MarketView for Febuary 13

Summary

Stocks closed higher on Thursday, with the Nasdaq rising for a sixth straight day, as Wall Street looked past disappointing data on consumer spending, chalking the weakness up to weather instead of weaker fundamentals. For example, the Nasdaq is up about 5.7 percent over the past six sessions, its best six-day advance since December 2011. Both the Dow Jones Industrial Average and S&P 500 rose for the fifth session out of the last six.

The indexes opened lower but gained throughout the session, although Cisco Systems, which sank after warning about a slump in revenue, limited the Dow's advance. Cisco fell 2.5 percent to $22.27 as one of the biggest drags on all three major U.S. indexes. The network-gear maker forecast a 6 to 8 percent drop in revenue in the current quarter.

Initial claims for state unemployment benefits unexpectedly rose last week while January retail sales fell and December retail sales were revised lower.

Comcast reported that it had agreed to acquire Time Warner Cable for $45.2 billion in an all-stock deal that combines the two largest U.S. cable operators. As a result, Time Warner Cable shares rose 7 percent to $144.81 while Comcast shed 4.1 percent to $52.97. Shares of Charter Communications, which had also pursued Time Warner Cable, fell 6.3 percent to $128.91.

A deadly winter storm moved north along the East Coast of the United States on Thursday, bringing heavy snow, sleet and rain across the Washington, D.C., and New York areas, grounding flights and shutting government offices. A scheduled Senate hearing with Federal Reserve Chair Janet Yellen on Thursday was postponed due to the snow. Yellen's testimony Tuesday helped fuel strong gains on Wall Street.

Whole Foods saw its share price fall 7.2 percent to $51.46. The food retailer stunned investors on Wednesday by cutting its 2014 sales forecast for the second time in three months.

Goodyear Tire & Rubber rose 11.5 percent to $26.94 posting higher-than-expected fourth-quarter earnings on Thursday and said it had fully funded its hourly U.S. pension plan.

Of the 382 companies in the S&P 500 that reported earnings through Thursday morning, 67.5 percent exceeded earnings expectations; this was above the 63 percent average since 1994 and slightly above the 67 percent rate for the past four quarters, according to Thomson Reuters’ data.

After the market closed, American International Group rose 3.2 percent after it reported results and raised its dividend. Brocade Communications rose 7.7 percent after the bell.

Avon Products fell 2.9 percent to $14.62. The beauty products company said it may pay as much as $132 million to settle a U.S. bribery investigation into its efforts to develop new markets overseas.

About 5.96 billion shares changed hands on the major equity exchanges, according to BATS exchange data. About 70 percent of companies traded on both the New York Stock Exchange and the Nasdaq closed higher.

And The Snow Is Not Helping

Retail sales were lower during the month of January and more Americans filed for jobless benefits last week, the latest signs the economy started the year on softer footing as unseasonably cold winter chill took its toll. More to the point, large parts of the country have been gripped by freezing temperatures and snow storms, which have been blamed for weak hiring over the past two months.

Retail sales fell 0.4 percent last month, led by a sharp decline in automobile sales and categories such as clothing, furniture stores and restaurants that depend of foot traffic. And if that was not enough, December sales were revised to show a 0.1 percent dip. They had previously been reported to have increased 0.2 percent. While the two straight months of declining sales most likely reflected frigid temperatures, there were also signs of general weakness creeping in as online sales also fell.

Last month saw receipts at auto dealers fall 2.1 percent. It was the second consecutive month of decreases. Auto manufacturers complained last week that frigid temperatures had hurt sales. Retail sales excluding automobiles were flat. Sales of building materials and garden equipment rose 1.4 percent, likely boosted by demand for snow removal equipment. There were also gains in receipts at service stations and electronics and appliance stores.

If you remove automobiles, gasoline, building materials and food services, so-called core sales fell 0.3 percent. Core sales for December were revised to only a 0.3 percent rise from a previously reported 0.7 percent advance. November's core sales figure was also revised down. They correspond most closely with the consumer spending component of gross domestic product.

The downward revisions to November and December core sales suggest that fourth-quarter consumer spending and economic growth were not as strong as initially thought. In its first estimate of fourth-quarter GDP, the government said the economy grew at a 3.2 percent annual pace, with consumer spending advancing at a 3.3 percent rate.

In the wake of other data exhibiting a larger trade deficit than the government had assumed, economists expect fourth-quarter GDP growth to be lowered substantially when the government publishes updated figures later this month.

In a separate report, the Labor Department said initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 339,000 in the week ended February 8. Economists had expected them to slip to 330,000. A four-week moving average of claims, considered a better measure of labor market trends, rose 3,500 to 336,750, suggesting layoffs have picked up only marginally.

Bad weather was likely behind the rise in filings last week. With another winter storm hitting many parts of the country this week, the survey period for February nonfarm payrolls, there is a good chance of a third month of weak hiring.