Markets
For the week of Monday, July 7, 2014 through Friday, May 11, 2014:
- Standard & Poor’s 500 Index: -0.85%
- Dow Jones Industrial Average: -0.68%
- NASDAQ Composite: -1.56%
Following last week’s record push, stocks slid ahead of the start of earnings season, with Small Caps and Technology stocks falling the most. The tumble continued Tuesday, knocking the Dow below 17000, as investors turned cautious ahead of earnings season. Trading volumes picked up from the low levels seen in recent days, but analysts could not point to a single catalyst that triggered the selling. Mid-week, stocks rebounded, as investors were reassured by the absence of any clear signal on interest-rate increases in the Fed minutes. The Fed’s minutes from the June monetary policy meeting indicated the Fed is in no rush to raise interest rates, and will likely maintain an accommodative stance that has helped power stock indexes to records this year. On Thursday, worries over the financial health of a major Portuguese lender spooked global markets, drubbing shares in southern Europe and sending U.S. stocks tumbling at the open. Indices closed out Friday’s session with slight gains. Internet brands eBay and Amazon led the way up.
Economic Data
Chain Store Sales Snapshot:
- The ICSC Chain Store Sales Index rose 1.7%.
- Sales increased 3.3% from last year.
MBA Mortgage Applications:
- The MBA Mortgage application composite index rose 1.9%.
- Refinance applications rose 0.4%.
- Purchase applications increased 3.7%.
Federal Open Market Committee Meeting Minutes:
- The minutes from the June FOMC meeting showed some policymakers were worried that:
- Markets were becoming complacent and
- Not factoring in enough uncertainty surrounding the outlook for the economy and monetary policy.
- We believe the minutes were dovish, as policymakers discussed not reducing their reinvestment program until they began raising interest rates.
- The Fed generally prefers to use regulation rather than the target fed funds rate to address financial imbalances.
- Therefore, the Fed’s balance sheet will not decline as soon as anticipated.
- Most Fed officials still believe the first increase in the fed funds rate would occur in 2015.
Jobless Claims:
- Initial unemployment claims fell 11,000 to 304,000.
- The four-week moving average slid 3,500 to 311,500.
- Continuing claims increased 10,000 to 2.58 million.
Earnings:
Alcoa Inc. (NYSE: AA)
- Alcoa earned $138 million, or $0.12 a share, compared to a net loss of $119 million, or $0.11 a share, last year.
- Excluding one-time items, Alcoa earned $216 million, or $0.18 a share, compared to $76 million, or $0.07 a share, a year ago.
- Sales decreased to $5.84 billion from $5.85 billion.
- Analysts expected Alcoa to earn $0.12 a share on $5.63 billion in revenue.
Bob Evans Farms (NASDAQ: BOBE)
- Bob Evans’ earnings declined to $13 million, or $0.53 a share, from $29.8 million, or $1.06 a share, last year.
- Adjusted earnings fell to $0.48 a share, from $0.69 a share.
- Net sales slid to $326.4 million from $333.9 million.
- Analysts projected earnings per share of $0.41 on revenue of $333 million.
- Severe weather and increased costs in pork, bakery and beef hurt results.
- Same-store sales declined 4.1%, with 3.4% decline attributed to the severe winter weather.
The Container Store Group, Inc. (NYSE: TCS)
- The Container Store reported a loss of $3.6 million, or $0.07 a share, compared to a loss of $4.8 million, or $9.25 a share, last year.
- Sales increased 9% to $173.4 million.
- Analysts expected a loss of $0.06 a share and $174.2 million in sales.
Family Dollar Stores Inc. (NYSE: FDO)
- Family Dollar reported profits of $81.1 million, or $0.71 a share, compared to $120.9 million, or $1.05 a share, year-over-year.
- Excluding restructuring plan charges, Family Dollar earned $0.85 a share.
- Sales increased to $2.66 billion.
- Analysts expected $0.85 to $0.95 a share on $2.61 billion in sales, for Family Dollar.
Progressive Corp. (NYSE: PGR)
- Progressive earned $293.4 million, or $0.49 a share, compared to $324.6 million, or $0.54 a share, a year ago.
- Progressive posted $40.4 million in net securities gains, compared to $132.9 million last year.
- Net premiums written increased to $4.63 billion.
- Analysts expected $0.48 a share and written net premiums of $4.64 billion.
Interest Rates
- The two-year Treasury rate fell five basis points to 0.46%.
- The five-year Treasury rate slid 11 basis points to 1.62%.
- The 10-year Treasury rate decreased 13 basis points to 2.51%.
- The 30-year Treasury yield declined 13 basis points to 3.34%.
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.
