Top Stories Last Week
• Stocks Climbed Again Last Week
U.S. stocks climbed for the week, driven by rising corporate earnings, which investors may believe are setting the stage for further market gains. Standard & Poor’s 500 Index climbed 1.3%, MSCI EAFE index gained 1.5%, while MSCI emerging market index lost 1.3%. Gold declined by 1.3% while the GSCI commodity index gained 0.4%. In the bond markets, Barclays US Treasury index lost 0.7% and US high yield bonds were higher by 0.1%.
• Apple Tumbled over 12% After Disappointed Quarterly Reports
Apple shares slid more than 12% Thursday, having triggered a Nasdaq circuit breaker earlier as analysts rushed to cut their price targets, following a lackluster earnings report. While the results came roughly in line with expectation, the forecast disappointed the market. Analysts have already been worried about slowing demand for the company’s iPhone. Although at least two have downgraded the stock to neutral rating, most analysts are still bullish on the shares. Some point to expected new products that may re-ignite interest in the company.
• Google Shares Surged 5% as Profits Exceeded Expectation
Google, the Internet search giant, reported earnings of $2.89 billion, or $8.62 a share in its fourth quarter, compared with $2.71 billion ($8.22 a share) a year ago, exceeding analysts’ estimates. Revenue was $11.34 billion, up from $8.13 billion in the same period a year ago. For its fiscal year, Google hit $50 billion for the first time. The strong results sent Google shares up nearly 5% in after-hours trading, to $736.40, on Tuesday.
• Bank of Japan Targeted 2% Inflation with Unlimited Short-term Bond Purchases
The Bank of Japan agreed to an “open-ended” commitment to ending deflation through asset purchases and adopted for the first time a firm 2% inflation target. The move comes after intense pressure from Japan’s new Prime Minister, Shinzo Abe, for the BOJ to do more for the “real economy”. But analysts pointed out they saw little concrete action behind the strong language, noting that asset purchases under the new program don’t even start until 2014. The bank’s decision is also seen by some analysts as an attempt to weaken the yen and stimulate exports, raising the possibility of a “currency war”.
• US Jobless Claims Dropped to A Five-Year Low
Weekly jobless claims in the US fell to a five-year low at 330K. The decline may reflect the difficulty adjusting the numbers to account for layoffs after the holiday shopping season. The labor department seeks to adjust for those seasonal trends, but the figures can still be volatile. If the trend holds up, fewer claims would an improving job market.
• UK GDP Shrank 0.3% in the Fourth Quarter of 2012
UK could be on course for its third recession in four years after the economy shrank by 0.3% in the fourth quarter of 2012. The drop was a bit worse than the consensus forecast for a 0.1% fall. The drop primarily reflected the unwinding of the boost from the London Olympics Games. UK’s economy could face a “triple dip” if it does not recover in the first quarter of 2013.
Top Stories to Watch This Week
• More Earnings Reports
Yahoo, Facebook, Amazon, ExxonMobil, JetBlue, Caterpillar, Boeing and Ford will post quarterly results.
• FOMC Meeting
The Fed will meet on Tuesday. Economists expected no significant changes in policies.
• US Nonfarm Payroll and Unemployment Rate
The US unemployment rate in December is expected to remain steady at 7.8%.
• PMI Index
China, US and Euro zone PMI index will be released.