Weekly Market Round-Up
Last week got off to a good start Monday with a rush of takeover and merger announcements that was well
received by equity investors. There were 30 transactions made public with a combined price tag of $16 billion.
Some notables include AOL’S acquisition of the news blog The Huffington Post for $315 million and a merger
between oil drillers Ensco and Pride International. When merger and acquisition activity picks up it is seen as a
good sign as corporations feel confident enough to invest for future growth (Source: Bloomberg).
After a solid day Monday, stocks traded in a very tight range throughout the rest of the week, with very little
economic news and what seemed to be a calming of the protest in Egypt. So far about 70% of the companies in the
S&P 500 have reported their quarterly results and nearly three quarters of them have beaten analysts’ estimates.
Profits were up 37% compared to a year ago, and sales were up by 9% on average across all sectors. All told, this
has been a good earnings season (Source:CNNMoney.com).
The fly in the ointment continues to be rising concerns of inflation as companies from all sectors voiced concerns
about rising commodity costs and warned that if businesses do not pass these higher expenses to consumers with
price hikes, profit margins will fall. While investors, and corporations grow more concerned over the prospects of
rising inflation, they turned their attention to Fed Chairman Ben Bernanke as he testified before the House Budget
Committee. In his testimony Mr.Bernanke said that despite a strengthening economic recovery, the
unemployment rate remains high while inflation is “still quite low.” He also told lawmakers that they need a
“credible program” to reduce the nation’s growing deficit (Souce:CNNMoney.com,Reuters).
Thursday morning’s jobless claims report came in better than expected with 383,000 initial claims coming in below
400,000 for only the second time since July 2008. Despite the good news, markets failed to move much and traded
in a close range through the remainder of the session. Markets have come a long way since the market bottom of
March 2009, and many observers are wondering how much further the rally can go before correcting
This week we will be watching events in Egypt and will have a busy week of economic reports with the retail sales
report Tuesday, housing starts and Fed meeting minutes Wednesday, and the Consumer Price Index and jobless
claims reports Thursday.
“Whatever you have spend less” - Samuel Johnson
Don Hanke is a Registered Representative and Investment Adviser Representative with Tower Square Securities, Inc. (TSS), (member
FINRA/SIPC) and a registered Investment Advisor.
Don Hanke is the owner operator of Tri City Asset Management, LLC in Hopewell, VA. Tri City Asset Management is not affiliated with TSS.
The Dow Jones Industrial Average, published by Dow Jones & Company, is an unmanaged average of 30 actively traded stocks (primarily
industrial) and assumes reinvestment of dividends. Standard & Poor’s 500® consists of 500 US stocks chosen for market size, liquidity, and
industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock’s weight
in the Index proportionate to its market value.