"Consumers, you have forsaken my high standards. This lack of faith must be punished."
Dow 13,198 (-.33%) S&P 1,413 (-.28%)
Major stock indices, like the S&P 500 and the Dow Jones Industrial Average, remained uninspiringly flat and unchanged for most of this morning and afternoon…and then investors seemed to make up their general mind that just because today’s key data on consumer confidence met expectations, they weren’t “wow-ed.” A brief housing announcement that US home prices fell back in January to their lowest levels since 2003, indicating the sluggishness of the housing recovery, didn’t help either. After jumping a highlight reel-worthy 161 points yesterday, the Dow dipped in the final minutes of trading today to finish down 44 points.
“Consumer Confidence Index” remains within expectations
Consumer optimism for March slipped just barely to 70.2 from 71.6 on the “Consumer Confidence Index” (CCI) scale, but remained in line with economists’ expectations of 70 and is still hovering around its 4-year high. The much-anticipated monthly report is prepared by The Conference Board, a private research group that surveys Americans on their spending habits. After the index surged over 10 points in February, today’s minor dip was somewhat anticipated. Still, as the jobs market has steadily improved since the fall of 2011, consumer confidence has followed its lead (we suggest visualizing Walmart shoppers cockily sticking their chests out as they peruse the “Shoes/Toiletries/Firearms” aisle). Analysts consider recently high oil prices and ensuing gas price hikes as the primary threat to the months of consumer sentiment advances.
Financials lead downers and defensive stocks make biggest gains
Financial and energy shares bore the brunt of most of the afternoon’s decline, while defensive stocks rose. This is somewhat typical on down days that defensive stocks would outperform, since defensive companies provide essentials that are last to be cut back on by budget-conscience consumers, like electricity, groceries and malt liquor. The biggest Blue Chip stock downer though was Bank of America (BAC) after an analyst at an investment bank lowered its investment rating. BAC has recovered from the Eurozone debt crisis low of $5/share and is up a whopping 72% in 2012. Now core earnings potential will be scrutinized and this analyst argued that its earnings per share (one of the biggest value drivers of any stock) can’t go up much higher. They lowered the year-end target price to $10, just above today’s closing price of 9.60 (-3.32%).
Tomorrow:
- The Commerce Department’s report on “Durable Goods Orders” – how many cars, planes and other big toys were purchased in February?
- The Supreme Court’s 3rd and final day of oral arguments concerning the fate of the Health Care Overhaul passed in 2010 will focus on the law’s relationship with Medicaid – this is your last court-side tailgate opportunity.
© 2012 MarketSnacks
