Economic Factors Weigh on U.S. Indexes

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Mar 15, 2015

U.S. financial market indexes were down for the March 13 week as lower oil prices and the rising dollar continued to weigh heavily on U.S. companies. The Dow Jones Industrial Average was down 0.57% for the week while the S&P 500 was down 0.87%.

During the week the market digested major reports on retail sales and inflation. The U.S. Census Bureau’s February Retail Sales report showed retail sales down 0.6% from the previous month as cold weather kept consumers from spending. Lower spending at home furnishing stores, dining establishments and general merchandise stores showed consumers’ propensity for staying indoors during the month. In total, consumers spent $437.01 billion in February compared to $439.57 billion in January.

Meanwhile, inflation data from the Commerce Department’s Producer Price Index showed prices falling 0.5% for the month of February. For the previous 12 months the Producer Price Index showed a decrease of 0.6%. The index, which measures the price wholesale producers receive for their goods, is another indication of the stronger dollar’s influence. The lower inflation reading could have effects on the Federal Reserve’s timing for a rate increase since inflation is a key factor for the Federal Reserve when considering monetary policy decisions. While the Producer Price Index is not a significant inflation measure for the Federal Reserve its lower reading in February further exemplifies the effect the stronger dollar is having on U.S. companies in the current economic environment.

In the Dow Jones Industrial Average technology stocks fell the most with Intel (INTC, Financial) down 6.81% and Cisco (CSCO, Financial) down 3.41% as technology stock values deflated during the week. In the S&P 500 technology stocks were also down with the sector falling 2.12% for the week. Energy stocks showed the greatest losses in the S&P 500 falling 2.80% for the week.

Next week Apple (AAPL, Financial) will join the Dow Jones Industrial Average and while its hefty market cap will be significant its price factor will be less so. In the Dow Jones Industrial Average, Apple will have the greatest market cap currently at $715 billion. However, in the price-weighted index Apple will be among the top ten in stock price currently ranking sixth at $123.59.