Financial News 4/29/12 – 5/5/12

Economy

-Spain announced it has joined 7 other European nations in recession.  The news calls into question whether the austerity measures will have the desired effect and whether more growth friendly measures should be taken.  5/1

-The Institute for Supply Management April U.S. manufacturing activity gauge rose substantially in April indicating increasing activity and greatly outpacing expectations for the reading.  It was the highest reading since June of last year. 5/2

-Auto sales in April rose by 2.3% and some auto makers boosted yearly sales estimates. 5/2

-ADP’s private hiring estimate for April fell off steeply from March with 119,000 jobs added.  This compares to 201,000 added in March.  5/3

-Non manufacturing business activity slipped in April, but still indicates grow. 5/4

-Retail sales disappointed rising 2.2%, missing their estimates that were already set low due to the timing of Easter. 5/4

-The productivity of the U.S. workforce fell in the first quarter potentially meaning that employers have reached maximum output with the current workforce and will need to increase hiring to grow. 5/4

-After the ECB’s most recent meeting, no monetary stimulus moves were made.  The central bank said additional moves need to be made by European governments. 5/4

-The April job report disappointed as only 115,000 jobs were added in April, short of the 160,000 that was expected and down from March.  It was the lowest amount added since October.  The unemployment rate did drop to 8.1%, but that was a result of less workers actively looking for employment.  The weak report brought up questions of a new soft patch in the economic recovery.  The one positive of the report was revised February and March numbers which showed 53,000 more people were hired than previously estimated.  5/5

Corporate

-Of the 300 firms that have reported earnings to date in the S&P 500, 70% have beaten analysts’ estimates, which is better than the 10 year average.  Earnings growth is currently on path to increase by 7.6% over a year ago, which is down from the 18.2% level from a year earlier.  Also, excluding Apple reduces earnings growth to 3.9%.  4/30

-Microsoft announced a deal to buy an 18% interest for $605 million in Barnes and Noble’s Nook e-reader.  5/1

-Bank of America announced it would make 2,000 job cuts in investment and commercial banking as well as wealth management.  The cuts are in higher earning positions, but those employees also are of more value to the firm.  5/1

-Pfizer’s earnings fell 19% in the first quarter as, Lipitor, one of its major drugs, faced generic completion for the first full quarter. 5/2

-BP’s first quarter profit fell as the firm dealt with the financial aftermath of the Deepwater Horizon drilling disaster. 5/2

-GM saw revenue rise in the first quarter and posted a $1 billion profit, however strength in the US market was overshadowing my weakness internationally.  5/4

-Facebook announced it is targeting an IPO that would value the company at approximately $96 billion making it the most valuable company at the time of IPO ever.  5/4

-Berkshire Hathaway’s profit more than doubled in the first quarter. 5/5

Market

-US equity markets were down slightly for the month as economic news in the U.S. took a sour turn and fears renewed in Europe as more countries entered recessions. The Dow was flat, and the S&P 500 had its first down month since November dropping 0.6%.  International stocks saw weaker performance for the month down 1.5%.  Fixed income rallied with all sectors in positive territory.  5/1

-Markets rallied on the first day of the month on strong manufacturing news. The Dow reached its highest level in over 4 years finishing at 13,279 and is just 6.2% off its all time high.  The S&P 500 gained 0.5% and investors exited treasuries as the 10 year yield rose to 1.958%. 5/2

-Markets fell on the weakening higher numbers in the U.S.  The S&P 500 had its worst week since December falling 2.4%, while the Dow dropped 1.4%.  Germany dropped 3.5%, the U.K declined 2.1% and Europe as a whole was down 2.4% for the week.  On the flip side, Treasurys jumped with the 10 year yield falling to 1.88%, a 3 month low. The concerns over slowing growth led to a falling price of crude oil.  It fell 4% and finished below $100 a barrel at $98.49. 5/5

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