Stocks Close Higher Despite Weak Economic Data
Stocks in the US started the trading session on the defensive as investors shied away as the major indices reached resistance levels. Although earnings have been relatively robust, economic data has been soft, and the advance in the stock market has been predicated on investor’s ability to blame the weakness on the weather. The colder than normal conditional in the eastern portion of the U.S. combined with inclement snowy conditions has sapped consumer spending and eroded job creation. Stocks quickly rebounded after moving lower initially, as all three major indices settled in the black.
Economic data came in weaker than expected eroding the futures market ahead of the open. Retail sales came in a -0.4% month over month compared to the -0.1% expected by economists. The ex-transportation retail sales report came in flat which was in line with expectations. December’s series was revised lower for the core moving to a 0.3% increase from the originally posted 0.7% increase. Meanwhile, Jobless claims printed at 339K compared to the 330K expected by economists.
There were two important media related news items that hit the street overnight. First, CBS (NYSE:CBS) reported Q4 earnings which exceeded Street forecasts. The company reported earnings per share of $0.78 and revenues climbing 14.3% to $3.91 billion. Net income rose to $470 million from $393 million.
The second piece of news was a block buster merger. Comcast’s (NASDAQ:CMCSA) is reported to have bid to acquire Time Warner Cable (NYSE:TWC) for $45 billion in stock, above a $38 billion offer from Charter Communications (NASDAQ:CHTR) . The merger would create a cable TV giant with 32 million subscribers, so it wouldn’t be a surprise if it were to face huge, if not insurmountable, regulatory hurdles. The biggest surprise from the deal is that Time Warner did not require a breakup fee which could keep them on the hook, and give Comcast unusual flexibility.
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