
  • The five-year Treasury rate rose 10 basis points to 1.64%.
  • The 10-year Treasury rate soared 13 basis points to 2.61%.
  • The 30-year Treasury yield climbed 12 basis points to 3.45%.
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.

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