Weekly Review | Feb 18 to Feb 25

Approved for release February 25, 2013

Market Indices

Index Feb 18, 2013 Feb 25, 2013 Change Percent
DJIA 13981.76 14000.57 18.81 +0.13
Nasdaq 3197.46 3161.82 -35.64 -1.11
S&P500 1519.79 1515.60 -4.19 -0.28
Russell 2000 924.14 916.15 -7.99 -0.86
Russell 1000 695.33 691.57 -3.76 -0.54

Equity Review

Last week U.S. equities rallied on Friday but left the major market indices almost flat.  The S&P 500 fell 0.3%, snapping a seven-week winning streak.  The index closed at 1,515.60 for the week.  The Dow Jones rose 0.1%, closing at 14,000.57 for the week ended February 22.  Hewlett-Packard led the gains for the Dow after delivering a profit and beating Wall Street’s expectations on earnings and revenue.  The company reported net income of $0.82 per share and revenue of $28.36 billion.  Estimates were $0.71 per share on earnings and $27.79 billion on revenue.  Management said, “While there’s still a lot of work to do to generate the kind of growth we want to see, our turnaround is starting to gain traction as a result of the actions we took in 2012 to lay the foundation for HP’s future.”  Office Depot, Inc. reported a loss and missed Wall Street’s expectations.  Earnings per share were $0, and below the estimate of $0.04 per share.  The company said, “Small businesses are the backbone of our economy, and we are elevating our commitment to empowering these very important customers.”  Marriott International, Inc. delivered a profit and beat expectations.  Earnings per share were $0.56 per share, beating the estimate of $0.55.  The company’s CEO said, “We were delighted with our 2012 results.  Full year earnings per share grew 31% over 2011 adjusted levels.”  Dell Inc.  delivered a profit and beat Wall Street’s expectations.  Earnings per share were $0.40 per share.  The estimate was $0.39 per share.  Dell’s CFO stated, “We continued to execute our long term strategy in Q4 and realized a 6% increase in our enterprise solutions and services business.”  This week retail earnings are still coming in, but the market will be affected by how consumers are feeling especially with gas prices continuing to climb.

Economic Indicators

Jobless Claims (4 wk avg)
-2.27 Feb 16, 2013 360,750
Feb 9, 2013 352,750
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

The number of Americans who applied for new jobless claims increased last week, but remain at a level that suggests slow but steady improvement in the labor market.  Claims rose 20,000 to 362,000 in the week ended February 16.  The forecast was a rise to 351,000.  The increase may have been partly influenced by the federal holiday on Monday.  The producer price index rose 0.2% in January which was below the 0.4% prediction.  Vegetable prices increased 39%, the biggest gain in almost a year.  The cost of broccoli, cauliflower and lettuce rose the fastest.  Energy prices fell 0.4%, but the index didn’t capture the surge in gasoline costs that started shortly after the year began.  Even with higher food and gasoline prices, inflation at the wholesale level remains subdued.  The consumer price index was flat in January.  Excluding food and gas, core consumer prices climbed 0.3% in January.  Economists say the spike in gas prices into February will sharply boost inflation in the next report and weigh heavily on real consumer income.  The Commerce Department reported that construction on new U.S. homes fell 8.5% in January to 890,000.  Economists had expected starts to be 914,000 but say that with housing starts still below the level of household formation, it is expected that homebuilding will remain on a general upward trend throughout this year and into 2014.  The minutes of the Fed’s January meeting showed for the first time that some Fed officials were concerned that very low interest rates were leading to excessive risk taking in a search for a higher yield.  Fed officials have pressed Congress to come up with a plan to get the deficit on a sustainable downward path.  Last Friday, two top Fed officials tried to relieve concerns that a lack of progress on fiscal policy would force the central bank into actions that they might not otherwise take.  This week Italy is in focus as well as European Union voting for new leaders.  In addition, gas prices continue to rise as they have increased $0.20 in two weeks.  The average price per gallon is currently $3.80.

U.S. Bonds

Two Year Note 0.266

Ten Year Note 2.001

30 Year Bond 3.193

Currencies & Commodities

Euro 1.3296

Pound 1.5101

Yen 94.07

Canadian Dollar 1.0241

Crude Oil 93.59

Gold, Apr 1587.0

Economic Calendar

Tuesday

FHFA House Price Index 0.7 %

New Home Sales 381 K

Consumer Confidence 61.0

Wednesday

Durable Goods New Orders -4.0 %

Durable Goods Ex-transportation 0.2 %

Pending Home Sales Index 3.0 %

Thursday

Real GDP 0.5 %

GDP Price Index 0.6 %

Business Barometer Index 55.0

Friday

Domestic Vehicle Sales 12.1 M

Total Vehicle Sales 15.2 M

Personal Income -2.1 %

Consumer Spending 0.2 %

PCE Price Index 0.1 %

Core PCE Price Index 0.2 %

Consumer Sentiment 76.0

Construction Spending 0.6 %

*Actual consensus values reported.

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