Dow 13,146 (+.15%) S&P 1,403 (-.16%)
That was close. Too close. After mediocre reports on the American consumer resulted in back-to-back negative days, the Dow Jones Industrial Average was down by as much as 70 points for most of today on more mixed economic news. With an hour left before the New York Stock Exchange closed at 4pm, we could feel the third bruising day in a row breathing down investors’ reasonably hairy necks. But bullish investors and fund managers, confident in the stock market’s 2012 rally, bought back falling stocks in the last hour of trading, creating an eruption in the Dow that pushed the stock index to finish 20 points into the green.
359,000 Americans applied for unemployment benefits last week, failing to sink below the 350,000 that many economists were hoping for. Investors basically shrugged at the news. But looking deeper into the report by the Labor Department, investors realized that the prior week’s number was revised up by 16,000 to 364,000, so this week’s report was actually an improvement of 5,000 from the week before. This confusing data left traders scratching their balding heads. Another “revision” was announced when the US Commerce Department said that, after a third recount, the 3% 4th quarter GDP growth first reported last month was correct. Good for you, Commerce Department! This disappointed analysts who expected a correction up to 3.2%. US GDP is such an important figure (it stands for almost a fourth of the world’s economic activity) that the government spends a ton of resources to make sure it’s calculated precisely each quarter.
Research in Motion and Best Buy earnings both fall beyond expectations
If we had a dollar for every time Research in Motion (RIMM) disappointed shareholders over the last year, we would probably have more cash than they do. The Blackberry maker and most recognizable Canadian company behind the Toronto Maple Leafs, RIMM announced its sales dropped 25% last quarter and now controls only 8% of the smart phone market it dominated just a couple years ago. RIMM has lost market share to Apple and Google‘s more advanced and cheaper options and just recently replaced its CEO after its shares free-fell 75% last year. In addition to its own poor quarterly earnings numbers, technology mega-chain Best Buy (BBY, -6.95%) released plans to cut 400 back-office jobs (non-customer facing roles) and close 50 stores in order to better compete with online retailers like Amazon (AMZN, no surprise, up nearly 2% today).
- An independent auditor found “serious and pressing” human rights violations at the infamous Foxconn plant, where most Apple, Dell and Hewlett-Packard products are made - Apple CEO Tim Cook is coincidentally visiting the very same factory this very same week, how will his company react?
- “Consumer Spending Data” – the final US consumer-related report of the week.
- The last trading day of the first quarter of 2012 – how will this three month rally finish its final official trading session?
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