Permanent Value Incorporated » Week in Review

Weekly Update: March 1- 5, 2010

Michael La Salle — Fri, 05 Mar 2010 23:21:26 +0000

Employment Numbers Push Stocks Higher

Stocks closed higher this week as the S&P 500 and Dow Jones Industrial Average both closed the week in the black for the year. The S&P 500 gained 3.1% and the Dow Jones Industrial Average gained 2.33% for the week. This comes in a week that showed better than expected employment numbers. Nonfarm payrolls declined by 36,000 jobs despite severe weather in February, far less negative than the market forecast of a decline of 63,000 jobs. The unemployment rate also surprised this week as rate remained unchanged at 9.7%, beating expectations of a 10% unemployment rate. Stocks gains were also inflated late Friday by reports that consumer borrowing rose unexpectedly in January for the first time since in over a year.

In earnings this week, Joy Global Inc., Fuel Systems Solutions, Inc., and PetSmart, Inc. all beat analysts’ expectations. U.S. pay-television provider, DISH Network Corporation also surprised investors this week as the company posted earnings of 40 cents per share, coming in 25% higher than analysts’ estimates of 32 cents per share.

What opportunities are ahead?

As this week comes to a close and we approach next week’s anniversary of the bottom of the U.S. stock market, it brings me back to a year ago and reminds me of all uncertainty surrounding the U.S. economy. Taking a jump back to today, the mood in the U.S. economy and investors is much brighter, the dollar is getting stronger, job losses are slowing down, and consumer borrowing made its first move up in a year.

Although we lost jobs in the overall economy, the manufacturing sector actually added jobs during February. This indicates an upturn in manufacturing output may be in the near future and a buying opportunity for investors.

The increase in consumer borrowing may be the most important economic indication of the week. The increase shows that consumers are beginning to poke their heads out of their shells and start spending. The increase also shows that banks may be becoming more willing to lend as the economy continues to recover.

As companies begin to hire, and consumers continue to feel more comfortable spending money, we may see even more growth in the overall economy and markets.

Market Returns

	This Week	Year to Date	Last Year	Last 3 Years
S&P 500	3.1%	2.12%	66.83%	-6.83%
Dow Jones Industrial Average	2.33%	1.32%	60.23%	-3.42%

Next Week’s Economic Releases

March 11 – International Trade

March 12 – Retail Sales

Troubles in Europe Continue to Worry Investors

Michael La Salle — Sat, 27 Feb 2010 02:52:21 +0000

Stocks were slightly lower this week as the S&P 500 lost 0.4% and the Dow Jones Industrial Average fell 0.7%. Debt problems in Europe continued to worry investors as more European countries, including Italy, Ireland, Portugal, and Spain, all joined Greece as countries in the European Union with too much debt. Spain, in particular, has become a bigger immediate issue as a housing bubble is responsible for overbuilding, which in turn is to blame for Spanish banks’ books being overloaded with unsold homes. Spain also boasts an unemployment rate of 18.8%, including 45% of people under-thirty years of age. In earnings news, out of the 456 companies in the S&P 500 who have reported earnings this season, 75% have topped analysts’ estimates. Home Depot and Target both beat analysts’ expectations this week. Lowe’s, the United States second largest home improvement retailer, also beat expectations by posting earnings of 14 cents per share, beating expectations of 12 cents per share.

Stocks Rise as Federal Reserve Raises Discount Rate

Michael La Salle — Sat, 20 Feb 2010 00:29:20 +0000

Stocks were higher for the second straight week as the Dow Jones Industrial Average gained 3.0% and the S&P 500 gained 3.1%. This gain came despite the Federal Reserve announcing on Thursday that is will be raising the discount rate, the interest rate the Federal Reserve Bank charges commercial banks that borrow short term funds from it, to 0.75% from 0.50%. In earnings news, Chesapeake Energy, Hewlett-Packard, and Wal-Mart all reported better-than-expected earnings this week. Priceline.com Incorporated also surprised this week as the global online travel company posted fourth-quarter earnings of $1.99 per share beating analysts’ expectations of $1.68 per share. Priceline.com Incorporated also forecast first-quarter earnings to be between $1.54 and $1.64 per share, coming in higher than analysts’ estimates of $1.40 per share. Shares of Priceline.com Incorporated rose to 10-year highs on the positive news.

Stocks Higher in Volatile Week Despite Greece Debt Troubles

Michael La Salle — Sat, 13 Feb 2010 00:25:53 +0000

Stocks were slightly higher this week, breaking a four-week down streak, as the S&P 500 and Dow Jones Industrial Average both gained 0.9% on the week. The slight gain in a volatile week in the stock market can be primarily attributed to European Union leaders’ support of Greece and their debt troubles. Retail Sales surprised this week as January posted an increase of 0.5%, beating forecasts of 0.3%. In other economic releases, the University of Michigan Index of Consumer Sentiment levels dropped in February as the index fell 0.7 points to 73.7. The index was expected to rise to 75. In earnings news, Philip Morris International and Walt Disney both reported better-than-expected earnings.

Stocks Slightly Down After Unexpected Drop in Unemployment Rate

Michael La Salle — Fri, 05 Feb 2010 22:30:22 +0000

Stocks were slightly down this week as the Dow Jones Industrial Average lost 0.6% and the S&P 500 fell 0.7%. This came in a week that showed an unexpected drop in the US unemployment rate as employers cut 20,000 jobs in January, bringing the unemployment rate to 9.7%. In earnings news, United Parcel Service, Cisco, and Visa all beat analysts’ expectations. Exxon Mobil also surprised on the upside by posting fourth quarter earnings of $1.27 per share, beating expectations of $1.19 per share.

Stocks Down Despite Positive GDP Report

Michael La Salle — Fri, 29 Jan 2010 23:24:11 +0000

Stocks were down this week as worries over President Obama’s proposal to reform several US industries outweighed strong corporate earnings and a positive GDP report. The Dow Jones Industrial Average was down 1% as the S&P 500 fell 1.6% on the week. The GDP showed the economy grew 5.7% in the fourth quarter of 2009, which is faster than economist forecasts of 4.7%. This is the fastest the GDP was grown in six years. Earnings news was strong this week, as technology giants Microsoft beat earnings expectations of $0.59 cents per share by posting earnings of $0.74 cents per share, and Apple posted earnings of $3.67 per share topping estimates of $2.08 cents per share.

President Obama’s Proposed Restrictions on Banks Push Stocks Lower

Michael La Salle — Fri, 22 Jan 2010 23:35:08 +0000

Stocks were down this week as the Dow Jones Industrial Average fell 4.1% and the S&P 500 dropped 3.9%. This down week can be attributed to President Obama’s proposal to impose size limits on commercial banks and restrict running privately owned trading operations. Other economic news was positive including a rise of 1.1% in the leading indicators index for December. In earnings news, out of the 62 companies in the S&P 500 that reported earnings this week, 46 beat analysts’ expectations. Noteworthy names included in the 46 were IBM, JPMorgan, Wells Fargo, Goldman Sachs, McDonalds, and Google who posted fourth quarter earnings of $6.79 per share, well above analysts’ estimates of $6.50 per share.

Stocks Slightly Lower on Weak Start to Earnings Season

Michael La Salle — Sat, 16 Jan 2010 00:08:48 +0000

Stocks were slightly down this week as the Dow Jones Industrial Average was down 0.1% and S&P 500 fell 0.8%. The small decline can be attributed to a weak start to the earnings season. Alcoa, the world’s third largest producer of aluminum, reported weaker than expected earnings by reporting earnings of 1 cent per share, cents below analysts’ estimates of 6 cents per share. In other earnings news, JPMorgan Chase posted fourth quarter earnings of 74 cents per share, beating analysts’ expectations of 61 cents per share.

Stocks Hit 15-Month Highs Despite Rise in Unemployment

Michael La Salle — Sat, 09 Jan 2010 02:07:13 +0000

Stocks hit 15-month highs this week despite disappointing unemployment numbers as the S&P 500 gained 2.7% and the Dow Jones Industrial Average rose 1.8%. The Labor Department announced the unemployment rate stayed at 10% in December as nonfarm payrolls dropped 85,000 in December for a total decrease of 4.2 million jobs in 2009. In mergers and acquisitions news, the Swiss pharmaceutical company Novartis announced its plans to gain full ownership of the Switzerland eye care company Alcon. In other news, United Parcel Service raised its fourth-quarter guidance from between 58 and 65 cents per share to between 73 and 75 cents per share.