May was the Best Month for Investors Since February

Markets

For the week of Monday, May 26, 2014 through Friday, May 30, 2014:

• Standard & Poor’s 500 Index: 1.24%
• Dow Jones Industrial Average: 0.73%
• NASDAQ Composite: 1.37%

After the markets were closed for the Memorial Day holiday, stocks rallied Tuesday, pushing the S&P 500 to its second-straight record, as a continued bounce in small-company stocks bolstered sentiment. The Dow also continued its upward climb and closed just below its record high reached on May 13.

By mid-week, stocks slipped as retail stocks took a breather. Stocks inched higher on Thursday as investors looked past the weak first quarter GDP report. The second GDP estimate showed the economy contracted at a seasonally adjusted 1%, which was more than expected. Investors brushed off the report, saying it was already known the economy was sluggish during the quarter, because of the harsh winter. Economists previously estimated GDP slowed to a 0.1% growth rate in the first quarter. Friday, markets closed mixed, but closed out May with two of the three major U.S. indices closing at record highs. A late push left the Dow Jones industrial Average and Standard & Poor’s 500 at all-time highs. May was the best month for investors since February.

Economic Data

Durable Goods Orders:

• New orders for durable goods increased 0.8% in April, supported by a jump in defense aircraft orders.
  • Overall, the details of the report were disappointing.
  • Weaker motor vehicle and nondefense aircraft orders offset the positive gains.
  • Excluding transportation, orders only rose 0.1%.

Case-Shiller Home Price Index:

• Existing-home price appreciation slightly decelerated on a year-ago basis in the three months ending in March, relative to the same period in February.
  • The 10-city composite index rose 12.6% year-over-year.
  • The 20-city composite increased 12.4% over the year.
• Seasonally adjusted month-to-month:
  • The 10-city composite rose 1.2%.
  • The 20-city composite also rose 1.2%.

Conference Board Consumer Confidence:

• The Conference Board Consumer Confidence Index increased to 83 in May from April’s final reading of 81.7.
• The index value was in line with the consensus view.

MBA Mortgage Applications Survey:

• The MBA Mortgage Applications index declined 1.2% for the week.
  • The purchase index fell 1.1%.
  • The refinance index fell 1.4%.

Chain Store Sales Snapshot:

• The ICSC Chain Store Sales Index declined 1.2% from last week.
  • The Memorial Day holiday affected the report as the number of holiday travelers distorted spending patterns.
• Year-over-year, the index rose 2.1%.

Jobless Claims:

• Initial claims for unemployment insurance benefits declined 27,000 to 300,000.
  • The decline reversed most of the previous week’s 29,000 gain.
• The four-week moving average slid from 322,750 to 311,500.
• Continuing claims slid 17,000 to 2.631 million.

Gross Domestic Product:

• Real GDP fell 1% in the first quarter.
• This was below the previous estimate of 0.1% growth and well below fourth quarter’s growth of 2.6%.
  • The 1% drop was the largest decline since the first quarter of 2011.
  • Inflation held steady.
• Real disposable income growth increased but was still weak.
  • Corporate profits slid 9.8%
  • Gross domestic income fell 2.3%.

Earnings:

AutoZone, Inc. (NYSE: AZO)

• AutoZone’s results beat analysts’ estimates as it reported earnings of $285.2 million, or $8.46 a share, compared to $265.6 million, or $7.27 a share, a year ago.
• Revenue increased 6.2% to $2.34 billion.
  • Analysts expected $8.44 a share on revenue of $2.34 billion.
  • Domestic commercial sales increased 14% to $406 million.
  • Same-store sales increased 4%.

Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL)

• Cracker Barrel earned $28.7 million, or $1.20 a share, compared to $24.6 million, or $1.02 a share, year-over-year.
  • Excluding one-time costs, Cracker Barrel earned $1.23 a share.
• Revenue rose 0.5% to $643.3 million, while analysts expected $643 million.

Michael Kors Holdings Limited (NYSE: KORS)

• Michael Kors reported profit of $161 million, or $0.78 a share, compared to $101.1 million, or $0.50 a share, last year.
  • Sales increased to $882 million from $577.4 million.
• Both beat analyst estimates of $0.68 a share and sales of $813 million.
• Same store sales increased 26.2%.

Abercrombie & Fitch Co. (NYSE: ANF)

• Abercrombie reported a loss of $23.7 million, or $0.32 a share, compared to a loss of $7.2 million, or $0.09 a share, last year.
  • Excluding one-time items, Abercrombie lost $0.17 a share.
  • Analysts expected a $0.19 loss.

Costco Wholesale Corporation (NASDAQ: COST)

• Costco earned $473 million, or $1.07 a share, compared to $459 million, or $1.04 a share, a year ago.
  • Sales increased from $24.08 billion to $25.79 billion.
  • Analysts expected $1.09 a share on sales of $25.68 billion.

Interest Rates

• The two-year Treasury rate rose three basis points to 0.37%.
• The five-year Treasury rate fell two basis points to 1.50%.
• The 10-year Treasury rate slid 10 basis points to 2.44%, a 2014 low.
• The 30-year Treasury yield dropped 10 basis points to 3.29%, also a 2014 low.

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.