Sunday, February 20, 2011

Weekly Recap

Here is's Weekly Wrap:

The major indices logged another weekly gain, with the S&P 500 climbing 1.0% after posting modest gains in four of the five sessions. The S&P 500 and Dow hit fresh two year highs, while the Nasdaq hit a three-year high and is 30 points away from its 2007 high. Overall it was a relatively slow week, with energy stocks acting as the primary driver of this week's gains.

Eight of the 10 sectors advanced. Energy (+3.7%) led the way as oil gained 0.7% and a dividend hike from ConocoPhillips (COP +7.0%).

ConocoPhilips rallied 7% after raising its quarterly dividend 20% to $0.66 per share, adding $10 bln to its share repurchase program and approving $13.5 bln in capex in 2011.

FedEx (FDX +3.0%) issued an earnings warning. But the stock managed to gain as the company cited rough weather.

Dell (DELL +10.5%) rallied on better-than-expected earnings results and guidance.

In economic news, retail sales increased 0.3% in January ( consensus +0.5%). Excluding autos, they also rose 0.3% ( consensus +0.6%). The January figures followed on the heels of downward revisions for December, which showed total retail sales up 0.5% (prior +0.6%) and retail sales excluding autos up 0.3% (prior +0.5%).

Retail sales have now risen seven months in a row. The Producer Price Index increased 0.8% in January ( consensus +0.7%) on top of a downwardly revised 0.9% increase in December. Core prices, though, were up a stronger than expected 0.5% ( consensus +0.2%), which was the largest rise since October 2008.

Core prices exclude food and energy. The jump in January was attributed primarily to the index for pharmaceutical preparations, which was up 1.4%, and higher prices for plastic products.

The January figures left total PPI up 3.6% year-over-year and core PPI up 1.6%. The Consumer Price Index for January validated the last point. Overall prices rose 0.4% while core prices, which exclude food and energy, increased 0.2%. The consensus estimates called for increases of 0.3% and 0.1% respectively.

Increases in the food and energy indexes accounted for over two thirds of the all items increase, according to the Bureau of Labor Statistics.

On a year-over-year basis, total CPI is up 1.6% and core CPI is up 1.0% versus 1.5% and 0.8%, respectively, in December. This is an encouraging uptick that supports a disconnect from a trend of disinflation.

Separately, initial claims for the week ending February 12 jumped 25,000 to 410,000. That was close to the consensus estimate of 408,000 and left the 4-week moving average fairly steady at 417,750.

In commodities, silver climbed to a thirty year high and the CRB Index climbed 1.2%.

The U.S. stock and bond market is closed Monday in observance of President's Day.


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