Monday December 12, 2016 – Friday December 16, 2016
On Monday, oil rose as non-OPEC producers led by Russia agreed to reduce production by almost 600,000 barrels a day. West Texas Intermediate crude gained over 2.5% to settle at $52.83 per barrel. The Dow Industrials closed at a record high, however, other major indexes were down.
On Tuesday, import prices for November fell .3% compared to the prior month’s .5% gain, and export prices fell .1% compared to the prior month’s .2% gain. The Dow Industrials, S&P 500 and NASDAQ composite all closed at record highs.
On Wednesday, the producer price index for November increased .4% compared to the prior month’s flat report, while retail sales for November were only up .1% compared to the prior month’s .6% gain. Industrial production for November was down .4%, and business inventories for October fell .2%. The EIA petroleum status report for the week ending December 9th showed crude oil inventory falling 2.6 million barrels. However, the big news for Wednesday was when the Federal Reserve concluded their two day meeting and raised its target rate up 25 basis points to a range of .5% to .75%. In addition the Fed said it now expects three rate hikes in 2017, instead of two as previously stated. Markets dropped modestly on the news.
On Thursday, the consumer price index for November was up .2%, and the housing market indicator for December surged 7 points to 70, its highest level since July 2005. Jobless claims for the week ending December 10th declined 4,000 to 254,000, while yields on 10-year Treasury notes hit 2.6%.
On Friday housing starts for November fell 18.7% to an annualized 1.09 million units, with new construction permits also falling 4.7% to 1.2 million. Markets opened modestly higher. Now let’s take a look at some stocks.
On Monday, President elect Donald Trump extended his attack to defense contractors, criticizing Lockheed Martin Corp. (NYSE:LMT) F-35 fighter jet program as “out of control”. After his Twitter comments stating that he will reign in military spending, Lockheed shares fell over 2.5%.
Wells Fargo & Co. (NYSE:WFC) failed to pass a key regulatory test for the second time this year as the bank tried to persuade U.S. regulators that it could continue to operate without tapping into public funds during a bank failure. The Federal Reserve and Federal Deposit Insurance Corporation rejected Wells Fargo’s “living will” plan and said that the bank would be sanctioned. Last April, Wells Fargo and other four banks failed an initial assessment, however the other four successfully complied later.
On Wednesday, Alaska Air Group, Inc. (NYSE:ALK) obtained regulatory approval to proceed with it’s $2.6 billion deal to acquire Virgin America Inc. (NASDAQ:VA) After the acquisition, Alaska will be the fifth-largest airline carrier in the U.S. Alaska won the bid in April after its rival JetBlue Airways Corporation (NASDAQ:JBLU) bowed out because of the high price. Shares of Alaska Air spiked over 5%.
VeriFone Systems Inc. (NYSE:PAY) reported 4th quarter results that topped analyst expectations, although guidance for the current quarter was missed due to the ongoing credit card transition to chip technology. The payments tech firm earned $0.30 a share on revenues of $467 million, beating expectations of revenue of $460 million. Shares surged well over 12% on the news.