Market Movers

This newsletter is intended to inform our new investors how the economic data helped lift the stock markets on Monday April 14, 2014. Stock markets opened higher due to improved U.S. retail sales numbers for March, which was reported at a 1.1 percent increase. The number was stronger than expected. Also a pleasant surprise was that February retail sales were revised upwards of 0.7 percent, which is a large deviation from the 0.3 percent rise initially reported. CNBC.com reported this week, their March nonfarm payroll job numbers were roughly in line with expectations, though it may not seem like jobs are picking up. Americans realize that we need more jobs to create more opportunity for everyone including our college grads, young and middle aged individuals, and aging individuals. From an investing perspective, a stronger working economy makes the stock markets grow which builds an investors wealth.

On the earnings front, companies still continue to report both quarterly sales and earnings. Some companies are beating analysis revenues but some may be light on earnings estimates or vice versa. For example: Google (GOOG & (GOOGL) (one of the most impressive growth stocks) missed both its analysis estimates on revenues and earnings which brought the stock down. On the other hand Apple (AAPL) beat Wall Street analyst expectations in revenues and earnings due to iPhones sales; they also announced an 8 percent dividend increase as well as a 7 to 1 stock split. Owners of Apple stock hit a home run with this first quarter announcement. Facebook (FB) the social media giant, had a good quarter as they beat both revenues and earnings. Dow components PepsiCo (PEP) beat analyst expectations while Coca-Cola (KO) met earnings and narrowly beat sales estimates. IBM (IBM) missed both revenues and earnings while Intel (INTC) was in line with revenues and did beat earnings estimates. Varian Medical (VAR) beat revenues but missed slightly on earnings.

New home sales which were reported on Wednesday April 23, 2014, indicated a big drop in housing prices in March. New home sales were reported down 14.5 percent, which is causing a slowdown in the economic housing recovery. It appears that since prices have gone up so quickly, it has produced a situation where many Americans are unable to purchase a new home or an existing home due to these high prices. Mortgage rate increases are also contributing to this slowdown. It will be interesting to see how Home Depot (HD) and Lowes (LOW) report their earnings next month due to them being tied to the housing market.

Do investors think the economy is growing? In my opinion, I think the economy is growing but at a slow pace. Housing has improved due to low interest rates as well as jobs growth. Investors need to monitor the financial news but realize not to be spooked by them. As long as you are invested in solid companies you can still make money in stocks while the markets move up and down.

Good luck and happy investing from CFE finances, we will be in touch with another newsletter soon. If you have any questions or concerns email us from our contact page.

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Earnings Season

This newsletter is intended to inform our new investors that now that it’s spring, it’s also earnings season. Not all companies report their earnings at this time of the year, but many tend to. Earnings season is the time of the year when we need to review any earnings of a company stock that we own or are interested in. If you want to find out if or when a company reports earnings, you can look at yahoo finance and enter the stock symbol. and on the bottom left hand corner of quote information and you will find where the next earnings release date is usually shown.

Some of the companies reporting this week are Citigroup, Bank of America, Johnson & Johnson, American Express, General Electric, IBM and Google. Fifty or more S&P 500 companies are reporting this coming week. There have already been 29 companies in the S&P 500 who have reported earnings thru April 11th 2014. It is always important and interesting to see what type of quarterly sales and earnings a company you own (or would like to own) will report because the market will drive the stock price up if your company had a stellar quarter. But the reverse can also happen and earnings can be disappointing and the stock will drop. So, keep an eye on company earnings.

Also on Monday April 14th 2014, investors will be looking for market support when retails sales numbers are released. Economists are predicting retail sales to be up .8 tenths of a percent. This is due to good car sales numbers in March. The stock markets have been dropping hard since the end of last week; we investors need to be strong through this earnings season because the volatility will continue until all companies have reported their earnings.

Another reason there is instability in the markets lately is the Federal Reserve had decided to lower quantitative easing (QE) in December because they believe the economy is recovering due to all the liquidity they have put into the market over the last 5 years. What that means is the Federal Reserve is monthly purchasing government and mortgage bonds with enormous amounts of money. The QE was $85 billion a month and has been lowered to $75 billion. This amount of money will continue to be tapered lower by the Federal Reserve as long as the economy continues to show improvement. This has many investors and money managers nervous which is why stocks have been volatile.

This makes for a good time for new investors to watch the stock markets along with company earnings, because they can enter the stock markets when stocks are dropping in price. Good companies maybe reporting lower than expected earning as well as the uncertainty of the economy can create a buying opportunity, thus giving the small investor a chance to position themselves for when the next big bull market happens.

Good luck and happy investing from CFE finances, we will be in touch with another newsletter soon. If you have any questions or concerns email us from our contact page.

Fluctuating Markets

This newsletter is intended to help reassure our new investors after the stock markets dropped in the Dow Jones average, the S& P 500, and the NASDAQ composite on Friday April 4, and Monday, April 7, 2014. Analysts reported the market dropped due to the unemployment rate remaining at 6.7% even though the job’s report showed more improvement.

The stock markets fell on Friday even though the monthly job’s report by the Labor Department reported employers added 192,000 jobs in March. This was less than the preview month of February, where employers added 197,000 jobs. Good news was that employers added a combination of 37,000 more jobs in January and February than previously estimated by the government. We are never exactly sure why the stock markets drop in value which drives down company stock prices, but what we do know is, if we buy stocks that are financially strong meaning they have good sales and earnings growth in the past and our research indicates they will continue to grow in the future, then we do not need to worry.

Some of us investors think it may be the big institution brokerage firms that manage large retirement funds who are the big sellers that move the market. For example, if one institutional firm is selling, they are all selling and vice versa if they are buying. Small investors do not move the markets although small investors enjoy the markets up and downs and are always looking for opportunities and profits.

We need to continually review our stock wish list and see how stocks we would like to own fared during the drop in market indices and decide if the stocks we want to own are in our price range to buy. Although sometimes you think the market may drop even more, you need to make a hard decision if this is the time to buy a stock at a discount price. Remember the markets will move up and down so there will always be opportunities to buy the stocks you want to buy at a good entry price as well as there will be opportunities to sell a stock at a price set for making you a profit.

Stock markets recovered on Wednesday April 9,2014 and the Dow Jones ended up +181.04 points to 16,437.18 up +1.11%, S&P 500 up +20.22 or +1.09% and the Nasdaq up +70.91 or +1.72% to 4183.90.

Good luck and happy investing from CFE finances, we will be in touch with another newsletter soon. If you have any questions or concerns email us from our contact page.