The stock markets in the United States regained ground today after experiencing a significant decline yesterday. The positive momentum of the markets was driven by the expansion of retail sales in the country.
The Department of Commerce reported that the U.S. retail sales increased 0.2% last month, higher that the 0.1% retail sales gain projected by 86 economist polled by Bloomberg.
According to Paul Dales, senior U.S. economist at Capital Economics, the growth in December will be enough to help generate a 3% annualized growth during the final quarter of 2013. He added, “If we’re right in thinking that the underlying trend in jobs growth is still improving, households will continue to spend more freely in 2014.”
With regard to the activity of the markets today, Martin Leclec, founder of Barrack Yard Advisors LLC told Bloomberg, “We’re probably at the stage in the stock market cycle where good news will continue to be seen as good news. I would say that after this massive move we’ve had, it does feel like the animal spirits are still resurrected.”
On the other hand, Patrick Kases, managing director and portfolio manager at Brandywine Global Investment Management opined, “Earnings are going to dominate for the next two or three weeks.” He added that people are concerned about the current economic growth rate. According to him, “How we finished the quarter going into January, I think that’s going to matter the most for where we are right now.”
The Federal Reserve decided to reduce its $85 billion monthly bond buying program to $75 billion due to the better-than-expected economic growth. Although the economy added fewer jobs than expected in December, policy makers were not discouraged. Yesterday, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta emphasized that the economy is on “solid footing.”
Charles Plosser and Richard Fisher, members of the Federal Reserve, stated separately their conviction to end the monthlyl stimulus after Lockhart expressed its support for the reduction. According to the Posser, the Fed made the right decision to cut its bond purchases as the economy is on “firmer footing.” Fisher said that he preferred to scale down the stimulus twice the announced amount.
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 16,373.47 (+0.71%)
- S&P 500- 1,838.77 (+1.08%)
- NASDAQ- 4,183.02 (+1.69%)
- Russell 2000- 1,162.96 (+1.30%)
European Markets
- EURO STOXX 50 Price EUR- 3,119.53 (+0.24%)
- FTSE 100 Index- 6,766.86 (+0.14%)
- Deutsche Borse AG German Stock Index DAX- 9,540.51 (+0.32%)
Asia Pacific Markets
- Nikkei 225- 15,422.40 (-3.08%)
- Hong Kong Hang Seng Index- 22,791.28 (-0.43%)
- Shanghai Shenzhen CSI 300 Index- 2,212.85 (+0.87%)
Stocks in Focus
The stock price of Intel Corporation (NASDAQ:INTC) gained almost 4% to $26.51 per share after Jefferies analyst, Mark Lipacis issued a positive conviction regarding the future of the company and reiterated his Buy rating for the stock with a $32 a share price target. He believed that a $3 annual EPS is achievable by 2016 compared with this year’s current estimate of $1.89.
According to Lipacis, the company realized its mistake in in misjudging the significance of the mobile computing market, and projected that it will double its effort in the space. The analyst said, “We think now that it has realized that market inflection, that it has focused its vast resources towards gaining share in those markets.”
Intuitive Surgical, Inc. (NASDAQ:ISRG) gained nearly 7% to $419.64 per share after projecting that it will deliver better-than-expected revenue for the fourth quarter. The company estimated that its revenue will be around $576 million, higher than the $548.6 million estimated by analysts.
Lastly, the shares of Time Warner Cable Inc (NYSE:TWC) rose more than 2% to $136 per share after rejecting the $61 billion takeover proposal of Charter Communications, Inc. (NASDAQ:CHTR). The second largest U.S. cable service provider said its smaller rival’s offer is “grossly inadequate.”
