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Pence Wealth Management Financial Markets Reports

US FINANCIAL MARKET

  • Stocks opened slightly lower on Thursday, with the S&P 500 retreating from a record high as investors digested the latest batch of corporate earnings.
  • Citigroup posted a lower-than-expected quarterly profit as cost cuts failed to make up for a drop in fixed-income revenue. Net income rose to $2.60 billion from $2.15 billion a year earlier. Revenue fell 2 % to $17.94 billion.
  • Goldman Sachs reported a 21 % drop in quarterly profit as revenue from fixed-income trading fell. Net income fell to $2.25 billion from $2.83 billion a year earlier. Revenue dropped 5 % to $8.78 billion compared with a year earlier.
  • BlackRock, the world’s largest money manager, reported a higher-than-expected quarterly profit benefiting from strong markets and a flow of new money into its ETFs and retail business. It ended the fourth quarter through December 31 with $4.3 trillion in assets. Net income rose 24 % to $841 million up from $690 million a year earlier. Revenue grew 9 % to $2.8 billion.
  • CSX shares tumbled the most in more than two years after the biggest railroad in the eastern U.S. posted a profit that trailed analysts’ estimates for the first time in eight quarters as coal shipments slumped. CSX’s results led off earnings reports for the rest of the industry coming next week. Net income slid 5.1 % to $426 million. Sales climbed 4.7 % to $3.03 billion, exceeding the $3.01 billion average estimate of analysts.
    • Shipments of intermodal freight climbed 11 % while chemical carloads, including crude oil, grew 18 %.
    • A shift to natural gas from coal at U.S. power plants hurt CSX, with a 5 % drop in shipments of the fuel, the railroad’s biggest individual freight category. Domestic coal volumes fell 9 % in the quarter and 7 % for all of 2013. Demand for coal shipments will have to rebound by 2015 in order for the company to reach the low end of its forecast.
    • The railroad’s operating ratio, an industry measure of efficiency comparing expenses to revenue, climbed to 73.2 %, the highest since the first quarter of 2010. A rising ratio indicates a railroad’s operations are becoming less efficient.
  • Johnson & Johnson said on Thursday it will sell its ortho clinical diagnostics unit to private equity firm Carlyle Group for $4.15 billion, a year after announcing it was considering spinning off or selling the slow-growing business.
  • UnitedHealth Group, the largest U.S. health insurer, on Thursday reported a higher fourth-quarter profit and the addition of 170,000 members, and said 2014 earnings would improve as well. The fourth quarter marked the beginning of sales of new individual plans created under Obamacare. Both earnings and revenue came in slightly ahead of analyst expectations. Net income rose to $1.4 billion from $1.2 billion a year earlier.  Revenue rose to $31.12 billion, up from $28.77 billion a year earlier.
  • Bombardier said on Thursday it will delay putting its new narrowbody CSeries jet into commercial use by at least nine months, citing a longer-than-expected test phase.
    • Saudi Gulf Airlines, a new carrier born of the deregulation of Saudi Arabia’s aviation market, has signed a $2 billion deal with Canada’s Bombardier to buy 16 CSeries jets with options for 10 more. Delivery of the CS300 jets, which seat between 130 and 160 passengers, is expected between the end of 2015 and the start of 2016.
  • Best Buy shares fell nearly 29 % at the open on Thursday after it reported a drop in holiday sales despite offering deep discounts.
  • J.C. Penney said on Wednesday it would close 33 stores and cut 2,000 jobs as part of its efforts to return to profitability.

US ECONOMY & POLITICS

  • The cost of living in the U.S. climbed in December by the most in six months, led by gains in fuel and rents that indicate inflation is making progress in moving toward the Federal Reserve’s goal.
    • Consumer Price Index (CPI) increased 0.3 % after being flat in November. In the 12 months to December, consumer prices accelerated 1.5 %. The increases were in line with economists’ expectations.
    • Stripping out the volatile energy and food components, the so-called core CPI rose only 0.1 %. In the 12 months, core CPI rose 1.7 %.
  • Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 326,000. The four-week moving average for new claims fell 13,500 to 335,000.
  • The National Association of Home Builders/Wells Fargo (NAHB) builder sentiment gauge fell to 56 from 57 in December. The median forecast in a Bloomberg survey called for 58.
  • The U.S. economy continued to grow at a moderate pace from late November through the end of 2013, the Federal Reserve said in its Beige Book report on Wednesday.
  • The Philadelphia Fed manufacturing index rose to +9.4 in January (vs. consensus +8.7), from +6.4 in December. Underlying components were more mixed, as the forward-looking new orders component (-7.8pt to +5.1) declined, but employment (+5.6pt to 10.0) rose and shipments (+0.2pt to 12.1) were roughly unchanged. The volatile inventories index declined sharply (-35.6pt to -19.6). In contrast to the slightly stronger current components, six-month ahead expectations softened a bit but generally remained in strongly expansionary territory.

 EUROPE & WORLD

  • Euro zone inflation slowed in December. Consumer prices (CPI) in 17 countries sharing the euro last year rose 0.3 % on the month, putting the annual inflation rate at 0.8 %.
  • European new-car sales surged the most in almost four years as price cuts by producers such as Renault and Ford helped generate a recovery that industry executives say will last in 2014. Deliveries last month jumped 13 % to 948,090 vehicles from 839,027 a year earlier. Carmakers are predicting a gradual increase in European demand this year after a sovereign-debt crisis and recessions led to a six-year contraction in deliveries through 2013.
  • Wealthy Chinese are likely to buy fewer luxury goods again this year after the steepest cut-back on spending in at least five years. Overall spending by wealthy Chinese fell by 15 % in 2013.

TODAY in HISTORY

  • Ivan the Terrible was crowned the first czar of Russia (1547)
  • A year after it was ratified, the 18th Amendment to the Constitution, prohibiting the sale of alcoholic beverages, went into effect (1920)

Sources: Reuters, Yahoo Finance, Google Finance, Bloomberg, CNN Money.

This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly. 

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