Before you start going headfirst into early March Madness, pre-tournament bracketology research, check out what sent stocks to record highs this past week.
1. U.S. Economy adds 175,000 new jobs in February
After weak growth in December and January, some more Americans managed to get out there and finds jobs in February. A total of 175,000 people were added to the workforce in the still cold but slightly less blizzardy month of February. Analysts were expecting a meager 150,000 jobs growth, so the news was taken well.
Meanwhile, the unemployment rate ticked up from 6.6% to 6.7%. However, more people got encouraged enough to restart their job search, which may have caused the uptick in the unemployment rate for a good reason.
The consumer-spending-reliant economy we've got here in the U.S. needs jobs and good wages to fuel spending, so this positive upside surprise kept investors happy Friday. That 175,000 number gets about a "C" grade normally, but with a frozen (literally) job market recently, it's not bad. Plus, many expect pent-up hiring demand to boost hiring in the coming spring months.
2. Stock market winner ...
You've got to listen to this good news. The maker of headphones all the cool kids are wearing, Skullcandy (NASDAQ:SKUL), surged 24% Friday after its earnings report hit all the right notes, topping analysts' expectations. "The Skull" reported a $3.6 million profit for the quarter, thanks to $72.2 million in revenues, compared with the $71.88 million expected.
But how does that look in the bigger picture? Sales fell 28% this fourth quarter compared with last year, when they generated about three times more profit ($11.5 million). That doesn't sound great, but Thursday's results still topped projections, and Skullcandy has being going through some hard times, like Dr. Dre in the mid-'90s. The company's suffered through legal expenses as a result of patent litigations from the bankruptcy of one of its major retail clients. Plus, aforementioned Dre has some trendy "Beats" headphones, and it's difficult to compete with the Dr.
For Wall Street, the key word here is "turnaround" -- many analysts are expecting a return to full-year profitability in 2014 thanks to the company's new product introductions set for this year and better positioning compared with the beginning of 2013. For a brand-focused industry targeting teens, tweens, and cool kids, the question will be whether Skull can join the holy ranks of Beats, Bose, and Sony in terms of brand equity.
3. ... And the stock market loser
We're not fans of the name (the term "shack" doesn't exactly sound as good as "mansion"), and neither were investors this past week. The '90s electronics retail legend RadioShack (NASDAQOTH:RSHCQ) fell more than 17% Tuesday after reporting disappointing earnings. More specifically, the Shack brought in $935 million in revenues during the fourth quarter -- unfortunately, that hefty sum represents a 20% drop from the $1.17 billion reported for the fourth quarter of 2013. And to make matters worse, Wall Street was expecting a dandy $1.12 billion.
Although the widened loss of $63.3 million wasn't up to par, either, investors were more focused on the bricks-and-mortar details -- RadioShack's 19% drop in same-store sales prompted the company to announce that it will close 1,100 underperforming stores (assuming the Shack's lenders for its 2018 credit agreement approve).
The kicker, though, is that all this happened at the worst possible time -- the holidays. For investors focused on retail, the most wonderful time of the year is expected to result in the most wonderful revenues figures for big-box stores. And after Radio Shack released its impressively self-deprecating "The '80s Called: They Want Their Store Back" ad during the Super Bowl (which boosted the stock 7% the next day), Wall Street had higher expectations for the company's recent performance. Looking forward, investors will be paying close attention to whether Radio Shack's cost-cutting initiatives can turn around the trend.
4. The Ukraine-vasion rattled stock and commodities markets
Fresh off winning the most Olympic medals, Russia won the gold for geopolitical upheaval by sending troops into the Crimea region of Ukraine -- just after Ukraine ousted its president over pursuing an economic stability deal with Russia instead of the EU. As Russia's motherland stock market fell over 10%, shares of financial stocks dependent on economic stability suffered early in the week, while North American potash fertilizer producers gained on hopes of sanctions against big-time potash-producin' Russia. One thing's for sure: Military conflict in Ukraine would be bad for European, Russian, and most U.S. stocks (except those crazy Potash producers).
5. Motor vehicle sales froze/stalled in February
Blizzards didn't just slow manufacturing, retail sales, and home turnovers last month, but they also discouraged folks from leaving home to pimp their rides. Despite consistent growth over the past three years, both General Motors (NYSE:GM) and Ford had fewer car sales for the second straight month compared with last year. Only Chrysler (owned by Fiat) switched to four-wheel drive, enjoying its 47th straight month of sales gains thanks to the new Jeep Cherokee SUV.
What MarketSnacks is checking out this week:
- Monday: 2 Federal Reserve presidents speak; earnings: Cooper Tire, Cosi
- Tuesday: National Federation of Independent Businesses' Small Business Index; earnings: American Eagle, Dick's Sporting Goods
- Wednesday: The Treasury releases its budget; earnings: Krispy Kreme, CVS Caremark
- Thursday: February retail sales; earnings: Hugo Boss, SeaWorld
- Friday: Reuters/University of Michigan Consumer Sentiment Survey
As originally published on MarketSnacks.com
Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends CVS Caremark, Ford, and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.