Stocks fell to end the week, though the S&P 500 ended February with its biggest monthly gain since October 2011 after a revised reading of fourth-quarter US economic growth came in better than expected.
First, the scoreboard:
- Dow: 18,141.2, -73.2, (-0.4%)
- S&P 500: 2,105, -5.6, (-0.3%)
- Nasdaq: 4,964.8, -23, (-0.5%)
And now, the top stories on Friday:
- The US economy grew at an annualized rate of 2.2% in the fourth quarter — better than the expected revision downward to 2%, but worse than the 2.6% initially reported. The Bureau of Economic Analysis said the lower GDP estimate reflected a downward revision to private inventory investment and an upward revision to imports, partly offset by an upward revision to nonresidential fixed investment and to state and local government spending. The BEA’s second estimate further showed that personal consumption grew 4.2% versus the initial calculation of 4.3%, making it the best since the fourth quarter of 2010.
- The Institute of Supply Management’s Chicago Purchasing Managers Index showed that economic activity unexpected declined in February. The index, at 45.8, missed expectations for a reading of 58.0, and indicated contraction as does any reading below 50. Philip Uglow, chief economist of MNI Indicators, said: “There’s some evidence to point to special factors such as the port strike and the weather, although we’ll need to see the March data to get a better picture of underlying growth.”
- US consumers are feeling good about the economy. The University of Michigan’s Consumer Confidence Index came in at 95.4, beating the expectations for a reading of 94.0. The reading fell from 98.1 posted in January.
- It was a big month for the market. In an email on Friday afternoon, the NYSE’s Rich Barry noted that at the open of trade on Friday, the Dow was up 6.1% with the S&P 500 up 5.8% and the Nasdaq up 7.6%. Despite Friday’s losses, this was still the best month for the Dow and the S&P in more than 3 years.
- In housing data, pending home sales jumped to an 18-month high in January, rising 1.7% from the prior month. December’s reading was revised to -1.5% from -3.5%. “In one line: Flat trend in recent months; spring is the big test,” Pantheon Macro’s Ian Shepherdson cautioned.
- US oil rig counts continue to plunge. The number of rigs in use fell by 33 this week to 986, the lowest total since the week ending June 17, 2011. Nonetheless, US oil production is still growing.
- Billionaire Carl Icahn’s publicly traded company posted a loss in the fourth quarter due to its significant stake in energy companies. In the earnings release on Thursday, Icahn Enterprises reported a loss of $US478 million, or $US3.84 a unit. IEP also announced a loss of $US355 million in the third quarter because of lower oil prices. The loss could have been worse if not for the massive earnings beat on Apple, one of IEP’s holdings.
- Weight Watchers’ shares tumbled as much as 34% Friday after the company reported fourth quarter adjusted earnings per share of 7 cents on revenues of $US327.8 million, down 10.4% year-over-year. Expectations were for revenues of $US389 million, while EPS was in line with forecasts. During the earnings call Thursday, CEO Jim Chambers said recently launched ads and customer promos couldn’t avert the 15% loss in active subscribers last quarter.
- Former AIG CEO Bob Benmosche died on Friday in a New York hospital. He was 70. Benmosche had announced that he had terminal cancer and had just a few months to live in an interview with Bloomberg TV’s Betty Liu last August. He took over AIG in 2009 with the task of turning the insurance giant around in the wake of the financial crisis and after a government bailout. “Bob was one of the most inspirational and successful leaders in corporate America by any measure,” AIG chairman Robert S. Miller wrote in a statement. “We will never forget that under Bob’s extraordinary leadership, the people of AIG repaid America in full plus a profit of nearly $US23 billion.”