For the week of Monday, August 13, 2012, through Friday, August 17, 2012:
- Standard & Poor’s 500 Index: 0.87%
- Dow Jones Industrial Average: 0.51%
- NASDAQ Composite: 1.84%
The markets were relatively flat the better part of the week, with gains coming Thursday and Friday. Early in the week, consumer stocks inched higher after Home Depot and a handful of high-end retailers delivered strong quarterly earnings, and July’s retail sales report topped estimates.
On Wednesday, U.S. stocks finished the day flat, as investors juggled an unexpected contraction in domestic manufacturing activity and a mixed batch of corporate earnings. Consumer-discretionary and financial stocks led the gains, while utilities and energy stocks were downside drags. Stocks quickly cut their gains after a higher open Thursday, following a pair of weaker-than-expected economic reports and as optimism for further Fed action diminished. On Friday, stocks ended a tumultuous trading day with the Dow closing just points away from a near five-year high. The gains increased stocks’ streak to six positive weeks.
Economic Data
- Retail Sales:
- July retail sales brought good news, rising 0.8% in July, which was much stronger than expected.
- Non-auto retail sales rose 0.8% in July, balancing June’s 0.8% decline;
- Gasoline sales rose for the first time since March, and
- Building materials rose 1% in July.
- The previous month’s revisions show retail sales fell 0.7% in June.
- July retail sales brought good news, rising 0.8% in July, which was much stronger than expected.
- Consumer Price Index:
- The Consumer Price Index was unchanged.
- This was the fourth straight month with no gain.
- Energy prices fell substantially, holding the headline number below consensus estimates.
- Core CPI inflation slowed, as a result of a broad deceleration in prices in many prominent categories.
- The Consumer Price Index was unchanged.
- Industrial Production:
- Industrial production rose 0.6% in July, while manufacturing gained 0.5%, as a result of increased utilities and mining output.
- A 3.3% increase in motor vehicles and parts production helped the manufacturing output.
- Otherwise manufacturing had a gain of 0.2%.
- Jobless Claims:
- Unemployment claims rose by 2,000 to 366,000 for the week.
Earnings
- Deere & Company (NYSE: DE)
- The effects of a slowing global economy caught up to Deere & Co. in its fiscal third quarter.
- Its net income rose 11%, but fell well short of Wall Street’s expectations.
- Deere and Co. earned $788 million, or $1.98 per share, for the quarter ended July 31, compared with $712.3 million, or $1.69 per share, for the same period last year.
- Analysts expected $2.31 per share in the most recent quarter.
- Revenue rose 15% to $9.59 billion, below analysts’ estimate of $9.61 billion.
- Sales of tractors and other farm equipment, by far its biggest segment, rose 14% to $7.27 billion.
- The effects of a slowing global economy caught up to Deere & Co. in its fiscal third quarter.
- Staples Inc. (NASDAQ: SPLS)
- Staples’ net income tumbled 32% in the second quarter absent a large tax refund from a year ago, on top of disappointing sales in North America and weakness in Europe.
- The prior-year period included a $21 million cash tax refund.
- The office supply chain fell short of Wall Street’s expectations.
- For the period ended July 28, Staples Inc. earned $120.4 million, or $0.18 per share, compared with $176.4 million, or $0.25 per share, a year earlier.
- Analysts expected earnings of $0.22 per share.
- Revenue fell 6% to $5.5 billion from $5.82 billion, also short of expectations.
- Staples’ net income tumbled 32% in the second quarter absent a large tax refund from a year ago, on top of disappointing sales in North America and weakness in Europe.
- Target Corporation (NYSE: TGT)
- Target’s net income for the second quarter was unchanged, as it paves the way for an upcoming move into Canada.
- The company saw solid spending by customers.
- Target’s earnings were $704 million, or $1.06 per share, in the period ended July 30, compared with $704 million, or $1.03 per share, in the year ago period.
- Revenue rose 3.5% to $16.45 versus the expected $16.75 million.
- The company expects earnings per share for the current quarter to be between $0.83 and $0.93, while analysts expect $0.77 per share.
- Target’s net income for the second quarter was unchanged, as it paves the way for an upcoming move into Canada.
- Wal-Mart Stores Inc. (NYSE: WMT)
- The world’s largest retailer saw second-quarter net income rise 5.7%
- Wal-Mart is wooing the return of frugal shoppers across the globe by doubling down on low prices.
- Wal-Mart reported net income of $4.02 billion, or $1.19 per share, comparable with $3.80 billion, or $1.09 per share, a year ago.
- Revenue, excluding membership fees at Sam’s Club, rose 4.5% to $113.53 billion.
- Analysts expected earnings of $1.17 per share on revenue of $114.63 billion.
- The world’s largest retailer saw second-quarter net income rise 5.7%
Interest Rates
- Treasury yields continued to rise, as investors’ waning confidence that the Fed will start another fresh round of bond-buying next month, damping market appetite for U.S. Treasurys.
- The two-year Treasury rate rose two basis points to 0.28%.
- The five-year Treasury rate increased nine basis points to 0.79%.
- The 10-year Treasury rate jumped 14 basis points to 1.80%, its highest level in over three months.
- The 30-year Treasury yield rose 15 basis points to 2.90%, near the 3%, a level not seen since April.
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.
