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Weekly Review | Feb 1 to Feb 5

Market Indices

Index	Feb 1, 2010	Feb 5, 2010	Change	Percent
DJIA	10068.99	10012.23	-56.76	-0.56
Nasdaq	2155.81	2141.12	-14.69	-0.68
S&P500	1073.89	1066.19	-7.7	-0.72
Russell 2000	602.22	592.98	-9.24	-1.53
Russell 1000	478.11	476.33	-1.78	-0.37

Equity Review

After a 3 percent sell off on Thursday and a stock rebound Friday that reversed a 1.5 percent decline earlier in the day, the S&P 500 index closed at 1,066 down 1% for the week. The sustainability of economic growth once stimulus spending winds down remains a concern. Companies in the news last week included Novo Nordisk which announced sales had increased by 11% and operating profit was up 21% over 2008. Aflac reported Q4 EPS of $1.18 versus consensus of $1.15. The insurance company sees 2010 EPS in the range of $5.24-$5.56. Diamond Offshore reported disappointing results for the fourth quarter with earnings of $1.98 per share which missed analysts’ expectations of $2.32. The oil services company declared a special dividend of $1.875 per share. Gymboree gave earnings guidance for the fiscal year 2009 of $3.38-$3.40 EPS above the consensus of $3.35. Ross Stores followed suit as the retailer sees Q4 EPS of $1.15-$1.16 versus consensus of $0.98. The company raised their dividend by 45% and announced a $750 million stock repurchase program. So far this quarter, with 301 companies in the S&P 500 so far reporting, 77% have beat the street estimates.

Economic Indicators

Economic Review

Wall Street was mainly focused last week on Friday’s jobs report which showed a decline in non-farm payrolls of 20,000 in January. While on the surface this was worse than analyst’ expected given the anticipated rise in new hires for the 2010 Census but with further review there are three underlining trends. One is a 6.2% (annual rate) increase in non-farm productivity which is the third increase over the past three quarters. Second, the number of total hours worked has increased 1.8% over the past three months. Third, temporary hires continue to rise with the latest month showing an increase of temp payrolls of 52,000. The unemployment rate dropped ot 9.7% from 10%. According to the Wall Street Journal, sales at stores open at least a year rose 3.3 percent in January over the prior year. As credit quality of government debt remains a concern with recent trouble in Greece, Treasury Secretary Timothy Geithner expressed his confidence that the U.S. would not lose its triple-A rating due to the country’s capacity to solve problems. Geithner also said it is important that the government focus on deficit reduction over the next 2-3 years. As with any recovery the road back to strong economic growth remains bumpy.