A Super Scooper firefighting plane makes a water drop on the Colby Fire in Azusa, California January 16, 2014.
Most stocks ended in the red today.
First, the scoreboard:
- Dow: 16,458.5 (+41.5, +0.2%)
- S&P 500: 1,838.7 (-7.1, -0.3%)
- Nasdaq: 4,197.5 (-21.1, -0.5%)
And now the top stories:
- Amid the sell-off, the Dow managed to stay in the green thanks to gains in two credit card stocks. American Express jumped today after reporting better-than-expected Q4 earnings. Visa climbed more modestly on a percentage basis, but actually added more points than AmEx to the Dow.
- U.S. housing starts fell 9.8% to an annualized pace of 999,000 units in December. This was better than the 985,000 level expected by economists. Building permits fell 3.0% to 986,000 units. "Overall, we see the December housing starts report as suggesting housing activity paused following the sharp rise in mortgage rates amid the Fed’s discussion of tapering in the middle of last year," said Barclays Michael Gapen. Many economists also blamed the slowdown on the unusually cold weather.
- Industrial production climbed 0.3% in December, which was right in line with expectations. The capacity utilization rate climbed to 79.2% from 79.1% a month ago. "This economic statistic does not fit the widely-used characterization of a slow-growth economy that is underachieving," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ. "There is no output gap that we need to close before lifting interest rates if you use capacity utilization instead of the unemployment rate. Capacity utilization — factory run-rate — is 79.2% in December, close enough to the 2007 average of 80.5%."
- The University of Michigan's preliminary January consumer confidence index unexpectedly fell to 80.4 in January from 82.5 in December. Economists were looking for an increase to 83.5. "The drop was driven by declines in both the expectations and current conditions indices," noted Capital Economics' Amna Asaf. "The latter, which normally reflects changes in labour market conditions, fell to 95.2, from 98.6. Although December's official payroll figures were weak, the downward trend in weekly jobless claims suggests that the labour market is still improving. Meanwhile, the expectations index fell trivially to 70.9, from 72.1, and is now consistent with first-quarter consumption growth slowing down to 2.0%, from our estimated 4.0% annualised gain in the fourth quarter."
- UPS warned today that its Q4 earnings would miss expectations. "" U.S. results were negatively impacted by the challenges of the compressed peak season coupled with an unprecedented level of online shopping that included a surge of last-minute orders," said UPS in a press release. "In an effort to maintain service standards and commitments, UPS took extraordinary measures deploying additional equipment and people. " Management expects to report Q4 earnings of $1.25 per share, which is significantly lower than the $1.43 analysts had been expecting.
- General Electric shares fell despite reporting earnings in line with expectations. “We saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe," said CEO Jeff Immelt. Orders, which represent future growth, grew 8% in the U.S., 3% in Europe, and 13% in the growth markets.
- In a new memo to clients, Oaktree Capital's Howard Marks argued that luck plays a huge role in successes even for the most skilled investors. "There’s no doubt that hard work, planning and persistence are essential for repeated success," wrote Marks. "But even the hardest workers and best decision makers among us will fail to succeed consistently without luck."
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