Market Monitoring – 27 November 2013

Edited by Vani Rao

Markets maintain status quo; Nasdaq breaches 4,000 marks

The Dow Jones Industrial Average and the S&P 500 Index closed with modest gains while the Nasdaq Composite Index breached the 4,000 level for the first time since September 2000.

The Dow added 0.26 points to close at 16,072.80, and the S&P 500 Index gained 0.27 points, or 0.01%, to 1,802.75. Most prominently, the Nasdaq rose 23.18 points, or 0.58%, to close at 4,017.75.

Source: Bloomberg
Source: Bloomberg

Stocks saw a brief dip during the opening hour, but the relative strength of the tech-heavy Nasdaq was enough to pull up and manage the S&P 500’s positive close.

Financial markets would be closed on Thursday, 28 November, for Thanksgiving. The markets will also close early at 1 p.m. ET on Friday, 29 November.

The S&P Retail Index advanced 0.9%. However, the Information Technology sector (+0.41%) ended among the leaders. Apart from the Consumer Discretionary and Information Technology, the Industrial sector (+0.29%) was the only sector that reported positive movement. Utilities (-0.99%) settled with a noteworthy loss.Healthcare and Telecom Services ended with losses between 0.1% and 0.4%.

Movers & Shakers

mm pic 2Companies with higher weight age played a key part in today’s advance and were the significant contributors to the outperformance of the Nasdaq.Facebook (NASDAQ:FB) gained 2.39%, (NASDAQ:PCLN) rose 1.62%, while the top index component, Apple (NASDAQ:AAPL), rallied 1.84%. Google Inc. (NASDAQ:GOOG) rose 1.19% to $1,058.41 and Inc.(NASDAQ:AMZN) shares by 1.26% to $381.37.

Source: WSA
Source: WSA

The Walt Disney Company (NYSE:DIS) led the Dow in percentage gains, with its shares rising 2.06% to $71.18. The company announced better-than-expected earnings earlier in the month.

Luxury retailer Tiffany & Co (NYSE:TIF) jumped 8.68% at $88.02,after itsthird-quarter sales topped expectations.

Shares of major residential construction companies rose following strong reports on the housing market. Lennar (NYSE:LEN) and D.R. Horton (NYSE:DHI) both gained about 4%.

Boeing (NYSE:BA) and General Electric (NYSE:GE) posted gains of 1.34% and 0.19%,respectively,following yesterday’s underperformance.

Wal-Mart Stores Inc.(NYSE:WMT) shares rose 0.31% to close at an all-time high of $80.68, a day after the retailer named a new chief executive.

Shares of struggling retailer J.C. Penney (NYSE:JCP) also rose after CEO Mike Ullman spent $1 million to buy 112,000 shares, according to a regulatory filing.


Gold was modestly up: December Gold touched a session high of $1,247.50 per ounce in morning action and eventually settled with a 20-cent gain at $1,241.20 per ounce.

Silver marginally low: DecemberSilver brushed a session low of $19.81 per ounce and settled at $19.85.

Crude oil fell: January Crude oil brushed a session high of $94.33 per barrel in morning pit trade, but spent the remainder of the session in negative territory. It touched a session low of $93.55 per barrel and eventually settled with a 0.26% loss at $93.85.

Treasuries settled near their highs as the 10-year yield slippedtwo basis points to 2.71%. More notably, the 5-year yield shed four basis points to close at 1.30%, its lowest level in nearly a month.

Economic Front

Home prices continued to climb in Q3, rising 11% from a year earlier, according to the Case-ShillerIndex of prices in 20 cities. However, the quarter-over-quarter gain slowed to 3%. In Q2, prices had jumped 7%.Separately, applications for building permits rose 6.2% in October, according to the US Census Bureau.

Building permit issuances increased in both September and October. Permits rose from 926,000 in August to 974,000 in September and 1.034 million in October. The jump in October brought permits to their highest level since June 2008. Reports on housing starts were not submitted on time due to the Government shutdown. As a result,the Census Bureau has decided to push back the starts release until December 18, during which time, September, October, and November starts data will be released.

The September Housing Price Index from the Federal Housing Finance Agency (FHFA) increased 0.3%, which followed an uptick of 0.4% observed during the prior month.

Separately, the November Consumer Confidence Index fell to 70.4 from an upwardly revised 72.4 (from 71.2) in October. Confidence in October plummeted as concerns about the economy following the government shutdown weighed heavily on the minds of consumers.

Top News

Reducing predator to prey: Men’s Warehouse counteroffers to buy Jos. A. Bank for $1.54 billion

In the cheapsuits business, the prey has become the predator. Men’s WearhouseInc. (NYSE:MW) has turned the tables on its recent pursuer Jos. A. Bank (NASDAQ:JOSB), by offering to buy the company forabout $1.54 billion.

The offer comes less than two weeks after Jos. A. Bank withdrew a $2.3-billion bid for its rival. Men’s Warehouse Inc. is offering $55 per share for Jos. A. Bank Clothiers Inc, a 9%premium to the company’s $50.32 Monday closing price.

The combined entitywould have more than 1,700 stores, according to Men’s Warehouse.

HP posts $1.4 billion profit in Q4, shares jump 7%

Hewlett-Packard Co (NYSE:HPQ), the world’s second-largest maker of personal computers, issued a strong profit prediction for the current quarter.

CEO Meg Whitman said better execution and cost management were the main driversfor the positive results. Underlining that there is still much work to do, she said the quarter’s results show that the tech giant’s turnaround remains on track heading into fiscal 2014.

The personal computer industry has been strugglingin recent years as consumers turned their attention to smartphones and tablet computers. HP has tried to offset declining PC demand by cutting costs and focusing on more profitable areas such as commercial and home printing.

HP’s stock has gained about 77% so far this year.

Burger King eyes expansion in French fast food market

Burger King Worldwide (NYSE: BKW) plans to expand its footprint in the French market and is looking to capture 20% market share in this country. The Miami-based burger giant currently hasthreestores in France. It has recently announced a tie-up with Group Olivier Bertrand, which manages 250 restaurants in France, and Nexicap, a private equity firm. Burger King will face strong competition from long-time rival McDonald’s Corp. (NYSE: MCD), which has 1,300 restaurants in France and controls a 46% market share. Burger King reported a 2.4% rise in sales for the European, African, and Middle East markets inQ3 this year.

Releases/Events – Today

Wednesday, November 27, 2013

  • MBA Mortgage Index
  • Durable Goods Orders
  • Chicago PMI
  • University of Michigan Consumer Confidence
  • Initial Unemployment Claims

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