U.S. Stocks Fall for the First Time in Over a Month – 9/12/14

 

  • U.S. market mostly unchanged this week snapping five straight weeks of gains
  • Russia and Ukraine crisis casts black cloud over global markets as uncertainty remains
  • Payroll numbers disappoint as new jobs increase much less than anticipated
  • August retail sales numbers in line with expectations providing support for consumer spending to continue to rise and aid economic growth

Weekly Market Recap:

The S&P 500 declined 1.1%, closing the week at 1985.54.  The Dow Jones Industrial Average fell 0.9% to 16,987.51 and the NASDAQ 100 closed at 4,567.59, slightly down for the week.  The most newsworthy events of the week were:

 

  • Apple (AAPL) held a special event Tuesday, where they announced the iPhone 6 and iPhone 6 Plus, as well as the much anticipated Apple Watch.  The iPhone 6 is a bit bigger, in terms of screen size, than the iPhone 5, but the iPhone 6 Plus is much larger in terms of screen size, measuring 5.5”.  The most notable improvements for the phone are a better camera, faster processor,  a full HD, 1920X1080 screen (on the 6 Plus), and a sapphire screen, which is much stronger than glass and therefore is less likely to crack/shatter.  Apple begins taking pre-orders for the new phones today, and will be available for purchase beginning next Friday.  The company also announced these phones and watch will have “Apple Pay”, a new service that allows users to pay with their phone/watch at participating retailers.
  • Dollar General (DG ) has been attempting to purchase Family Dollar (FDO) for the past few weeks, with Family Dollar’s board rejecting all their offers.  Dollar General has decided they will now take their bid “hostile”, meaning they will bypass the board and go directly to the shareholders to vote on.
  • Home Depot (HD) confirmed their payment security system has been breached, potentially affecting anyone that used a payment card at a Home Depot store since April 1, 2014.  The company is offering free identity protection services, including credit monitoring, for the next 12 months.  Further details and sign up information can be found on Home Depot’s website.
  • General Electric (GE) announced that it will be selling its appliance unit to Electrolux for $3.3 Billion.  Under the terms of the deal, Electrolux will continue to use the GE Appliance brand.  GE’s goal is to further its strategic focus on infrastructure and technology.

 

EU Announces Sanctions Against Russia:

The European Union agreed yesterday to begin their new sanctions against Russia over the Ukraine crisis.  They also stated that they could lift them next month if Moscow abides by the fragile truce.  15 companies and 24 Russian individuals were added to the EU “blacklist”.  Under the newly widened sanctions list, it is “prohibited to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments with a maturity exceeding 30 days.”

Monthly Employment Situation:

August’s nonfarm payroll numbers were released last Friday and they were disappointing, to say the least.  Payroll jobs rose only 142,000 in August, much less than the average economist estimate of 230,000 and much lower than July’s number of 209,000.  Job gains occurred in professional and business services and in health care.  The unemployment rate ticked down from 6.2% to 6.1%, matching economist expectations.  Many economists cautioned against reading too much into this drop, noting that August numbers tend to be revised upward by an average of 31,000 the following month.  Going off the average, this would put the ‘revised’ number at 173,000, still much lower than economists predicted.

Retail Sales Match Estimates:

August retail sales were reported today and showed a rise that is the fastest pace in four months.  The 0.6% month-over-month gain matched that average economist estimate.  Of the 13 different categories that make up this data, 11 of them showed advances.  Auto dealers and building material stores led the advance, which rose 1.5% and 1.4%, respectively.  The two retail categories that showed weakness last month were service stations and general merchandise chains (which includes department stores).  The Commerce Department’s retail sales data aren’t adjusted for prices, so the drop at gas stations may be due to lower costs at the pump.

 

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