Equities
The stock market had another strong run on Thursday with the three major indices moving higher from the prior session. The Dow Jones in particular managed to cross through a psychological threshold by eclipsing the 16,000 mark, ultimately closing up 0.40%. However, the Dow remains the laggard of the major indices, which is still down more than 2-and-a-half percent year-to-date.
Earlier in the week, enthusiasm was quite high as new economic data from China indicated a potential reversal of bearish trends, while the newly appointed Federal Reserve Chair Janet Yellen gave a statement which was perceived by market participants to be confident and reaffirming. The dichotomy, though, continues to present itself between equity valuations and the “real economy.” According to the latest data from Haver Analytics, domestic retail sales for month of January dropped to four-tenths of a percent, well below even December’s poor results. While much of the decline in consumer demand could be explained by the recent storms that are affecting the east coast, the divergence is nonetheless worrying and investors should to continue to remain vigilant.
Currencies
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US Dollar
The overall market action for the U.S. Dollar index was relatively muted, with the greenback trading in a very tight range throughout most of the week, with Thursday’s session closing at 80.29
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Yen
The action on the Dollar/Yen was somewhat choppy, although upside momentum was notably capped following Janet Yellen’s first official statement as Federal Reserve chair. The Yen closed Thursday at 102.16 after another volatile trading day.
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Euro
The Euro/Dollar pair took a sizable dip mid-week after a European Central Bank executive board member stated that imposing a negative deposit rate was a possible option to induce further liquidity in the Eurozone region. However, Thursday’s price action recovered previous losses as traders anticipate the release of GDP data on Friday.
Winners & Losers
The winner for this week is Packaging Corporation of America, ticker symbol PKG:
- Packaging Corporation rode the bullish momentum swing of the underlying equities market this week, punctuated by a 10% move on Wednesday after an earnings report beat estimates by 15-cents per share.
- The company also reported record level of sales in the fourth quarter, along with significantly increased volume in December, lending some credence to a potential improvement in the domestic business environment.
The loser for this week is IMAX Corporation, ticker symbol IMAX :
- Ever since IMAX was featured on Money magazine’s “Investment Guide” for 2014, shares have declined more than 12%.
- Despite company guidance where profits are anticipated to grow 45% this year, and 23% annually for the next several years, IMAX has had trouble making inroads into the burgeoning Chinese market, thus increasing the dependency of the firm’s main movie business to the quality of Hollywood content.