Weekly Market Recap: The Dow Jones Industrial Average Flirts with 13,000

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Monday

Markets closed up on Wall Street today: Dow +0.57%, S&P +0.68%, Nasdaq +0.95%, Oil +1.92%, Gold -0.02%.

On the commodities front, Oil (NYSE:USO) rose to $100.56 a barrel. Precious metals were mixed, with Gold (NYSE:GLD) falling slightly to $1,724.90 an ounce while Silver (NYSE:SLV) rose 0.29% to settle at $33.70.

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Today’s markets were up because:

1) Greece. The Greek Parliament cleared the first of three hurdles it must overcome to qualify for a second bailout worth 130 billion euros when lawmakers approved a package of austerity reforms on Sunday. Greece needs the bailout funds to avoid a potential default on a 14.5 billion-euro bond redemption on March 20. Now the government need only identify another 325 million euros in spending cuts and give assurances that the program will be implemented even after elections are held later this year. If those conditions are met, euro-zone finance ministers are expected to endorse the program at a meeting on Wednesday.

2) Budget. The day held no major economic news, but President Obama did unveil a $3.8 trillion budget request that would impose a 30 percent minimum tax on millionaires while earmarking more than $800 billion for job creation and infrastructure investment. However, the Republican-led House of Representatives has already vowed to vote down the proposal, which the administration said would add more than $300 billion to the U.S. economy this year alone, as it would not only increase tax revenue, but also add an estimated $6 trillion to the national debt over the next decade.

3) Financials. Financial stocks posted early gains today in the wake of Greece’s debt deal. Shares of Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), and JPMorgan (NYSE:JPM) were all up more than 1 percent. Bank stocks tend to track developments in the sovereign debt crisis in Europe because of fears over their exposure to foreign debt. Positive developments abroad also helped Germany’s Deutsche Bank (NYSE:DB) and Royal Bank of Scotland (NYSE:RBS) post moderate gains.

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Tuesday

Markets closed mixed on Wall Street today: Dow +0.03%, S&P -0.09%, Nasdaq +0.02%, Oil +0.24%, Gold -0.19%.

On the commodities front, Oil (NYSE:USO) rose to $101.15 a barrel. Precious metals were down, with Gold (NYSE:GLD) falling to $1,721.60 an ounce while Silver (NYSE:SLV) fell 0.57% to settle at $33.53.

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Today’s markets were mixed because:

1) Retail. The Department of Commerce reported today that U.S. retail sales rose in January, but less than expected, as auto sales fell sharply. Additionally, this morning’s report downwardly revised retail sales growth for the preceding two months, painting a rather dismal picture for consumer spending in the two months it should have flourished — that is, the holiday shopping season.

2) Moody’s. Late Monday, Moody’s Investors Service downgraded six euro-zone countries — Italy, Malta, Portugal, Slovakia, Slovenia, and Spain — and put Austria, France, and the United Kingdom, all of which have top-tier triple-A credit ratings, on watch for a possible downgrade, which means they have a 30 percent chance of being downgraded within the next 18 months.

3) Earnings. The relatively flat day of trading is at least partly the result of a rather mixed bag of earnings reports, with no major players making waves with their quarterly results. Michael Kors (NYSE:KORS) shares jumped after posting better-than-expected fiscal third quarter earnings and revenue, while Zipcar (NASDAQ:ZIP) shares jumped after the company, which made its stock market debut last April, posted a 21 percent revenue bump and a 25 percent increase in total membership during the quarter. Masco (NYSE:MAS) and Goodyear Tire (NYSE:GT) shares sank after reporting losses, while drug companies Hospira (NYSE:HSP) and Watson (NYSE:WPI) both reported better-than-expected quarterly results, sending shares higher.

BONUS: Austerity: The Real Cost of Greece’s Bailouts

Wednesday

Markets closed down on Wall Street today: Dow -0.76%, S&P -0.54%, Nasdaq -0.55%, Oil +1.27%, Gold +0.72%.

On the commodities front, Oil (NYSE:USO) rose to $102.02 a barrel. Precious metals were also up, with Gold (NYSE:GLD) rising to $1,730.00 an ounce while Silver (NYSE:SLV) rose 0.13% to settle at $33.39.

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Today’s markets were down because:

1) Greece. You may be asking yourself, What could Greece have possibly done this time? Well, nothing, and that’s the problem.  Greece still remains on the brink of disaster, a little piece of land it has called home since 2010. Greece’s progress has been gruelingly slow, and at times non-existent. Now that the government has acquiesced to the euro zone’s demands for austerity, all that’s left to do is await finance ministers’ approval, which many had anticipated would come on Wednesday at a meeting that was ultimately canceled at the last minute. Though the meeting was rescheduled for the beginning of next week, and finance ministers have hinted they will approve the latest economic reform proposal, which Greece needs in order to secure its next bailout, no one wants to count their chickens before they hatch.

2) Euro. The overall euro-zone economy shrank in the fourth quarter of 2011 for the first time since 2009, but the 0.3 percent decline was not as bad as economists had expected. The latest figures were helped by a smaller-than-expected decline in Germany’s gross domestic product, and unexpected growth in France. Meanwhile, China pledged to invest in Europe’s bailout funds while sustaining its holdings of euro assets. Chinese Premier Wen Jiabao said, “China is firm in supporting the EU side in dealing with the debt problems,” assuaging fears over the the euro zone’s seeming inability to effectively combat the debt crisis.

3) Companies. The day held much in the way of corporate news, with Comcast (NASDAQ:CMCSA) shares jumping after the cable provider beat estimates for its fourth-quarter profit and revenue, and announced a 44 percent increase to its dividend as well as a $6.5 billion stock buyback program. Abercrombie & Fitch (NYSE:ANF) and Dean Foods (NYSE:DF) were also trading higher, though both reported fourth-quarter losses, while higher-than-expected fourth-quarter profit boosted shares of Devon Energy (NYSE:DVN). Procter & Gamble (NYSE:PG) and Kellogg (NYSE:K) were trading higher after the latter agreed to pay the former $2.7 billion to buy its Pringles potato chip unit, while Zynga (NASDAQ:ZNGA) sank after the social gaming company posted a $404 million loss for its full fiscal year.

BONUS: Austerity: The Real Cost of Greece’s Bailouts

Thursday

Markets closed up on Wall Street today: Dow +0.96%, S&P +1.10%, Nasdaq +1.51%, Oil +0.49%, Gold +0.10%.

On the commodities front, Oil (NYSE:USO) rose to $102.30 a barrel. Precious metals were also up, with Gold (NYSE:GLD) rising to $1,729.80 an ounce while Silver (NYSE:SLV) rose 0.26% to settle at $33.50.

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Today’s markets were up because:

1)  Jobs. The U.S. Department of Labor reported today that initial claims for unemployment benefits unexpectedly fell last week to the lowest level in nearly four years, marking the the most substantial evidence of an improving labor market since the national unemployment rate reportedly dropped to 8.3 percent in January.

2) Housing. An unusually mild January helped builders beat forecasts for housing starts, which were up 1.5 percent from December to an annual rate of 699,000, the Commerce Department reported today. Meanwhile, applications for building permits, the best indicator of housing starts in the next two or three months, increased to a 676,000 annual rate.

3) Moody’s. Investors are paying little heed to ratings agencies these days, as financial stocks led today’s rally despite Moody’s putting Credit Suisse (NYSE:CS), UBS (NYSE:UBS), Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Deutsche Bank (NYSE:DB) on watch for possible downgrades, to name a few. All of the stocks were trading between 1 percent and 4 percent higher today, largely outperforming the major U.S. indexes.

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Friday

Markets closed mixed on Wall Street today: Dow +0.35%, S&P +0.23%, Nasdaq -0.27%, Oil +1.18%, Gold -0.26%.

On the commodities front, Oil (NYSE:USO) rose to $103.52 a barrel. Precious metals were down, with Gold (NYSE:GLD) falling to $1,723.90 an ounce while Silver (NYSE:SLV) fell 0.25% to settle at $33.22.

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Today’s markets were mixed because:

1) Economy. The Consumer Price Index rose 0.2 percent in January after holding steady for two consecutive months, according to a Bureau of Labor Statistics report today, while core inflation rose 0.2 percent, and the Conference Board’s Leading Economic Indicators index ticked up 4 percent.

2) Germany. The one righteous stalwart remaining in the euro zone, Germany took a hit today when President Christian Wulff unexpectedly resigned. Though the German presidency is largely symbolic, Chancellor Angela Merkel must now undergo what could prove to be a politically divisive search for Wulff’s replacement, just when European leaders are meant to be hammering out a bailout deal with Greece.

3) Companies. H.J. Heinz (NYSE:HNZ) and Campbell Soup (NYSE:CPB) shares edged higher after beating earnings estimates, while Nordstrom (NYSE:JWN) went the opposite direction as yearly profits missed targets. Baidu (NASDAQ:BIDU) beat estimates, but shares declined as the company issued a poor revenue outlook for the current quarter. Brightcove (NASDAQ:BCOV) shares rocketed as high as 35 percent today in the stock’s market debut, with shares initially priced at $11 in its IPO rising above $15, but it was a bad day for drugmakers Gilead Sciences (NASDAQ:GILD), and Johnson & Johnson (NYSE:JNJ), which both closed the day lower after the former said the majority of patients involved in a hepatitis C treatment experienced a relapse within four weeks, while the latter had to recall more than half a million bottles of Infants’ Tylenol because of consumer complaints about the difficulties of using the dosing system.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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