Weekly Review | Sep 8 to Sep 15

Approved for release September 16, 2014

Market Indices

Index Sep 8, 2014 Sep 15, 2014 Change Percent
DJIA 17131.71 16987.51 -144.2 -0.84
Nasdaq 4579.06 4567.60 -11.46 -0.25
S&P500 2007.17 1985.54 -21.63 -1.08
Russell 2000 1169.32 1160.61 -8.71 -0.74
Russell 1000 936.31 927.77 -8.54 -0.91

Equity Review

The stock market closed lower last week as investors became concerned over the prospect of this week’s Fed rate meeting. The S&P 500 finished 0.6% lower at 1,985.55. The Dow Jones closed at 16,987.51, down 0.4% for the week ended September 12. The nation’s largest bookstore chain, Barnes & Noble, reported a loss for its first quarter results. Net income was a loss of $28.4 million, or $0.56 per share. The estimate was a loss of $0.68 per share. The company’s CEO stated, “We continued to improve our financial performance, while further executing on our strategic initiatives, including work on the proposed separation of the Barnes & Noble Retail and Nook businesses.”  Kroger delivered strong earnings for the second quarter, due to surging sales of organic and natural food and recent acquisitions. Earnings per share were $0.70, a penny more than expected. In August, the company completed a $237.7 million purchase of online vitamin, supplement and organic retailer, Vitacost. Apple unveiled two new iPhones last week, the iPhone6 and the iPhone6 Plus. CEO Jim Cook says the ambition of the iPhone is to replace the traditional wallet, as they also unveiled Apple Pay. This new mobile payments platform allows the new iPhone to interact with payment terminals in a simple tap. Ebay shares fell to a two-month low over concerns that Apple Pay will prove to be a strong competitor to the online auctioneer’s PayPal service. Shares of Krispy Kreme Doughnuts fell 4.8% after the company posted second quarter earnings below expectations. Net income was $9 million, or $0.13 per share. The estimate was $0.15 per share. CEO Tony Thompson stressed that the company is focusing on ways to boost the number of people at its stores. He wants to do this by expanding the company’s beverage menu as well as developing “more everyday” doughnut use occasions for their products. However, today consumers are embracing healthier food.

Economic Indicators

Jobless Claims (4 wk avg)
-0.25 Sep 6, 2014 304,000
Aug 30, 2014 303,250
Monthly Job Gains
August 2012 142,000
July 2012 212,000
ISM Manufacturing Index
+3.33 August 2012 59.0
July 2012 57.1
ISM NonManufacturing Index
+1.53 August 2012 59.6
July 2012 58.7

Economic Review

The U.S. added 142,000 jobs in August, the smallest gain since December.  The forecast was a gain of 228,000 jobs.  The unemployment rate fell to 6.1%, matching a six-year low.  The report drove down yields of the 10-year treasury.  Analysts say the Federal Reserve is less likely to accelerate its timetable to raise interest rates after the letdown.  The number of unemployment claims increased 11,000 to 315,000 in the week ended September 6.  Economists were expecting claims of 301,000.  The Labor Department said continuing claims rose 9,000 to 2.49 million in the week ended August 30.  The four-week average for continuing claims fell 15,000 to 2.5 million, the lowest average since mid-2007.  The Commerce Department reported that U.S. retail sales were solid in August, showing a 0.6% gain.  The big boost came from automobiles, which was somewhat offset by lower gas prices.  Excluding the auto sector, total sales were up 0.3%.  Economists expected total sales to rise 0.6% with a 0.2% gain excluding autos, and say “the overall tone of the report was encouraging. The takeaway is that consumer spending has not skipped a beat from the strong momentum seen in the second quarter. “  The preliminary reading on the University of Michigan/Thomson Reuters consumer-sentiment index rose to 84.6. Economists were expecting reading of 83.8.  Fed officials plan to meet this week to set monetary policy for the next six weeks.  The Federal Reserve thinks the economy is getting stronger and may be healthy enough to handle higher interest rates sometime within the next year.

U.S. Bonds

Two Year Note 0.564

Ten Year Note 2.586

30 Year Bond 3.317

Currencies & Commodities

Euro 1.2934

Pound 1.6235

Yen 107.14

Canadian Dollar 1.1075

Crude Oil 91.92

Gold, Dec 1236.0

Economic Calendar

Tuesday

PPI-FD 0.0 %

PPI-FD Less Food & Energy 0.1 %

Wednesday

CPI 0.0 %

CPI Less Food & Energy 0.2 %

Housing Market Index 56

Federal Funds Rate 0 to 0.25 %

Thursday

Housing Starts 1.038 M

Housing Permits 1.055 M

General Bus Conditions Index 23.0

Friday

Leading Indicators 0.4 %

*Actual consensus values reported.

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