Dow Jumps Over 750 Points on Optimistic Economic Outlook
Posted on December 7th, 2011
Weekly Wrap Up
Despite three days of moderate gains and losses, the large gains that the market experienced on Monday and Wednesday were more than enough to make this a very solid performing week for the stock market. The Dow Jones index gained over 750 points this week. Two major events propelling the stock market this week were the successful Black Friday shopping holiday, which saw record retail sales, as well as the mid-week decision by the worlds central banks to work together to increase liquidity to the worlds financial system. Other economic news was mostly positive, as home sales increased 1.3%, consumer confidence saw its largest increase in over eight years, the Fed Beige Book survey reported economic expansion in most areas, and unemployment rate slipped to 8.6%. Corporate news was mixed, as many retailers reported strong sales over the holiday weekend, while American Airlines parent company AMR Corp filed for bankruptcy protection. Crude oil futures ended the week close to $101 a barrel. More Market News
Economic News
Fewer New Homes Purchased in U.S. Than Forecast in October Fewer U.S. new homes were purchased in October than forecast as builders headed for the weakest year on record. Sales increased 1.3 percent to a 307,000 annual pace, data from the Commerce Department showed today in Washington. The median estimate of 70 economists surveyed by Bloomberg News projected a 315,000 rate. Demand is on pace to reach 301,000 this year, less than the 323,000 in 2010 that was the lowest since data-keeping began in 1963.An overhang of distressed properties in the foreclosure pipeline that is weighing on prices of existing houses may keep luring buyers away from new construction. A jobless rate that has been hovering around 9 percent or higher for more than two years signals demand will take time to pick up.
U.S. Consumer Confidence Index Rises by Most Since April 2003 Consumer confidence climbed in November by the most in more than eight years as Americans grew more upbeat about employment and income prospects. The Conference Boards index increased to 56 from a revised 40.9 reading in October, the biggest monthly gain since April 2003, figures from the New York-based private research group showed today. The gauge, at a four-month high, exceeded the most-optimistic forecast in a Bloomberg News survey of economists.Rising sentiment may help sustain sales during the holiday shopping season, which accounts for as much as 40 percent of retailers annual revenue. Fewer new claims for jobless benefits and cheaper fuel costs are easing the burden for American consumers, whose spending accounts for about 70 percent of the economy.
U.S. unemployment rate falls to 8.6% in November, raising hopes for growth The unemployment rate plummeted to its lowest level in more than two years in November, as employers hired at a steady clip, according to new report that offers hope for the job market entering the holiday season.The jobless rate fell to 8.6 percent last month, from 9 percent in October, the lowest level since the economic free-fall of March 2009, the Labor Department reported Friday morning. But the improvement in the job market was not quite as strong as that drop would suggest: About half the decline was attributed to people dropping out of the labor force, no longer counting themselves as even looking for work.
Still, 278,000 more people described themselves as having a job, and a separate survey of employers which is generally more reliable as a month-to-month indicator showed they added 120,000 positions. That is about the rate of job creation needed to keep pace with a rising population.
Business News
AMR shares halted repeatedly in busiest trading day ever American Airlines shares were having their busiest day in history on Tuesday after the companys parent filed for bankruptcy, even taking account of 16 mandatory trading halts due to the volatility.Shares of AMR Corp , the parent of American Airlines, dropped 80 percent to 32 cents, with more than 125 million shares traded after the companys bankruptcy. It ranked as second-most active early on Tuesday afternoon behind Bank of America .
The stock was halted repeatedly in the early hours of trading due to volatility. A stock in the Russell 1000 index that moves more than 10 percent in a five-minute period is halted under circuit breaker rules adopted by U.S. exchanges after the May 2010 flash crash.
Macy’s & Kohl’s Are Top Performers in Retail Black Friday and Thanksgiving weekend sales were record-breaking. According to the National Retail Federation a total of 226 million shoppers spent $52.4 billion, up from $45 billion last year; a 16% jump. Whats more, sales gains were across all categories, if not all retailers.One the highlights from the weekend were results at Macys where 40% more people waited outside the companys flagship store in Manhattans Herald Square. According to Macys CEO Terry Lundgren, the customer enthusiasm was all part of what hes calling the companys strongest year in a decade.
Macys results came as no surprise to Michelle Clark, who has Macys as her top pick in the department store retail space. The retail analyst for Morgan Stanley tells Breakout the company has been knocking the cover off the ball all year long.
Technology Focus
FCC report criticizes AT&T bid to take over T-Mobile Federal regulators allowed AT&T Inc. to withdraw its proposed $39-billion takeover of T-Mobile USA from their approval process, but they also dealt a further blow to the teetering deal. The Federal Communications Commission released a 157-page report Tuesday detailing the agencys staff findings that the purchase was not in the public interest.The staff report concluded that the combination of two of the nations largest wireless providers AT&T ranks second in subscribers and T-Mobile is fourth would harm competition through an unprecedented increase in market concentration.
And it would lead to higher prices. The report suggested that consumers nationwide could pay as much as 6% more a year, on average, through 2015, with larger increases in Los Angeles, San Francisco, New York City and other major metropolitan areas.
Amazon, eBay at Odds Over Web Sales Tax Amazon.com Inc. and eBay Inc. staked out opposing positions Wednesday in testimonies before US lawmakers on the issue of collecting sales tax from online purchases.The two largest e-commerce firms differ primarily on whether small businesses should be exempt from pending legislation that would require online retailers to collect taxes in states were they have no physical presence.
Under current practices, online merchants may avoid collecting tax on such transactions, prompting traditional retailers to complain that this gives internet-based rivals an unfair advantage.
Your Money
Black Friday sales hit record, giving season hope Earlier-than-ever store openings and aggressive marketing pitches brought out hoards of budget-conscious shoppers over Black Friday weekend, setting a positive tone for the retail industry’s biggest sales season.Different surveys showed positive sales and traffic on the day after Thanksgiving as retailers, including Wal-Mart Stores Inc. , kicked off their special event on Thanksgiving night and other retailers from Target Corp. to Best Buy Co. moved their store openings to midnight on Friday.
The gains lifted retail stocks 3.2% in the S&P Retail Index’s biggest one-day percentage gain since August.
Five Steps to Assess Your Strengths As discussed in my previous post, your personal value proposition is why an employer should hire you or promote you over someone else. Its the foundation of your career strategy.A products value proposition only works if its true, if the business has the organizational competencies needed to deliver the value proposition. Likewise, a PVP only works if its true if you have the strengths required. So the first step in developing a winning value proposition is self-appraisal to assess your strengths.
Is it possible to come up with new insights about strengths? Heres someone who did just that.
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