May 19, 2014 – May 23, 2014
Trading was light, and overall the markets were without direction this week, with the exception of Nasdaq as tech stocks continued their move back up.
On Tuesday, some large retailers reported poor quarterly results, along with Federal Reserve official Charles Plosser warning that interest rates may need to rise soon. This was enough to cause a sharp selloff.
On Wednesday, the Fed minutes from the previous meeting were released and showed attention has now shifted to normalizing interest rates. Normalizing rates means ending the bond purchasing program and raising short-term interest rates above zero. However, rates are not likely to rise soon. The minutes also show a desire to improve communication with the public in order to prevent shock to the markets. Markets rallied strongly on the news.
On Thursday, jobless claims for the week ending May 17th rose 28,000 to 326,000, higher than expected. Existing home sales ended four months of declines when April figures showed a gain of 1.3% to 4.65 million units. The flash PMI manufacturing index for May increased to 56.2, from 55.4 in April. Levels above 50 indicate expansion.
On Friday, new home sales for April rose to a 3.5 year high, increasing 6.4% to 443,000 units. Markets rallied on the news.
Now let’s take a look at some stocks.
Target Corporation (NYSE: TGT) was in the crosshairs again this week after the company pushed out Tony Fisher, their top executive in their Canadian division. Target has been trying to remedy a failing expansion in Canada as well as recover from a major security breach which ousted former CEO Gregg Steinhafel. Target also announced 1st quarter earnings which missed analysts’ forecasts. Net income fell 16% year-over-year, from $498 million to $418 million or $0.66 per share; analyst had forecast earnings of $0.71 per share.
JD.com (NASDAQ: JD), China’s 2nd largest e-commerce company, made their first appearance in the US stock market Thursday. JD’s IPO was priced above expectations, selling 93.7 million shares at $19 per share and raising $1.8 billion. The IPO is currently the largest ever by a Chinese internet company listing in the US. Investors are eager to capitalize on the current e-commerce growth in China.
eBay Inc.(NASDAQ: EBAY) got massive attention Wednesday after the online auction company announced that there was a cyber-security breach on one of the company’s databases and told users to change their passwords. Hackers were able to gain access by compromising a small number of employee login credentials. eBay said no financial information was accessed, only general information, such as names, passwords, emails, birthdates and phone numbers. The company also noted that their PayPal databases remain unaffected.
Activision Blizzard, Inc. (NASDAQ: ATVI), the largest video game publisher, announced Tuesday they will be attempting to sue the developers of third party software that allows users to cheat on their game, StarCraft II. Activision believes that the cheat software could compromise the online gaming experience. The day after the lawsuit announcement, Activsion also announced a major offering of 41.5 million shares by Vivendi S.A., a major shareholder of Activision. The sale represents 50% of what Vivendi held and 5.8% of Activision.