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U.S. Stocks Fluctuate After Record Highs Amid Sales Data

*from www.bloomberg.com, May 13, 2013 (To view original article click here.)

Take Away #1: U.S. stocks fluctuated between gains and losses, after benchmark indexes climbed to record levels last week, even as government data showed retail sales unexpectedly rose in April.

Key Facts and Figures:

  • The S&P 500 Index fell 0.1% to 1,631.82 at 1:47 in New York, after rising as much as 0.1% earlier in the day.
  • The Dow Jones Industrial Average slid 51.83 points, or 0.3%, to 15,066.66.
  • Trading of S&P 500 stocks was 21% below the 30-day average at this time of day.

Take Away #2: The 0.1% increase in U.S. retail sales followed a 0.5% decline in March, Commerce Department figures showed today.

Key Facts and Figures:

  • The median forecast of economists surveyed by Bloomberg called for a 0.3% drop.
  • A separate report showed companies in the U.S. unexpectedly held inventories in check in March as sales fell by the most in nine months.
  • This is an indication orders may rise as demand picks up.

Take Away #3: Overseas, Israel’s central bank cut its benchmark rate 25 basis points to 1.5%, joining a wave of monetary easing spanning from the U.S. to Europe.

Key Facts and Figures:

  • In China, the world’s second largest economy, fixed-asset investment unexpectedly decelerated last month while industrial output trailed estimates.

Take Away 4: The S&P 500 rallied to a record on May 10, capping a third week of gains and extending its advance so far this year to 15%.

Key Facts and Figures:

  • U.S. stocks climbed last week as companies from Walt Disney Co. to DirecTV beat earnings estimates and central banks worldwide stepped up monetary stimulus to boost growth.
  • The S&P 500 has climbed to record highs on six of the previous seven trading days.
  • Oppenheimer & Co.’s Hon Stoltzfus raised his year-end target for the index to 1,730 today from 1,585, ranking him as the second most bullish strategist on Wall Street.
  • Canaccord Genuity Securities LLC’s Tony Dwyer has a 1,760 estimate on the benchmark index.

Take Away #5: The Chicago Board Exchange Volatility Index, or VIX, rose 1% to 12.71.

Key Facts and Figures:

  • The equity volatility gauge is down 29% for the year.
  • Seven out of 10 groups in the S&P 500 retreated, with raw-material shares declining the most with a 0.9% loss, while health-care companies had the largest gains.

Take Away 6: Yum! Brands, AutoZone, and Mosaic retreat.

Key Facts and Figures:

  • Yum! Brands Inc., owner of the KFC and Pizza Hut dining chains, slid 2.2% to $68.78.
  • The company reported a 29% drop in sales at stores open at least 12 months in China as the spread of bird flu hurt demand.
  • Analysts projected a 27% drop, the average of five estimates compiled by researcher Consensus Metrix.
  • Sales dropped 36% at KFC while gaining 5% at Pizza Hut.
  • AutoZone Inc. slipped 1.5% to $414.62.
  • The retailer of automotive parts and accessories was downgraded to hold from buy at Deutsche Bank AG with a 12-month price estimate of $410 a share.
  • Mosaic Co. (MOS) lost 3.8% to $60.90.
  • The world’s largest producer of phosphate crop nutrients said it favors share buybacks over dividends to redeploy surplus cash.
  • With an estimated $2 billion of cash by the end of the month, Mosaic is assessing its ability to buy back shares while seizing growth opportunities and maintaining a “solid” investment grade credit rating, said CFO Larry Stranghoener.

Take Away #7: Corning and J.C. Penney advance, while Theravance surged.

Key Facts and Figures:

  • Corning (GLW) rose 0.7% to $15.21 after Barclays Plc raised its recommendation for the shares to overweight, the equivalent of a buy rating.
  • Morgan Stanley also upgraded the maker of glass for flat-panel televisions to equal weight, a level similar to hold, from underweight.
  • J.C. Penney Co. rose 3.9% to $18.40.
  • The department store chain that replaced its CEO last month set a lender meeting for tomorrow to discuss a $1.75 billion loan, according to a sources.
  • CEO Myron Ulman is working to improve sales after revenue last year tumbled 25% to $13 billion amid Ron Johnson’s failed attempt to remake the retailer.
  • Theravance jumped 16% to $40.54 after Elan agreed to buy a shore of drug royalties that Theravance will receive from GlaxoSmithKline Plc.
  • The Irish drugmaker will receive 21% of royalties earned by Theravance on four respiratory drugs, and 20% of that income will be paid to Elan shareholders as a dividend.

Take Away #8: Returns from the U.S. equity bull market that started four years ago are matching those from the last half of the 1990’s even as valuations are 28% lower.

Key Facts and Figures:

  • The S&P 500 has gained 26.2% annually including dividends since March 2009.
  • That is the same as during the last 50 months of the technology bubble, according to data compiled by Bloomberg.
  • Shares in the index now trade at 18.6 times annual profit, below the average 25.7 multiple in the 1990s rally led by Internet companies.
  • For bulls, the valuations show stocks will keep rising after the S&P 500 advanced 164% as individuals scarred by the worst financial meltdown since the Great Depression return to equities.
  • Bears say the price-earnings ratios mean investors lack confidence in the economy and corporate growth.
  • They also note that the last time returns were this high, the bubble popped and more than $5 trillion was erased from the value of U.S. stocks, according to data from the World Bank.

*To view original article from www.bloomberg.com click here.

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