Market Wrap-up for June 5 - The Week in Review

The uncertainty over the Greek aid agreement and Friday’s unemployment data led to a volatile week on Wall Street, with the S&P 500 falling 0.9% on Thursday. Chief Investment Officer of Solaris Group Tim Ghriskey summed up the week when interviewed by Reuters – “The concern is tomorrow and the jobs number”. Friday’s unemployment rate came in at 5.5%, slightly worse than estimates of 5.4%.

On Monday, the Dow Jones Industrial Average gained 29.69 points—0.2%—to 18,040.37. The S&P 500 ticked up 4.34 points, matching the 0.2% gain posted by the Dow, to 2,111.73. The Nasdaq Composite rose 12.90 points, or 0.3%, to close 5,082.93.

Year to date, the Dow Industrials is up 1.2%.

Construction spending data released on Monday painted a positive picture with a 2.2% rise in April. This was considerably higher than the forecasts of 0.7%. Although the figure was the highest since November of 2008, there was a muted market reaction, with the Dow Jones trading in a 123-point range. Other economic releases for the day included the ISM Manufacturing PMI and Prices reports, both of which beat forecasts. The Dow finished the session at 18,040.4 (up 0.2%).

• Bristol Myers Squibb (BMY ) announced that the FDA approved its combination melanoma treatment application with the stock rising 3.1%. BMY has a dividend yield of 2.25%.

• Intel (INTC) announced a $16.7 billion purchase of chip maker Altera. INTC has a dividend yield of 2.97%.

Giving back the previous session’s slight gains, the market reacted to factory orders and economic optimism data on Tuesday. Factory orders contracted 0.4% in April from the previous period, with economists noting the impact of a strong dollar.

The Dow Jones Industrial Average shed 28.43 points, or the 0.2% it gained on Monday, to 18,011.94. The S&P 500 ticked 2.13 points lower, or 0.1%, to close at 2,109.60. The Nasdaq Composite Index shed 6.40 points, or 0.1%, to 5,076.52. The spillover was partly due to a 0.9% dip on the DAX out of Germany.

• Cracker Barrel (CBRL ) tops Q3 EPS as they reported $1.49, $0.12 better than the analyst estimate of $1.37. Revenue for the quarter came in at $683.4 million versus the consensus estimate of $680.04 million.

• Dollar General reported Q1 EPS of $0.84, $0.03 better than the analyst estimate of $0.81. Revenue for the quarter came in at $4.92 billion versus the consensus estimate of $4.94 billion. Comps increased 3.7%.

• PVH Corp. (PVH ) beat earnings forecasts on Tuesday with the stock rising 8.4%. PVH has a dividend yield of 0.13%.

Vehicle sales came in at a 10-year high with 17.8 million, up from 16.5 million in April, according to Autodata. This is the highest number in nearly a decade.

Factory orders dipped -0.4% and the TIPP report rated the economic optimism at 48.1, down from last month’s 49.7.

Renewed optimism that Greece may come to an agreement with its creditors helped push Wall Street higher on Wednesday; the S&P 500 index climbed 4.47 points, or 0.2%, to 2,114.07. The Nasdaq Composite Index rose 22.71 points, or 0.4%, to 5,099.23. The Nasdaq is off 0.1% from its closing high of 5,106.59, which was hit on May 27.

Other big economic news included the release of the Fed’s Beige Book, with modest growth reported during the April / May period. ISM Non-Manufacturing PMI was down to 55.7. It was forecasted for 57.1 and was 57.8 last month; this is blamed mostly on the strong dollar.

• Wendy’s Company (WEN ) announced a buyback of $1.4 billion of its stock on Wednesday. The market reacted to the news with a 3.3% rise in the stock price to finish at $11.47.

A wild Thursday saw markets dip despite positive unemployment claims. The forecast expected a claim of 280,000 when in fact 276,000 was reported. This was a staunch improvement from last month when 284,000 was reported. Heavy falls were posted on all U.S. indices on Thursday with the Greek debt situation playing on investors’ minds. Reports that the International Monetary Fund had advised the Fed to hold off raising rates also compounded the broad based sell-off. Federal Reserve Governor Daniel Tarullo stated in his speech that the U.S. economy appears to have “lost some momentum” and may not recover as quickly from a rough first quarter as it did last year.

The Nasdaq Composite fell 45 points, or 0.9%, to 5,054. The S&P 500 lost 19 points, or 0.9%, to 2,095. The Dow Jones Industrial Average dropped 181 points, or 1%, to 17,895. The blue-chip index opened lower, briefly pushing into positive territory before slipping back. Losses were broad; all of the S&P 500’s sectors were in negative territory.

• Earnings-wise, J. M. Smucker (SJM ) reported Q4 EPS of $0.98—$0.01 worse than the analyst estimate of $0.99. Revenue for the quarter came in at $1.45 billion versus the consensus estimate of $1.34 billion.

• Joy Global (JOY) reported better-than-expected earnings on Thursday with an Earnings Per Share (EPS) of $0.59. This was $0.01 above the initial analyst forecasts. The company declared a dividend of 20 cents per share.

Mixed interpretations of Non-Farm Payrolls data led to a muted open on Friday with the Dow Jones at 17,889 (down 17 points) at 10:47 am. Beating job estimates, the 280,000 figure was seen as a precursor for a potential interest rate hike. The unemployment rate rose slightly to 5.5%.

Three dividend earnings were also announced on Friday:

• Thor Industries (THO ) reported worse-than-expected earnings late Thursday with an Earnings Per Share (EPS) of $1.19. This was 2 cents a share below the initial analyst forecasts for the quarter.

• Analogic (ALOG) reported better-than-expected earnings late Thursday with an Earnings Per Share (EPS) of $1.07. This was 8 cents above initial analyst forecasts for the quarter.

• Comtech Telecom (CMTL) announced after market on Thursday third quarter earnings of 30 cents per share. Eclipsing the EPS consensus forecasts of $0.23, the company recently announced a $4.3 million contract win for one of its subsidiaries.

Next week will see a few earnings reports from H&R Block (HRB ), Men’s Wearhouse Inc. (MW), RF Industries (RFIL), and Cherokee Inc. (CHKE).

The following economic data will also be reported: Labor Market Conditions on Monday, Wholesale Inventories on Tuesday, Federal Budget Balance on Wednesday, Retail Sales and Unemployment Claims on Thursday, PPI and Inflation Expectations on Friday.