Assignment
melssa4RUNNING HEAD: ANALYSIS OF THE MARKET 1
ANALYSIS OF THE MARKET 6
ANALYSIS OF THE MARKET 7
According to Bowman (2014), the stocks in all markets in the U.S traded cautiously on Wednesday morning with the expectation of an announcement by Janet Yellen, the Federal Reserve Chairwoman. The stocks fell later that day with the announcement that the central bank intends to increase the interest rates in a little over six months even if the level of unemployment does not improve considerably. The Federal Open Market Committee is worried that the inflation could increase further if such measures are not taken.
Thalman (2014) went on a little further to explain that the central bank intends to maintain a low short term interest rate. The central bank is also considering reducing its asset purchase price sum by about ten billion dollars. These efforts have seen the stocks fall after this announcement. As a result, the Dow Jones Industrial Average dipped by 117 points compared to last week’s performance of the market index. This can be explained by the fact that investors are losing confidence in the economy. They believe that the economy does not seem to maintain its current growth rate if the cost of borrowing continues to increase.
This week recorded a general dismal performance in the portfolio stocks. However, most stocks gained ground compared to last week. These stocks are MSFT, RRD, CZR and BBY. The overall gain is nonetheless weak since it is overshadowed by the significant reduction in value of some of the shares, especially IEP. The other losers after IEP are DAL, DCI, RLGY, KO and SVU in that order.
Our top gainer this week is MSFT. The shares traded up 2.64% from 38.27 to 39.27 at the close of trading on Wednesday. The gain can be attributed to reports saying that Microsoft has debatably one of the best dividend growths potential currently. Other than that, Microsoft is one of the leading companies globally with a market capitalization above $0.3 trillion. The trend of the performance of share is fairly stable. The company has showed a growth of about 35% in the past financial year. The company is also expects to report an increase in the sale of the Xbox One console in the near future thanks to the award winning game, Titanfall. These reasons give the investors hope that the company is headed in the right direction.
RR Donnelley & Sons Company edged up by 2.51% to close trading on Wednesday at $18.87. Gravure Management Excellence Awards named RR Donnelley the Company of the year. The awards were presented by the Gravure Association of the Americas. This announcement was made early this week. The gravure industry has this association as its best and top marketing, technical and educational resource. RR Donnelley also prides itself in scooping other awards in categories that recognize the company’s efforts to empower its employees. Employee safety, sustainability and development are the areas the Association was pleased with the company.
The Chief Executive Officer of the company expressed his gratitude for the award and is committed to continue focussing on the well being, effectiveness and safety of the employees. He went on to say that the management is watchful of the environmental impact in the society in which the company operates and inhabits. Moreover, Tom Carroll, the company’s Executive Vice President and Chief Human Resources Officer stated that the company is putting a lot of emphasis in the sectors of developing, retaining and advancing their employees. He added that they allow the employees to serve as mentors to their colleagues thereby enhancing leadership opportunities within the company. Such kinds of efforts make the employees feel part of the company and they are motivated so that they produce products of high quality to the customers.
Caesars Entertainment gained 1.32% in value from last week’s price of $24.10 to $24.41. During the end of last week however, the company had sold properties amounting to approximately $2.2 billion to its subsidiary; Caesars Growth Partners. In spite of its efforts to try manage its overwhelming debt burden of about twenty one billion dollars, the move to sale the assets responsible for growth may be viewed as unwise. This is the reason the stock traded poorly towards the end of last week (Hoium, 2014).
Early this week, Caesars Entertainment announced that it had secured a preliminary licence to construct a casino in South Korea. The licence was approved by the South Korean Ministry of Culture, Sport and Tourism. The casino is to be a foreigner only casino to be located a few miles from Seoul in Incheon. The investors were pleased with such news that boosted their confidence in the shares, resultantly having the share prices increase by about 3.5% in Tuesday afternoon. This is the first significant venture in Asia for the company. Lippo Group and OUE is a casino builder based in Hong Kong that came into a joint venture with Caesars Entertainment to see this project become a reality possibly before the commencement of the 2018 Winter Olympics in Korea. The casino will encourage the economic growth of the host country and make real its tourism objectives (Detar, 2014).
Icahn Enterprises L.P. is this week’s biggest loser after it shed 7.29% of its stock prices to settle at $102.19 at the close of trading on Wednesday. In just two weeks, the shares of the company have decreased by almost fifteen percent despite the impressive quarterly financial report. It is evident that the investors are influenced by emotion. This comes after Carl Ichan engaging strongly in a debate over the management of eBay with regards to PayPal. EBay purchased PayPal in the year 2002 for a one and a half billion dollars. Mr. Ichan now calls on eBay to sell a fifth of its PayPal payments unit in an IPO. This is a different approach considered by the CEO of Icahn Enterprises who argued that PayPal is an undervalued entity in eBay and that eBay should sell the entire of its PayPal payments. Ichan also argues that PayPal needs to be independent to compete effectively in the mobile payments industry by seizing the opportunity to offer new services that exist in the market which include check writing and direct deposits.
Delta Air Lines Incorporated recorded a 2.43% decline in its stock performance in our stock portfolio. A panel fell off the wing of a Boeing 757 aircraft during a flight from Orlando to Atlanta on Sunday. This is the subject matter under investigation by the company. It was found out that the panel was missing from the top the wing. None of the 185 people on board were injured. The company operates a fleet of seven hundred and forty three aircrafts. About 21% of the aircrafts are the Boeing 757 (Schlangenstein, 2014).
In addition, the company’s competitor, JetBlue is offering a reward program to frequent fliers even if they belong to another airline’s loyalty program. This upgraded reward program is what the airline also refers to as a Mosaic membership. The customers will be required to sign up and complete the Mosaic Challenge whose membership validity runs through the year 2015. Each contestant is required to earn 3750 base flights over a three month period. Three points are worth a dollar spent on an individual fare. The benefits of the membership include boarding early and checking two bags free of charge. This should worry the investors of Delta Air Lines Inc since its loyalty program qualifies for the Mosaic membership.
Investors are looking forward to see how the partnership of the Atlanta-based airline with LinkedIn will pay off. The partnership is meant to connect the LinkedIn community with the leaders from various industries on a particular assigned flight through an “Innovation Class” program.
Shares of Donaldson Company, Inc. shed off 2.26% compared to last week. This can be explained by the fact that the company recently issued their quarterly earnings report. The net income applicable to common shares reduced from $61,592,000 to $58,340,000 which represents a drop of 5.28%.
The data chart below shows the previous week’s performance as at the close of trading on Wednesday.
Source: https://finance.yahoo.com/portfolio/pf_3/view/v2
References
Bowman, J. (2014, March 19). Dow Skids As Guess? Falls After Hours, but KB Homes Shines. Retrieved from http://www.fool.com/investing/general/2014/03/19/dow.aspx
Congrats Microsoft Shareholders... You Nailed It. Retrieved from http://seekingalpha.com/article/2098183-congrats-microsoft-shareholders-you-nailed-it?source=yahoo
Detar, J. (2014, March 18). Top U.S. Casino Caesars Lands South Korean License. Retrieved from http://news.investors.com/031814-693679-caesars-shares-climb-on-korean-casino-license.htm?ven=yahoocp&src=aurlled&ven=yahoo
Delta Partners with LinkedIn to Connect Present and Future Business Leaders In-Flight. Retrieved from http://finance.yahoo.com/news/delta-partners-linkedin-connect-present-201100626.html
Hoium, T. (2014, March 14). Caesars Becoming Weaker After Asset Sales. Retrieved from http://www.fool.com/investing/general/2014/03/14/caesars-becoming-weaker-after-asset-sales.aspx
Icahn Changes Course, Urges eBay to Sell 20 Percent of PayPal. Retrieved from http://finance.yahoo.com/news/icahn-calls-ebay-sell-20-173243220.html
RR Donnelley Named Company of the Year in the Gravure Management Excellence Awards. Retrieved from http://finance.yahoo.com/news/rr-donnelley-named-company-gravure-103000204.html
Schlangenstein, M. (2014, March 17). Delta Investigates Loss of Boeing 757 Wing Panel During Flight. Retrieved from http://www.bloomberg.com/news/2014-03-17/delta-investigates-loss-of-boeing-757-wing-panel-during-flight.html?cmpid=yhoo
Sorry Airlines, JetBlue Wants Your Loyal Customers. Retrieved from http://www.cnbc.com/id/101504015?__source=yahoo%257cfinance%257cheadline%257cheadline%257cstory&par=yahoo&doc=101504015%257cSorry+airlines,+JetBlue+w
Thalman, M. (2014, March 19). Markets Fall As Fed Continues to Taper. Retrieved from http://www.fool.com/investing/general/2014/03/19/markets-fall-as-fed-continues-to-taper.aspx
Why Microsoft Is A Must For Your Retail Portfolio. Retrieved from http://seekingalpha.com/article/2097823-why-microsoft-is-a-must-for-your-retail-portfolio?source=yahoo