Dow Jones dragged lower by consumer-orientated stocks - Proactiveinvestors (AU)

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Dow Jones dragged lower by consumer-orientated stocks

Thursday, February 14, 2013 by Proactive Investors

Dow Jones dragged lower by consumer-orientated stocks

U.S. stocks were generally lower overnight after being dragged lower by consumer-orientated stocks. Also weighing on the market was data showing retail sales just inched up in January, with growth impacted by higher payroll taxes, and as McDonald's weighed on the Dow.

On the data front, U.S. retail sales in January edged up 0.1%, in the first month since the reduced payroll taxes expired. Retail sales slowed but followed a strong December gain of 0.5%. Analysts projected a 0.1% rise. Excluding the auto sector, retail sales rose 0.2%, also meeting economists' expectations.

By the close the Dow Jones had come off the lows of the day, and was off 59 points to 13,960, while the NASDAQ added three points to 3190.

The Dow's slide on Wednesday was largely due to McDonald's (NYSE:MCD), which saw its shares fall more than 1.3% in afternoon trade, accounting for around a quarter of the overall drop in the Dow in recent action. Coca-Cola Co. was the indexes’ worst performer with a 1.4% fall to $37.05.

Some are speculating that the slide in the burger chain's stock is related to concerns over projections for tighter spending from consumers, as well as the potential impact of an increase in the Federal minimum wage as spoken about in the State of the Union address last night.

President Obama said in the speech that Democrats and Republicans should be able to work together to boost the middle class, and urged Republicans to end "manufactured" crises over the federal budget deficit.

The President announced he would start discussions on a potential free trade deal with the European Union in an effort to increase exports and create jobs, and also pushed for Congress to increase the minimum wage to $9 an hour from the current $7.25.


Corporate and Earning News

On the corporate front, Comcast (NASDAQ:CMCSA) shares were lately up more than 2.6% after it said last night it would buy General Electric Co.’s (NYSE:GE) entire 49% common stake in the NBCUniversal joint venture for around $16.7 billion. The cable company also said fourth quarter earnings rose 18% to $1.52 billion, or 56 cents per share, and said it would boost its dividend by 20% to 78 cents per share on an annualized basis. The company also said it plans to buy back $2 billion of its stock during 2013.

On the earnings front this morning, Deere & Company (NYSE:DE) reported its first quarter profit rose 22%, while revenue rose 10% to $7.42 billion, topping expectations. The company said this was the 11th straight quarter of record earnings for Deere. It said that for this year, it expects equipment sales to rise 6%, while net income is anticipated to come in around $3.3 billion, but shares were down more than 3%.

Cliffs Natural Resources (NYSE:CLF), meanwhile, saw its shares fall more than 20% after the mining company said late Tuesday that it swung to a loss in its fourth quarter as revenue declined. The company was also downgraded to a hold rating from buy by Deutsche Bank, and to a neutral rating from buy by Citigroup.

Dean Foods Co. (NYSE:DF) shares slid after the food and beverage company on Wednesday said it swung to a profit in the fourth quarter but forecast first-quarter earnings of 10 to 15 cents a share, well below analysts’ expectations of 30 cents a share.

After the closing bell today, Metlife (NYSE:MET) is expected to post fourth quarter earnings of $1.18 a share, while Whole Foods Market (NASDAQ:WFM) is forecast to post a profit of 77 cents a share in its first quarter.

Other earnings reports are expected from Applied Materials (NASDAQ:AMAT), Cisco (NASDAQ:CSCO) and Nvidia Corp (NASDAQ:NVDA). Heavyweight gold miner Kinross Gold (NYSE:KGC) is also due to hand in results.

Elsewhere in the corporate realm, Groupon (NASDAQ:GRPN) shares jumped more than 6% this morning after Sterne Agee upgraded the stock to buy from neutral, with the analysts saying that despite the stock being volatile and that "meaningful" risks remain, they believe the risks are well known and largely priced in.


Economic news

Aside from retail sales data Wednesday, reports showed that import prices were up 0.6% in January, compared to forecasts for a 0.8% rise and to down 0.5% in December. Export prices rose 0.3% from a 0.1% decline in December, meeting consensus views.

Meanwhile, businesses brought down their inventories relative to sales in the fourth quarter, setting up what should be a rebuilding for the ongoing quarter. Business inventories rose 0.1% in December, which makes for a 1.4% sequential gain from the third quarter.


Commodities

Oil futures fell Wednesday as traders considered conflicting data on U.S. petroleum supplies.

A report late Tuesday from the American Petroleum Institute showed a 2.3-million barrel decline in U.S. crude stockpiles last week, while the Energy Information Administration said a rise in domestic production and a decline in refinery inputs helped offset a decline in imports to make for a 0.6 million barrel build in oil inventories last week.

Platts analysts were expecting crude stocks to have risen by 2.5 million barrels. March crude fell 50 cents, or 0.5%, to settle at $97.01 a barrel on the New York Mercantile Exchange.

Meanwhile, gold futures finished at their lowest level since August ahead of this weekend's G-20 meeting. Gold for April delivery declined $4.50, or 0.3%, to end at $1,645.10 an ounce on the Comex division of the New York Mercantile Exchange.

Investors are looking forward to this weekend’s G-20 meeting, which they hope will provide some indication on currency policy.

According to FactSet data, this was the lowest settlement for the most active gold contract since August 22.

Platinum, meanwhile, finished higher for a straight second session on supply concerns.  April Platinum closed up $12.50, or 0.7%, at $1,729.70 an ounce.


Europe

European markets finished higher today with shares in Germany leading the region. The DAX rose 0.67% while Britain's FTSE 100 gained 0.33% and France's CAC 40 advanced 0.24%.

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