Weekly Review | Feb 11 to Feb 18

Approved for release February 19, 2013

Market Indices

Index Feb 11, 2013 Feb 18, 2013 Change Percent
DJIA 13992.97 13981.76 -11.21 -0.08
Nasdaq 3192.53 3192.03 -0.5 -0.02
S&P500 1517.93 1519.79 1.86 +0.12
Russell 2000 913.55 923.15 9.6 +1.05
Russell 1000 696.18 694.59 -1.59 -0.23

Equity Review

The S&P 500 index climbed 0.1% last week closing at 1,519.79 for the week.  The Dow Jones closed down 0.1% for its second week of losses.  The index finished at 13,981.76 for the week ended February 15.  Stocks traded lower on weak retail sales worries following a leaked Wal-Mart email.  The company’s shares fell Friday due to a report that February sales for the world’s largest retailer are off to the worst monthly start in seven years.  A Wal-Mart vice president wrote in an email to executives that disappointing sales figures were driven by the payroll-tax increase that hit shoppers who are already battling tough economic conditions.  He referred to month-to-date sales as “the worst start to a month in approximately 7 years.”  American Airlines and U.S. Airways have agreed to merge in an $11 billion deal that would create the world’s biggest airline.  The merged airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace.  Cisco Systems, Inc. delivered a profit and beat Wall Street’s expectations.  They also beat the revenue forecast.  Earnings per share increased 6.25% to $0.51 versus $0.47 a year ago, beating the $0.48 estimate for this quarter.  Revenue was $12.10 billion, beating the forecast of $12.06 billion.  Management said, “We delivered record earnings per share this quarter and record revenue for the 8th quarter in a row in a challenging economic environment.  We continue to drive the innovation, quality and leadership our customers expect, and we remain focused on consistent returns to our shareholders.”  CBS Corporation also delivered a profit on earnings, but missed expectations and came up short on revenue expectations.  Net income was $0.64 per share, missing the $0.69 per share estimate.  The company’s CEO stated, “CBS had a record year in 2012, as well as a record fourth quarter, and the momentum is building for an even better 2013.”  This week is a shortened trading session due to the President’s Day holiday, but will have some big companies reporting quarterly earnings. 

Economic Indicators

Jobless Claims (4 wk avg)
-0.43 Feb 9, 2013 352,500
Feb 2, 2013 351,000
Monthly Job Gains
January 2012 157,000
December 2012 196,000
ISM Manufacturing Index
+5.78 January 2012 53.1
December 2012 50.2
ISM NonManufacturing Index
-0.9 January 2012 55.2
December 2012 55.7

Economic Review

U.S. retail sales grew very little in January, indicating the tax increase is constraining consumers.  Sales rose 0.1%, according to the Commerce Department, but were down in auto dealers, drug stores and home furnishings and clothing stores.  Gold futures settled at their lowest level in nearly six months last Thursday, due to a stronger dollar.  Gold for delivery in April fell $9.60, or 0.6% to settle at $1,635.50 an ounce.  Investors assessed the outlook for gold considering disappointing economic data from the euro zone.  The number of people filing for unemployment benefits fell 27,000 to 341,000 in the week ended February 9.  Economists expected a drop to 360,000.  Claims are now slightly above a five-year low.  Last week President Obama pledged to pull out all the stops to foster a resurgence of manufacturing.  He said, “I believe in manufacturing.  I think it makes the country stronger.”  One of his advisors said that factories don’t just add jobs but foster more economic activity.  More and more firms are locating their factories in the U.S.  Analysts are cutting forecasts for U.S. growth in 2013 to 1.9% from 2.1%, citing the rising odds that the spending reductions will actually take place.  The latest worry is the sequester, some $85 billion in federal spending cuts for this fiscal year, which are set to kick in on March 1 unless Congress changes the law.  A plan has been created by Senate Democrats to replace the looming sharp cuts to defense and domestic spending.  The plan is to get half of the $110 billion needed to prevent the sharp cuts through new revenue, and half through spending cuts.  President Obama said the sequester would slow the recovery and cost hundreds of thousands of jobs.  He repeated his call for any deficit reduction to be balanced between spending and higher taxes from closing loopholes. 

U.S. Bonds

Two Year Note 0.282

Ten Year Note 1.997

30 Year Bond 3.170

Currencies & Commodities

Euro 1.3361

Pound 1.5475

Yen 93.57

Canadian Dollar 1.0132

Crude Oil 95.84

Gold, Apr 1608.3

Economic Calendar

Tuesday

Housing Market Index 48

Wednesday

Housing Starts 0.914 M

Housing Starts Permits 0.920 M

Producer Price Index 0.3 %

PPI 0.3 %

PPI Less Food & Energy 0.2 %

Thursday

CPI 0.1 %

CPI Less Food & Energy 0.2 %

Existing Home Sales 4.900 M

Philadelphia Fed Survey 1.1

Leading Indicators 0.3 %

*Actual consensus values reported.

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