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Stocks Fade as Economic News Points to Taper

Originally published: 01.01.14 by Margot Crabtree


A red-hot market started our session, with the Dow industrials and the Nasdaq notching new highs, and the Nasdaq hitting a 13-year high just before Thanksgiving.

As our trading session ended Dec. 16, 2013, however, the fervor cooled as investors eyed the stronger economic news warily on concern that the Federal Reserve will end its bond-buying stimulus

In late November, payroll company ADP said that businesses added 215,000 jobs in November, following 184,000 jobs created in October, and better than its earlier estimate of 130,000 jobs.

The Labor Department also reported positive news, saying the new job creation for November lowered the unemployment rate to 7 percent, a five-year low, from 7.3 percent in October. After several consecutive weeks of declines, unemployment claims rose sharply as our session ended, up 68,000 to 368,000.

Permits for housing grew to a five-year high, with apartments making a sizable chunk of that increase. The reading for the Thomson Reuters/University of Michigan consumer sentiment index surpassed expectations, at 75.1, versus the median forecast of 73.5. Before taper worries beset stocks in December, Wall Street was on track for its best year in ten.

As the session came to a close, markets were a see-saw of


"will they, won't they," in regard to tapering, with profit taking making inroads. Factory output rose 0.6 percent in November, for the fourth straight month, and industrial production was up 1.1 percent for the month. Markets rose on the last day of our session, but it was not enough to land most indices in positive terrain for the month. The Fed was scheduled for a two-day meet just after our session ended.

"There are signs that growth here in the U.S. is being emulated elsewhere, the recovery is in relatively good footing worldwide, and the Fed's decision to eventually start to taper is positive in the long run," said Peter Jankovskis, cochief investment officer at OakBrook Investments in Lisle, Ill. "The market is waiting to see what the Fed is going to decide to do. Bottom line, the economy continues to show signs of strength and eventually the market will react positively to that."

Exchange
Symbol
Company Name
Price
7/15/14
Price
6/15/14
Net
Change
PercentChange
52-Week
High
52-Week
Low
Shares
Outstanding
Market
Capitalization
NASD AAON AAON, Inc. 30.60 27.79 2.81 10.11% 28.01 13.11 36750 1124550
NYSE ABB ABB Ltd. 24.90 25.34 -0.44 -1.74% 26.00 20.36 2300000 57270000
NYSE ARG Airgas, Inc. 107.52 110.32 -2.80 -2.54% 112.43 88.60 73750 7929600
NYSE AOS AO Smith Corp. 53.18 54.39 -1.21 -2.22% 55.18 30.40 91220 4851079.6
NYSE FIX Comfort Systems USA, Inc. 19.06 19.73 -0.67 -3.40% 20.95 11.32 37290 710747.4
NYSE DOV Dover Corp. 91.71 93.30 -1.59 -1.70% 93.89 63.79 170360 15623715.6
NASD ELON Echelon Corp. 2.07 2.39 -0.32 -13.39% 2.97 1.99 43340 89713.8
NYSE DD E. I. DuPont de Nemours & Co. 60.84 62.11 -1.27 -2.04% 62.69 44.10 926100 56343924
NYSE EME EMCOR Group, Inc. 40.07 38.03 2.04 5.36% 43.98 33.35 67130 2689899.1
NYSE EMR Emerson Electric Co. 66.89 67.97 -1.08 -1.59% 68.44 51.65 703960 47087884.4
NYSE F Ford Motor Co. 16.86 17.07 -0.21 -1.23% 18.02 11.14 3940000 66428400
NYSE GM General Motors Co. 40.04 38.77 1.27 3.28% 41.17 24.65 1390000 55655600
NYSE HON Honeywell International, Inc. 87.37 88.62 -1.25 -1.41% 89.52 61.57 784670 68556617.9
NASD HDSN Hudson Technologies, Inc. 3.12 2.20 0.92 41.82% 5.04 1.75 25070 78218.4
NYSE IR Ingersoll-Rand Plc 57.79 68.53 -10.74 -15.67% 57.43 37.15 288090 16648721.1
NYSE JCI Johnson Controls, Inc. 50.95 49.45 1.50 3.03% 51.90 28.28 685160 34908902
NYSE LII Lennox International Inc. 80.82 81.14 -0.32 -0.39% 83.25 50.94 49510 4001398.2
NYSE LXU LSB Industries, Inc. 34.07 30.33 3.74 12.33% 42.79 28.15 22520 767256.4
NYSE MTW Manitowoc Co., Inc. 21.46 19.61 1.85 9.43% 21.87 15.01 133630 2867699.8
NYSE NWL Newell Rubbermaid, Inc. 31.08 30.10 0.98 3.26% 32.25 21.50 287200 8926176
NYSE MLI Mueller Industries, Inc. 60.68 60.11 0.57 0.95% 61.77 47.42 28270 1715423.6
OTC NSANY Nissan Motor Co. Ltd. 17.03 18.52 -1.49 -8.05% 24.15 17.24 2100000 35763000
NASD OFLX OmegaFlex, Inc. 20.16 20.50 -0.34 -1.66% 22.55 11.07 10090 203414.4
NYSE PH Parker-Hannifin Corp. 120.48 117.61 2.87 2.44% 155.52 83.16 149240 17980435.2
NYSE RBC Regal-Beloit Corp. 70.84 74.15 -3.31 -4.46% 88.25 61.86 45070 3192758.8
NYSE ROK Rockwell Automation 110.96 111.98 -1.02 -0.91% 114.76 80.60 138660 15385713.6
NYSE SI Siemens AG 131.95 130.24 1.71 1.31% 133.57 98.69 843000 111233850
NYSE SPW SPX Corp.  93.93 96.27 -2.34 -2.43% 96.33 61.09 45650 4287904.5
NYSE TXN Texas Instruments 42.29 42.55 -0.26 -0.61% 43.67 30.30 1090000 46096100
NYSE UTX United Technologies Corp. 108.53 108.59 -0.06 -0.06% 112.46 79.50 917580 99584957.4
NYSE WSO Watsco, Inc. 93.22 96.09 -2.87 -2.99% 98.13 72.00 32210 3002616.2

 

The HVACR Business Stock Index slipped slightly off 14.35 points, or 1.11 percent, closing at 1277.28. Declining issues bypassed advancing issues at a 20-to-11 count.

Ingersoll-Rand tumbled this month, losing 10.74 points, or 15.67 percent. IR completed the spin-off of its commercial and residential securities arm, Allegion, which began trading on the New York exchange under the ticker ALLE. Research firm MKM Partners cut its rating on Ingersoll-Rand to neutral from buy.

Analyst Joshua Pokrzywinski said, "With expectations that recovery is upon us and the Allegion spin complete, valuation appears fair versus other premium multi-industrials and the IR-specific major catalysts are behind us." Pokrzywinski said that he isn't "convinced that 2014 will be a strong recovery year for institutional markets where IR's larger HVAC offering is more prominent."

The MKM Partners' price target for IR is $58. Investment firm UBS lowered its price target for IR to $64 from $74. Their rating on IR is buy. IR closed at $57.79, and was the top dollar and percentage loser.

LSB Industries rose 3.74 points, or 12.33 percent, ending at $34.07. The company reported that its Pryor, Okla. facility is expected to come back online in December, though the exact date was not announced by publication deadlines. The plant ceased production in October 2013 due to unexpected maintenance and equipment upgrades, and repairs were more extensive than initially expected. LXU was the top dollar gainer.

This month, Regal-Beloit also closed its acquisition of Cemp s.r.l., based in Milano, Italy. Cemp manufactures motors for hazardous duty. The deal was signed in October for an undisclosed amount. RBC's earnings guidance for the quarter did not include the anticipated results of the purchase. RBC fell 3.31 points, or 4.46 percent, and closed at $70.84.


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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