U.S. Market
Stocks moved higher today after Fed Chair Janet Yellen testified before the Senate.
Yellen provided testimony to the Senate Banking Committee this morning that was broadly in line with her earlier testimony to the House. She did indicate that there have been growing signs of softness in the economy, but that it was too soon to tell if this was caused by the unusually cold weather or other factors.
Initial unemployment claims rose 14,000 to 348,000 last week. Economists had expected claims to come in at 335,000. The less volatile four-week moving average was largely unchanged at 338,250.
Durable goods orders fell a less-than-expected 1% in January from December levels. Much of the decline was driven by the volatile transportation category which includes commercial aircraft. Orders of nondefense capital goods, excluding aircraft, were up 1.7% in the month,
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At market close the Dow and S&P 500 were each up 0.5% while the Nasdaq was 0.6% higher.
Stocks on the Move
Shares of Best Buy (BBY) gave up early gains to end lower after the firm reported fourth-quarter results. Adjusted operating margins fell 120 basis points to 4.5%, which was less severe than the guidance management laid out in its holiday sales update in January (which called for 175-180 basis points of compression), attributed to tighter expense management, vendor support for holiday price-matching efforts, and a modestly less promotional post-holiday retail environment.
J.C. Penney’s (JCP) fourth-quarter results modestly exceeded market profitability expectations and met the company’s projection for $2 billion in liquidity at year-end. J.C. Penney offered some indication that gross margins can continue to improve while capital expenditures, working capital, selling, general, and administrative expenses, and even cash taxes and pension expenses will be tailwinds to cash flow in 2014. Gross margins are still down more than 10 percentage points from prior levels around 39% after the failed remerchandising effort undertaken during 2012 and 2011. Shares soared over 25% on the news.
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