Mixed Markets Because of Tech Earnings

Markets

For the week of Monday, July 15, 2013 through Friday, July 19, 2013:

• Standard & Poor’s 500 Index: 0.73%
• Dow Jones Industrial Average: 0.57%
• NASDAQ Composite: -0.34%

Despite Monday being the lowest-volume full trading day of the year, stocks advanced as investors considered China’s economic growth, which was better than expected. Tuesday the markets tumbled on lackluster earnings results. Bond prices rose Wednesday and stocks edged higher after Federal Reserve Chairman Ben Bernanke reassured investors that the central bank does not have any set plans to pull back on its easy-money policies. Mr. Bernanke stated that the decision to trim stimulus efforts depends directly on U.S. economic growth. By Thursday, stocks inched higher after upbeat jobless claims data. Major stock indices finished mixed on Friday, on disappointing earnings from tech giants Google and Microsoft.

Economic Data

• Retail Sales:
  • Retail sales rose 0.4% in June.
    • Non-auto retail sales were unchanged, and
    • Gasoline added 0.1%.
  • May’s gain was revised down from 0.3% to 0.2%.
• Chain Store Sales:
  • Chain store sales slid 1.1% in the latest week.
  • Year-to-year growth was 1.7%.
• Consumer Price Index:
  • The consumer price index rose 0.5% in June.
    • Both gasoline and food prices increased.
  • The core CPI rose 0.2%.
• Industrial Production:
  • Industrial production increased 0.3% in June.
    • Manufacturing output rose 0.3%
    • May’s manufacturing output was revised up 0.2%.
  • Production of motor vehicle and parts gained 1.3%.
    • Other manufacturing production rose 0.2% for a second straight month.
• MBA Mortgage Applications Survey:
  • Mortgage applications fell for the fifth straight week.
    • Refinance activity fell.
    • Purchase activity was virtually unmoved.
• Housing Starts:
  • Housing starts slid to 836,000 annualized units in June.
    • This was a drop of 9.9% from May.
  • Both multifamily and single-family starts weakened.
  • Permits declined month to month by 7.5%.
• Beige Book:
  • Most districts reported a moderate to modest improvement in the July Beige Book.
    • The Northeast benefited from:
      • Stability in Europe, and
      • An improvement in real estate and other industries, as a result of a lull in federal budget austerity measures.
    • The Midwest benefited from manufacturing, particularly of autos, and energy.
      • However, adverse weather weighed on Midwest and Southern farmers.
    • Business and energy conditions are improving in the South.
    • The West is still driven by technology and housing.
  • Credit conditions are improving, while competition among lenders is growing.
  • Federal budget sequestration did not appear to affect any districts.
• Jobless Claims:
  • Initial claims for unemployment fell to 334,000.
  • Just above the post-recession low of just under 330,000.
  • Continuing claims rose 91,000 to 3.11 million in the week ending July 6.

Earnings:

• Citigroup, Inc. (NYSE: C)
  • Citigroup’s earnings of $1.25 per share beat the $1.18 expected by analysts.
    • Citigroup’s profit was $3.9 billion.
  • Revenue was $20 billion, beating estimates of $19.8 billion.
• The Coca-Cola Company (NYSE: KO)
  • Coca-Cola earned $2.68 billion, or $0.59 a share, compared to $2.79 billion, or $0.61 a share, year-over-year.
    • Excluding one-time items, Coke earned $0.63 a share.
  • Revenue was $12.75 billion, short of the $12.95 billion expected.
  • Emerging markets helped global volume increase by 1%.
• Johnson & Johnson (NYSE: JNJ)
  • Johnson and Johnson reported earnings of $3.83 billion, or $1.33 a share, compared to $1.41 billion, or $0.50 a share last year.
    • Excluding one-time items, earnings were $4.29 billion, or $1.48 a share.
  • Sales were $17.88 billion.
  • Analysts expected $1.39 per share and sales of $17.72 billion.
• Bank of America Corporation (NYSE: BAC)
  • Bank of America earned $3.6 billion, or $0.32 a share.
  • Analysts expected earnings of $0.25 a share.
• International Business Machines Corporation (NYSE: IBM)
  • Excluding restructuring expenses, IBM earned $3.91 a share, compared to the $3.78 analysts expected.
  • Revenue fell 3.3% to $24.9 billion from one year ago. 

Interest Rates

• The two-year Treasury rate fell three basis points to 0.3%.
• The five-year Treasury rate dropped nine basis points to 1.30%.
• The 10-year Treasury rate dropped approximately nine basis points to 2.49%.
• The 30-year Treasury yield slipped five basis points lower to 3.58%.

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.