Positive Week with Record-Setting Highs

Markets

For the week of Monday, May 6, 2013, through Friday, May 10, 2013:

• Standard & Poor’s 500 Index: 1.29%
• Dow Jones Industrial Average: 1.11%
• NASDAQ Composite: 1.79%

Stocks began the week flat to slightly higher, with financial shares leading gains on Monday. The Dow closed above 15000 for the first time Tuesday, as stocks continue a historic four-year run, which investors are finding increasingly irresistible. However, the surge isn’t driven by blind optimism like it was in the bull market of 1999. In the current low-interest rate environment, investors see few alternatives to stocks. Since the market bottomed in March 2009, the Dow has surged nearly 130%, without suffering a single bear-market. Stocks continued their upward climb mid-week, as the S&P 500 reached a record level for the fifth consecutive trading session, closing at 1632.69. Technology and materials stocks led the markets higher, while defensive sectors, including utilities and consumer staples, lagged. Industrial and financial stocks are the best performers so far in May.

Thursday brought a dip to the three major indices, but by Friday, a rally reversed a pullback from the previous session, driving the S&P 500 and DJIA to record highs. The Federal Reserve’s accommodative monetary policy has allowed stocks to rise for months. However, Fed Chairman, Ben Bernanke, did not dispel, nor substantiate, rumors that the Fed is considering scaling back.

Economic Data

• April Jobs Report:
  • Exceeding expectations, jobs increased to 165,000.
    • The private sector added 176,000 jobs in April.
  • Both February and March gains were revised upward.
  • Earnings grew 0.2%.
  • The unemployment rate fell to 7.5%.
• Chain Store Sales Snapshot:
  • The Chain Store Sales Index gave back most of the last two weeks’ gains, slipping 1%.
    • Year-over-year growth fell to 2.4%.
• MBA Mortgage Applications Survey:
  • Mortgage applications advanced for the fifth straight week, as the composite index rose 7%.
    • The strong refinance drive is a result of historically low mortgage interest.
  • Purchase applications are modestly rising.
• Jobless Claims:
  • Initial jobless claims fell 4,000 to 323,000.
    • This was the lowest reading since October 2007.
  • The four-week moving average fell by 6,250 to 337,000—its lowest level since late 2007.
  • Continuing claims fell by 27,000 to 3.01 million.
• Wholesale Trade:
  • Wholesale inventories increased by 0.4% in March, beating analysts’ expected 0.3% gain.
  • The inventory-to-sales ratio rose to 1.21.

Earnings

• Sysco Corporation (NYSE: SYY)
  • Sysco’s earnings fell 22%, to $201 million, or $0.34 a share, versus $259.6 million, or $0.44 a share, one year ago.
    • Excluding one-time items, Sysco earned $0.40 per share, while analysts expected $0.43 a share.
  • Revenue was $10.9 billion, compared to $10.5 billion a year ago.
    • Analysts expected revenue of $11.1 billion.
• The Walt Disney Company (NYSE: DIS)
  • Disney’s profit beat expectations, boosted by higher attendance at theme parks and the movie box office success of “Oz the Great and Powerful.”
    • Net income increased 32% year-over-year to $1.5 billion.
    • Earnings of $0.79 a share beat analysts’ estimates of $0.77.
    • Sales rose 10% to $10.6 billion.
• DirecTV (NASDAQ: DTV)
  • DirecTV posted net income of $690 million, or $1.20 a share, compared to $731 million, or $1.07 a share, one year ago.
    • Adjusted earnings per share were $1.43.
    • Analysts expected earnings of $1.07 a share.
  • Revenue rose to $7.58 billion from $7.05 billion, beating analysts’ estimates of $7.53 billion.
• Whole Foods Market, Inc. (NASDAQ: WFM)
  • Whole Foods reported net income of $142 million, or $0.76 a share, compared to $118 million, or $0.64 a share, last year.
    • Total sales grew from $2.67 billion to $3.03 billion.

Interest Rates

• The two-year Treasury rate rose one basis point to 0.22%.
• The five-year Treasury rate increased five basis points to 0.74%.
• The 10-year Treasury rate jumped 11 basis points to 1.80%.
• The 30-year Treasury yield increased eight basis points to 2.98%, coming close to the key 3% level.

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.