Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
On a week that had a number of important jobs reports and more than one that missed expectations, the major indexes finished on a high note and performed much better than expected. For the week, the Dow Jones Industrial Average (DJINDICES:^DJI) gained 95 points, or 0.6%, while the S&P 500 rose more than 14 points, or 0.8%, and the Nasdaq increased almost 22 points, or 0.53%.
As for the jobs data, ADP's Wednesday report indicated 175,000 new private-sector jobs in January, below the 185,000 economists had predicted. Weekly jobless claims, announced on Thursday, fell to 331,000, a drop of 20,000 from the previous week and below estimates of 337,000. And on Friday, the all-important Labor Department report came in at a measly 113,000 jobs created in January. Economists had been calling for 189,000, but it was still better than December's report of just 74,000 jobs.
Among the good news was that the unemployment rate fell to 6.6% and the labor force participation rate increased to 63% from 62.8% in December.
Before we get to the Dow's biggest losers of the week, let's look at its top performer. Walt Disney (NYSE:DIS) climbed 4.21% for the week, after the company's earnings, released Thursday, revealed beats on both the top and bottom lines. Revenue increased by 9% during the quarter, as the blockbuster movie Frozen racked up more than $870 million in worldwide box-office sales. With Disney's infrastructure, that kind of performance in the theater will translate to big-time revenue in areas such as branding, merchandising, and maybe even theme-park attractions. Investors have a bright future to look forward to.
Last week's big losers
United Technologies (NYSE:RTX) closed the week down 2.88%, enough to make it the Dow's third worst-performing component of the week. There was little hard news, though rumors did begin to spread that the company may sell or spin off its Sikorsky helicopter unit, which is highly levered to the Defense Department and sensitive to budget cuts. The division, which makes the famed Black Hawk chopper, generated $6.25 billion in sales during 2013, a 7.9% decline from the year before as the Pentagon made cuts. Some observers think more cuts could be on the way, and that makes Sikorsky a potential liability. However, Sikorsky also makes up about 10% of the company's revenue, and that wouldn't be easy to replace in the near future. This stock will become a tough call if the rumors pan out.
Coming in second place, after falling more than 3.06%, was AT&T (NYSE:T). The telecom giant dropped like a rock on Monday afternoon and never rebounded. Going on the offensive in the wireless wars, the company said it will offer a cheaper version of its family plan than will allow up to two lines to have unlimited talk and text and 10 gigabytes of data for only $130 per month. The plan is much cheaper than what rival Verizon is offering and more competitive than what T-Mobile provides. AT&T's strategy may sound like a great way to attract and keep customers, but it means margins will fall in the coming quarters.
Finally, this past week's biggest Dow loser was Microsoft (NASDAQ:MSFT), down 3.38%. There was debate about whether the announcement of a new CEO would move shares up or down, depending on whether investors thought the right person was picked for the job. What that says about the selection of longtime Microsoft employee Satya Nadella to be the company's third CEO perhaps remains to be seen. Nadella was widely considered a conservative pick, especially among those who thought the company needed a real Bill Gates-type of visionary to take over from Steve Ballmer. As for me, I like to think that slow and steady wins the race -- even in the world of technology.
The other Dow losers this week:
- ExxonMobil, down 1.71%
- Goldman Sachs, down 1.33%
- Home Depot, down 0.52%
- Intel, down 1.38%
- Nike, down 0.22%
- Travelers, down 0.49%
- UnitedHealth Group, down 1.27%
- Verizon, down 2.52%
- Wal-Mart, down 1.24%