Thanks for joining on this edition of PowerTalk, where I, Chris Versace - editor of the PowerTrend Profits investing newsletter, dish with good friend Keith Bliss of Cuttone & Co. from the floor of the NYSE. Each week we'll be breaking down the latest goings on in the market and talking about what's moving it. We also share what data and events we'll be keeping our eyes on next week.
This past week was an interesting one to say the least. From the start of the sequester and the would be snow-quester on the east coast to the latest economic data that points to a firmer domestic economy. Despite a better than expected February Employment Report, there are reasons to be think that this could be an outlier rather than the real thing. Not only did the Challenger Grey Job Cuts report point to a 37% increase in job cuts during February, but sifting through this week's Fed Beige Book reveals restrained hiring given the implications of the Affordable Care Act. Factor in the expected impact of the sequester on defense companies and related contractors and odds are job creation in March will abate.
That's not to say the February Employment Report was all bad. The pick up in construction jobs boosts the case for homebuilders, like Toll Brothers (NYSE:TOL), Ryland Group (NYSE:RYL) and Lennar Corp. (NYSE:LEN) among others as well as homebuilding materials companies like USG (NYSE:USG) and Sherwin Williams (NYSE:SHW).
Amidst all of this, the stock market continued to grind its way higher this week with the Dow Jones Industrial Average closing at a new high and the S&P 500 not far behind. One concerning point in this move higher is that the leaders have not been the usual suspects. That is, it's not tech, financials or consumer discretionary that are leading the way, but rather defensive sectors like consumer staples, utilities and the like.
On our radar next week is the February economic data that will start to reflect the jump in gas prices. More specifically that's inflation figures a la the consumer and producer price indices as well as retail sales figures. Already a number of companies including Rite Aid Corp. (NYSE:RAD), Ross Stores (NASDAQ:ROST), Zumiez (NASDAQ:ZUMZ), The Buckle (NYSE:BKE), Fred's (NASDAQ:FRED) and Cato Corp. (NYSE:CATO) have announced negative February same store comparisons. With gas prices up 11% on average for the month and a hefty 14% year to date, odds are there will be more disappointing retail figures to be had.
Be sure to come back next week, when Keith and I will be break it all down again as we wrap the week and look ahead.