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Stocks Struggle as Markets Correct

Originally published: 03.01.14 by Margot Crabtree


Although a report from the Federal Reserve at the start of our session showed that industrial production grew by 3.5 percent in the fourth quarter of 2013, that report was not reflected in the stock market, which was all about negative terrain. As our trading session ended on February 14, 2014, national markets began improving, but not enough to pull stocks out of their slump.

A report from the Commerce Department showed a slowdown in December homebuilding, but the full year was the best since the housing bubble burst. Emerging markets scared investors after a preliminary survey of a purchasing managers’ index of Chinese manufacturing dropped to 49.6, the lowest reading since July; any number below 50 indicates contraction.

 

 

 

 

 

 

 

The Thomson Reuters/University of Michigan consumer sentiment index was 81.2, down from 82.5 last month, but up from the reading of 80.4 two weeks ago. The Federal Reserve also cut its stimulus program by another $10 billion, sending more tremors into an already unsettled market. The Commerce Department reported that cold

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weather also knocked retail back: sales fell 0.4 percent in January. Investors returned to earnings after spending time pondering emerging markets and bad weather; acquisitions also bolstered the market. “It seems a little too soon for [stocks] to have worked their way through this yet,” said Barry Knapp, the head of U.S. equity portfolio strategy at Barclays. “We don’t think the uptrend is going to resume right away. Stocks will probably still struggle a bit in the first half of the year.” 

The HVACR Business Stock Index fell 33.69 points, or 2.54 percent, and closed at 1291.87. Declining issues overpowered advancing issues by a 23-to-7 count. 

Parker-Hannifin tumbled 11.11 points, or 8.62 percent this session, after missing estimates. For its fiscal 2014 second quarter, PH posted net income of $253.4 million, or $1.66 per share, versus $181.1 million, or $1.19 per share, in the same quarter last year. Revenue grew 1.3 percent to $3.11 billion. Adjusted net income was $1.24 per share, which fell below analysts’ expectations of $1.25 in earnings per share and $3.15 billion in revenue. PH ended at 117.85, and was the top dollar loser. 

Honeywell advanced 4.70 points, or 5.23 percent after beating analysts’ estimates for fourth quarter earnings. HON said it earned net income of $947 million, or $1.19 per share, compared to net income of $251 million, or $0.32 per share, in last year’s comparable quarter. Revenue was up 8 percent to $10.39 billion. Excluding one-time items, HON earned $1.24 per share, besting estimates of $1.21 per share from analysts surveyed by Thomson Reuters. Honeywell closed at 94.61, and was the top dollar gainer.

Shares of Dover fell 10.30 points, or 10.69 percent this session, despite meeting analysts’ expectations for the fourth quarter. DOV reported net income from continuing operations of $210.8 million, or $1.22 per share, compared to net income of $208.2 million, or $1.16 per share, last year. Revenue rose 10 percent to $2.2 billion. Dover said it plans to spin off its Knowles communications technologies unit. Knowles will begin trading on March 3, 2014 under the ticker “KN” on the New York Stock Exchange. DOV ended at 86.06. 

 


 Margot Crabtree is president of Trade Trends, Inc., a financial data services provider. She has been offering market analysis with customized stock indices and financial commentaries since 1999. For additional information, visit www.tradetrendsonline.com.


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