May 5, 2014 – May 9, 2014
It was a good week for the Dow and the S&P 500, not so much for Nasdaq. On Monday concern with China’s growth continued when the HSBC China purchasing managers’ index showed a reading of 48.1. Levels below 50 indicate contraction and this was the fourth month below 50. However, concerns were put aside with the release of the ISM U.S. non-manufacturing index showing a level of 55.2, with especially good growth in the new orders component of the report.
On Tuesday, the U.S. trade deficit shrank for March, due to an increase in exports, narrowing to $40.4 billion compared to $41.9 billion in February. On Wednesday, Fed Chair Yellen testified before Congress but she didn’t say anything to spook investors. However, Nasdaq continued its decline as momentum stocks were sold off. Productivity for the first quarter was released dropping 1.7%, but the numbers are not considered reliable due to the cold weather.
On Thursday, initial jobless claims for the week ending May 3, dropped 26,000 to 319,000. Of the more than 440 companies releasing their earnings for last quarter, 75% have beaten profit estimates and 53% have beaten revenue projections.
Now let’s take a look at some stocks.
Whole Foods Market (NASDAQ: WFM) shares decreased 18.8% on Wednesday following the company’s release of their second quarter earnings. Whole Foods reported profits of $142 million or $0.38 per share, well below analysts’ estimates of $0.41 per share. The company also lowered their annual earnings forecast as competition increases in the natural and organic food sector, especially with Walmart expressing intentions of entering the space.
The Walt Disney Company’s (NYSE: DIS) stock shot up during Wednesday’s trading after the company reported a stellar second quarter. Disney reported revenue of $11.6 billion, ahead of analysts’ projections of $11.2 billion, while net income was reported at $1.9 billion or $1.08 per share, an increase of 27% year-over-year. Management also noted they experienced revenue growth ranging from 4% to 35% in every business segment of the company.
Keurig Green Mountain (NASDAQ: GMCR), the leading maker of home single-serving coffees, surged more than 12% on Thursday after reporting their second quarter net sales totaling $1.1 billion, increasing 10% year-over-year. Operating profit was $260 million, up 23% from a year ago. Keurig also announced a new partnership with The J.M. Smucker Company for the manufacturing, marketing, distribution and sale of Smucker’s coffee brands.
SolarCity Corporation (NASDAQ: SCTY), a provider of distributed clean energy, saw their shares jump more than 14% on Thursday after the company reported their first quarter earnings. SolarCity’s revenue increased 112% year-over-year to $63.5 million while reporting a loss of $0.82 per share. Analysts projected revenues of $53 million and a loss of $0.70 per share. SolarCity noted that they expect to end 2014 with more than 2 gigawatts of energy deployed.