For the week of Monday, March 19, 2012 through Friday, March 23, 2012
- Standard & Poor’s 500 Index: -0.50%
- Dow Jones Industrial Average: -1.15%
- NASDAQ Composite: 0.41%
The markets started the week strong, but dipped on Thursday, and struggled to recover on Friday. While the week may have ended mixed, the major indices are up an average of nearly 12% for the year. The Materials, Industrials and Energy sectors dragged the markets down. We find it interesting that Energy is down, as it does not seem to be following the price of oil. We saw positive numbers on housing during the week, but we do not recommend investing in housing just yet.
McDonald’s Corp. (NYSE: MCD), Apple, Inc. (NASDAQ: AAPL) and Hewlett-Packard Company (NYSE: HPQ) all made headlines during the week. McDonald’s announced Don Thompson as the company’s new CEO, who has served as the company’s operating chief since January 2010. Apple’s CEO Tim Cook took a step away from his predecessor and announced the company would return cash to shareholders as a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012. Hewlett-Packard announced it will merge its personal computer and printing divisions in an effort to cut costs, improve its designs and become more efficient.
Economic Data
- Housing News
- Housing Starts
- Residential construction picked up in February with permit issuance increasing 5.1% above January’s pace.
- Completions also increased month to month.
- January housing starts were revised upward by the Census.
- February’s housing starts declined 1.1% to an annualized pace of 698,000.
- Permits and starts are well above the February 2011 pace; however, completions are 7% below.
- Existing Home Sales
- Existing-home sales slipped 0.9% month to month in February to an annualized 4.59 million units, but the National Association of Realtors revised January sales up by 1.3%.
- Inventory increase to 6.4 months of supply, although an increase in listings drove some of the gain.
- The median house price increased 0.3% year to year in February.
- New Home Sales
- New home sales are expected to tick up to 325,000 from 321,000.
- Housing Starts
- Jobless Claims
- Jobless claims last week hit a four-year low and re-enforced the labor market’s improving trend.
- Initial jobless claims fell by 5,000 to 348,000 for the week ending March 17.
- The prior week’s data were revised from 351,000 to 353,000.
- Continuing claims also declined in the prior week.
M&A Activity and More:
- Hewlett-Packard Company (NYSE: HPQ) continues “flip-flopping” as it plans to merge its PC and Printing businesses.
- Hewlett-Packard said Wednesday it will merge its personal computer and printing divisions in an effort to cut costs, improve its designs and become more efficient.
- This is the first major strategic move by Meg Whitman since she became chief executive last September.
- Until now, she had focused on understanding H-P’s businesses.
Earnings
- Tiffany & Co. (NYSE: TIF)
- TIF’s fiscal fourth-quarter earnings edged down 1.5%, but the jeweler’s sales for the current year are on track.
- After achieving better-than-anticipated sales and earnings growth in the first three quarters of 2011, the company’s U.S. and European sales weakened during the holiday season, as demand for the company’s jewelry fell because of the sovereign-debt crisis.
- TIF announced that fourth-quarter profits fell by 1.6% to $178.4 million, or $1.39 a share, missing estimates of $1.42 a share.
- TIF announced that full-year earnings should be between $3.95 and $4.05 per share, ahead of estimates of $3.92 per share.
- Oracle Corporation (NASDAQ: ORCL)
- ORCL’s sales of new software licenses helped its latest quarter, easing concerns about the company’s future, as the loss of customers to rivals offering less expensive software.
- The business software maker earned $2.5 billion, or $0.49 per share, during its fiscal third quarter.
- This was an 18% increase from net income of $2.1 billion, or $0.41 per share, last year.
- If not for acquisition expenses and other costs, Oracle said it would have earned $0.62 per share.
- Oracle Corp. thrived, despite meager growth in its total revenue, which grew just 3% from last year to $9 billion.
- The performance might have been perceived as a flop, if not for a 7% increase in revenue from new software licenses.
- General Mills Inc. (NYSE: GIS)
- Cereal and snack maker General Mills reported third-quarter profit in line with Wall Street estimates, but cost inflation of raw materials squeezed margins.
- The company posted a 2% decline in profit to $0.55 per share, in-line with analyst estimate.
- Sales grew 13% to $4.12 billion, above estimates of $4.08 billion.
- FedEx Corporation (NYSE: FDX)
- FDX reported a profit of $521 million for the fiscal quarter ended Feb. 29, up sharply from a year-earlier profit of $231 million.
- Earnings rose to $1.65 from$0.73 a share.
- Cutting costs tied to the combination of the company’s FedEx Freight and FedEx National LTL operations, earnings rose from $0.81 a share to $1.55 a share.
- In December, the company forecasted shares would be $1.25 to $1.45 a share.
- Revenue rose 9% to $10.56 billion, just shy of the $10.6 billion estimate held by analysts.
- Operating margin widened to 7.7% from 4.1%.
- Revenue in FedEx’s express-shipping business—by far the largest top-line contributor—rose 8% to $6.54 billion, helping to drive a 96% improvement in the segment’s operating profit.
- FDX forecasts earnings of $1.75 to $2 a share for the current quarter, while analysts forecast $1.98 a share.
Interest Rates
- The two-year Treasury rate was flat at 0.36%.
- The five-year Treasury rate increased 0.3% to 1.11% touching highs not seen since October 2011.
- The 10-year Treasury rate fell 0.2% to 2.26%, but is still near highs for the year.
- The 30-year Treasury yield slid 0.6% to 3.36%, still holding well above the 3% level that it fell below in late 2011.
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.
