May 26, 2014 – May 30, 2014
Markets were closed for a holiday Monday, and Tuesday started off the week strong with the S&P 500 closing at a record high, although with a slightly lower volume of shares trading than normal. Durable goods orders for April increased 0.8% after increasing in March 3.6%. Analysts had expected a 0.8% decrease and this had a positive effect on the market. The Case-Shiller home price index rose 1.2% for March, also higher than expectations, and consumer confidence for May was 83.0, up from 81.7.
On Wednesday, markets pulled back slightly, with Treasuries rallying on suspicion of poor GDP growth to be released on Thursday. U.S. 30 year bonds fell to an 11 month low of 3.29% and 10 year notes fell to 2.44%, the lowest level since last June.
On Thursday, jobless claims for the week ending May 24th showed a drop of 27,000 to 300,000. The four week average is down to 311,500, a new recovery low. And for the first time since 2011 GDP came in negative at -1.0%, worse than analysts’ expectations of -0.5%. However, much of it was attributed to bad weather, with a rebound evident in current macroeconomic data. Markets rallied and the S&P 500 closed at another high, along with NASDAQ and the Dow Jones Industrials making strong gains.
On Friday, personal income for April showed a 0.3% gain month-to-month and consumer spending decreased 0.1%.
Now let’s take a look at some stocks.
Apple (NASDAQ: AAPL) hit a new 52-week high Thursday after it was announced the company will buy Beats Electronics, the popular headphone manufacturer and music streaming service, for $3 billion. As part of the acquisition, Beats co-founders, Dr. Dre and Jimmy Lovine, will be joining Apple’s team. Apple’s CEO, Tim Cook, says that the terms for the acquisition would allow the firm to “continue to create the most innovative music products and services in the world.”
McDonald’s Corp. (NYSE: MCD) made headlines Wednesday after the fast food company announced that they intend to return $18 billion to $20 billion to shareholders through dividend payouts and share repurchases, which represents a 10% to 20% increase compared to the cash returned between 2011 and 2013. The company also announced their plans on refranchising at least 1500 restaurants.
Tyson Foods (NYSE: TSN) the large chicken processing company, offered to acquire Hillshire Brands for $6.8 billion, including assumed debt. This bid came after Pilgrim’s Pride’s $6.4 billion bid for Hillshire earlier this week. Wall Street is anticipating that the bidding war will continue for now and that the numbers will keep getting bigger.
Ford Motor Co. (NYSE: F) shares were down after the company issued recalls that account for 1.4 million vehicles. Of these, approximately 1.1 million are SUVs sold in North America that have the potential to suffer a loss of power steering. Due to recent events where GM’s (NYSE: GM) recalls have been linked to 13 deaths, carmakers have increased their efforts on recalling vehicles as soon as defects are discovered.