February 27th, 2013 9:39 AM by Mel Samick
In the equity markets, the S&P and NASDAQ wrapped up their worst week of 2013, but the Dow managed to end the week with a slight gain. The Dow started on a high with investor sentiments being raised by the merger talks between office supplies' giants, Office Depot and OfficeMax, but it was followed by a selling streak which saw the biggest 2-day drop this year. The weak data from Europe added to the unease that began with minutes from the latest Federal Reserve meeting showing policy makers were split over whether to continue extraordinary stimulus efforts. Meanwhile, earnings reports from Wal-Mart, Chesapeake, AIG and HP came through, and all of them performed better than their forecasted earnings, but were soft on sales. Due to the restoration of the federal payroll tax, giant retailers such as Wal-Mart, all the way down to mom and pop restaurants, are feeling the pinch from slower sales. This coupled with expensive gas prices, and no wonder my wife has been complaining that we are not going out for dinner enough!
The Bond markets saw the 10-Year Treasury trading at almost a one-week low on speculation that the Federal Reserve's asset purchases may support bond prices. The 10-Year Treasury ended at 1.96 percent. Globally, the UK was stripped of its AAA rating by Moody's, which cited weakness in the nation's growth outlook and challenges to the government's fiscal consolidation program.
In other economic indicators, CPI added to the markets woes. The index was unchanged for January as it was for December; nevertheless it is 0.2 percent below forecasts. Jobless Claims rose almost 20K to 362,000, which is in itself a big jump. The housing sector didn't have much positive news either. Housing Starts showed some winter volatility in January by declining and showing possible lingering effects from Hurricane Sandy. In January, housing starts declined 8.5 percent, following a sharp rebound of 15.7 percent in December. A shortage of homes on the market is holding down sales of existing homes which did rise but not by much in January, up 0.4 percent to a slightly higher-than-expected annual rate of 4.92 million. But the number of homes for sale dropped to the lowest level in more than 13 years, according to the National Association of Realtors.
Information Provided by NYCB Capital Markets