Reports that payrolls grew at the fastest pace since February and the services sector continued to expand helped lift the major indexes to three-month highs. The Dow rose 217 points, the Nasdaq added 58 points, and the S&P 500 gained 25 points. Twenty-eight of the 30 Dow components rose, led by Hewlett-Packard (HPQ), which rose 4%. Volume was moderate, with advancers outpacing decliners by about five to one on the NYSE and by nearly four to one on the Nasdaq. Treasury prices fell, while the gold futures rose 1% to $1,609.30 an ounce. The price of crude oil spiked 4.9% to $91.40 per barrel.
For the week, the indexes rose fractionally, with the Dow, the Nasdaq, and the S&P 500 adding 0.16%, 0.33%, and 0.36%, respectively.
In Earnings News:
- After yesterday’s closing bell, Kraft Foods announced that second-quarter profit increased 5% to 58 cents a share from 55 cents a year prior. Revenue declined by 4% and was hurt by unfavorable exchange rates and slow sales in Europe. Kraft stood by its full-year earnings forecast and said it is on track to split into two companies—an international snacks business and North American grocery business—on October 1. Kraft’s shares (KFT) were up 4%.
- Procter & Gamble, the world’s largest producer of household products, beat analysts’ expectations in the fourth quarter, earning $1.24 per share, up from the 84 cents per share it earned the same period a year ago. Sales declined, and P&G moved forward with its restructuring plans announced in February, including jobs cuts being ahead of schedule. It also announced that it will buy back up to $4 billion worth of its shares during the fiscal year. The stock (PG) added 3% today.
In Other Business News:
- The Labor Department reported that 163,000 jobs were added to payrolls in July, its biggest gain since February. The private sector created 172,000 new jobs, while government positions declined by 9,000. The jobless rate ticked higher, from 8.2% to 8.3%.
- The Institute for Supply Management’s nonmanufacturing index rose to 52.6 in July from 52.1 in June, showing slow but improved growth in the services sector. The new orders component of the index rose one point to 54.3, while the business activity component surged 5.5 points to 57.2. Any reading over 50 indicates business is expanding for service providers.
The 30th Olympic Games have been under way for a week with fierce competition followed by anthems and medal ceremonies. The gold, silver, and bronze medals at the 302 victory ceremonies are the largest ever for an Olympics, weighing about 400 grams and measuring 85mm across and 7mm thick. The approximate 14-ounce weight is about double those made for the 2008 Beijing games. One might think that mass would add up to a valuable hunk of metal based on materials alone.
Using the specifications set by the International Olympic Committee, or IOC, and recent market prices, the gold, silver, and bronze medals are worth about $644, $330, and $4.70, respectively, according to CBS News. The gold medal is, in fact, 92.5% silver, 6.16% copper, and 1.34% gold—only about 6 grams of the good stuff. The Games haven’t had solid gold medals for 100 years—Stockholm 1912 was the last time. (Hopefully the athletes are motivated by more than the medal’s metal. A solid gold London 2012 gold medal would cost more than $22,000 in materials alone.)
Many country’s Olympic committees do give the athletes prize money for winning medals. The U.S. Olympic Committee pays $25,000 for gold, $15,000 for silver, and $10,000 for bronze. Let’s see: Figure five hours a day training for six days a week for four years and a $25,000 payday for gold, it comes out to be about $4.00 per hour. Hmm, this desk job isn’t so bad. And with the government wanting its share of taxes, it takes a special person to go for the gold. At least Sir Paul McCartney didn’t open the Games with “Taxman.”
The durability of these medals also faced a test in these Games. Brazil’s Felipe Kitadai, who won bronze in the 60-kilogram judo competition, was so proud of his medal he took it everywhere—including the shower—where it dropped to the floor and was dented. The Brazilian Olympic Committee requested a new one on his behalf and the IOC said it will issue a replacement. I wouldn’t tell a bronze medal winner in judo “No!” either, but I would suggest soap-on-a-rope instead.
This metal counting won’t end with these games on August 12. Ford Motor created a bit of its own buzz this week when it announced plans to switch some metal components of its popular F-150 pickup truck. According to The Wall Street Journal, executives familiar with the plans said Ford will look to replace steel with aluminum, even in body panels, to pare the 2014 truck’s weight by about 700 pounds—about a 15% reduction. The weight savings could allow the vehicles to travel farther on a tank of gas and meet stricter fuel-economy regulations in the future. We’ll have to see if the pickup purists are ready for the motor company to meddle with their preferred metal. Ford, it appears, believes the savings will be worth the weight ... er ... wait.
Portfolio Manager David Sylvester talks about the impact of European sovereign debt on money market funds as this week’s guest for On the Trading Desk.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
This website is accompanied by current prospectuses for Wells Fargo Advantage Funds®.