Happy New Year, folks. After a relatively quiet end to 2011, investors rang in 2012's first week of trading not with a bang, but rather with some respectable gains in the broad indexes. The Dow Jones Industrial Average (INDEX: ^DJI ) rose 1.2% for the week, while the broader market Russell 3000 index climbed 1.6%.
This week saw some key macro storylines both improve and remain worrisome. On the plus side, U.S. payroll numbers came out better than expected, increasing by 200,000 at a time when the consensus expectation called for growth of only 150,000 and pushing unemployment in the States to its lowest level in three years. The rate dropped to 8.5%, down from 8.7%.
In other news, Europe remained embroiled its debt-driven fiasco. Interest rates on Italian bonds rose again above the crisis level of 7%, prompting the European Central Bank to begin purchasing Italian debt in the open market. Market observers maintain that interest rates of 7% or higher are largely unsustainable and could lead to more serious trouble if not dealt with in due course.
The back of the pack
If we define a clear loser as a stock that dropped by 2% or more, the Dow had only one for the week: Verizon Communications (NYSE: VZ ) , which fell 4.5%. The telecom titan announced this week that it sold around 4.2 million iPhones in the last quarter. Sounds great, right? Not so fast. The heavy discounting required to attract consumers to buy the coveted Apple (Nasdaq: AAPL ) devices through Verizon will probably drive down Verizon's margins as well for the period. Apple sells the iPhone for between $500 and $600, and wireless carriers such as Verizon and AT&T (NYSE: T ) -- which also declined 1.9% for the week -- eat as much as $400 of that initial cost to get consumers to sign long-term plans with them.
Rounding out the week's three biggest losers was beverage stalwart and Buffett darling Coca-Cola (NYSE: KO ) . The soft-drink provider fell 1.5%, largely driven by news that it's scaling back on its joint venture with Nestle SA. Instead, Coke plans to focus increasingly on producing ready-to-drink teas in Europe and Canada. Sales through the joint venture's Nestea product have lagged those of the competitor-driven JV between PepsiCo and Unilever that distributes drinks under the Lipton brand in the United States.
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