October 14, 2013 – October 18, 2013
Welcome to Financial Buzz Market Weekly, LIVE from the New York Stock Exchange, bringing you a review of this week’s stock market.
Amid mounting criticism of U.S. legislators, the government budget and debt crisis has been temporarily resolved. An estimated 450,000 furloughed employees returned to work as Congress passed a bill late approving continuing government operations until and suspending the debt ceiling until .
Speaker of the House, John Boehner vowed to continue fighting against Obamacare. Meanwhile, economists estimate the cost to the economy in billions, with estimates ranging from a GDP slowdown of .3% to .6%. More worrying is possible long-term fallout.
Fitch Ratings placed the triple A credit rating of the US on negative watch and large creditors, like China, expressed their displeasure and their desire to diversify away from U.S. backed debt instruments.
Upon the news of the resolution, markets had a strong rally, with Nasdaq hitting a 13 year high and the S&P 500 hitting its highest level ever. The VIX dropped below 14. Gold jumped to a one-week high due to short sellers buying back shares and bonds rallied.
In other news, most major reports, such as the Consumer Price Index, Housing Index, and Industrial Production were delayed due to the shutdown.
Jobless Claims jumped significantly to 358,000 due to temporary layoffs tied to the government shutdown and California’s continuing computer reporting problems. Next week will be important as the reports start to return. However, in some cases, the lack of data collection will create a black hole that will continue to skew overall accuracy for many weeks or months to come.
Now let’s discuss some stocks. Bellwether IBM (NYSE: IBM) reported a 4% drop in 3rd quarter revenue, marking the 6th consecutive quarterly decline. IBM said a large part of the decline was due to sales in hardware to China, which was down about 40%. IBM expects demand in China to pick up in 2014, after the Chinese government finalizes their economic reform plan.
Amarin Corporation PLC (NASDAQ: AMRN) dipped more than 60% during trading when an FDA advisory committee voted against approval of Amarin’s high triglycerides and heart disease treating drug, Vascepa.
Recon Technologies (NASDAQ: RCON) shares climbed during the past 5-day period, gaining a total of over 16%. Recon revealed late last week that the company has developed their first automated shale gas extraction system.
Advanced Micro Devices Inc (NYSE: AMD). showed gains throughout the entire week, and also released their third quarter earnings report. Numbers were in the positives, year over year, with revenue up almost 15% and net income at $48 million vs a loss of $131 million.
And finally, Apple, Inc. (NASDAQ: AAPL) announced this week that they have brought on board Burberry CEO, Angela Ahrendts, as a new senior vice president, reporting to CEO Tim Cook. Ahrendts, in her newly created position, will oversee Apple’s retail and online stores.