Weekly Review | Feb 25 to Mar 4

Approved for release March 04, 2013

Market Indices

Index Feb 25, 2013 Mar 4, 2013 Change Percent
DJIA 14000.57 14089.66 89.09 +0.64
Nasdaq 3180.59 3169.74 -10.85 -0.34
S&P500 1515.60 1518.20 2.6 +0.17
Russell 2000 916.12 914.73 -1.39 -0.15
Russell 1000 693.83 694.56 0.73 +0.11

Equity Review

After an uncertain week, U.S. equities ended the week slightly higher.  The S&P 500 gained 0.2% for the week ended March 1 at 1,518.20.  The Dow Jones closed up 0.6% for the week at 14,089.66.  Home Depot, Inc. delivered a profit, beat Wall Street’s expectations and beat the revenue expectation.  Earnings increased 34% from a year ago to $0.67 per share.  Revenue was $18.25 billion, beating the estimate of $17.69 billion.  Management said, “We ended the year with a strong performance as our business benefited from a continued recovery in the housing market coupled with sales related to repairs in the areas impacted by Hurricane Sandy.”  Target Corporation delivered a profit but missed expectations.  The retailer said net income was $1.47 per share, just missing the $1.48 forecast.  Management stated, “We’re pleased with Target’s fourth quarter performance, particularly in the face of continued consumer uncertainty.  Outstanding discipline and execution by our team will allow us to deliver on significant plans in 2013, including completion of the largest store opening program in our company’s history with 124 new stores.”  Priceline.com Inc. delivered a profit and beat Wall Street’s expectations.  Earnings per share increased 26% to $6.77 versus EPS of $5.37 a year ago.  This quarter’s estimate was $6.54 per share.  The company’s CEO said, “We finished 2012 with a strong 4th quarter showing improved unit growth in hotel room and rental car day reservations.  While global economic conditions remain a concern, we are excited about our long-term outlook.”  This week a better than expected employment report could help stocks rise to record highs.

Economic Indicators

Jobless Claims (4 wk avg)
1.87 Feb 23, 2013 355,000
Feb 16, 2013 361,750
Monthly Job Gains
February 2012 157,000
January 2012 196,000
ISM Manufacturing Index
+2.07 February 2012 54.2
January 2012 53.1
ISM NonManufacturing Index
-0.9 February 2012 55.2
January 2012 55.7

Economic Review

The White House and Congress had until Friday on a deal to eliminate the sequester.  The cuts total $85 billion for the rest of 2013 and $1 trillion in government spending over nine years, ending in fiscal 2021.  President Obama warned about the effects on the U.S. economy, saying the longer the sequester goes on, the greater the damage to our economy.  Democrats want to raise taxes again to offset some of the cuts, but Republicans have ruled out any more tax increases.  The spending cuts, however, will only kick in gradually and many Americans might not notice them right away.  Sales of new U.S. homes were up 15% in January to 437,000, the highest pace since July 2008.  The median price of new homes fell over 9% to $226,400 in January from $249,800, indicating that buyers are more interested in less expensive properties.  Sales climbed 45% in the West, and 27% in the Northeast.  Sales may have benefited from the warm winter weather that persisted from December into early January.  The S&P/Case Shiller 20-city composite index posted a 0.9% increase in December.  The index chairman said that home prices ended 2012 with solid gains.  Despite gains, prices still remain about 29% below a bubble peak in 2006.  Recovering home values will likely continue to help holders of underwater mortgages, with more homeowners becoming eligible for refinancing at lower mortgage rates.  Durable goods fell 5.2% in January due to a weaker demand for aircraft.  Minus transportation, orders rose 1.9%.  The number of people who applied for unemployment benefits fell 22,000 to 344,000 in the week ended February 23.  Economists expected claims to be 362,000 and say that claims continue to suggest that the recent trend in employment growth is at least being maintained.  The decline in claims points to further acceleration.  Gas prices rose 10% last month, marking the worst February on record.  Major maintenance work at many of the nation’s refineries limited capacity and was responsible for much of February’s increase in gas at the pump.  In the meantime, North American production of crude oil has been increasing which should ease the pressure of higher prices.  The prediction in the next four to six weeks is the low $3 range. 

U.S. Bonds

Two Year Note 0.241

Ten Year Note 1.860

30 Year Bond 3.064

Currencies & Commodities

Euro 1.2998

Pound 1.5065

Yen 93.45

Canadian Dollar 1.0285

Crude Oil 90.53

Gold, Apr 1574.6

Economic Calendar

Thursday

International Trade $-43.0 B

Nonfarm Productivity -1.6 %

Unit Labor Costs 4.4 %

Friday

Wholesale Trade 0.4 %

*Actual consensus values reported.

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