Wednesday, March 6, 2013

GE Leads the Dow Higher

As of 1:20 p.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down 40 points, or 0.29%, to 13,979. The S&P 500 (SNPINDEX: ^GSPC  ) is flat, up less than a point.

There were three U.S. economic releases today:





Retail sales




Import price index








Source: MarketWatch U.S. Economic Calendar.

This morning the Department of Commerce reported that retail sales rose a seasonally adjusted 0.1% in January. While the growth rate was below December's 0.5%, it was still above analysts' expectations of no growth. If you exclude the volatile automobile sector, retail sales rose 0.2%, beating analyst expectations of 0.1% growth.

US Retail Sales data by YCharts.

Analysts expected low growth as the 50% rise in the payroll tax, which took effect on Jan. 1, takes an immediate toll on consumers' disposable incomes.

The second U.S. economic release came from the U.S. Department of Labor, which reported that import prices rose 0.6% in January, slightly below analyst expectations of 0.7% growth. The rise in import prices was led by fuel prices, which rose 2.4% in January. Excluding fuel, import prices only rose 0.2%.

The Department of Commerce also reported that inventories rose 0.1% in December. That's below November's 0.3% growth but in line with economists' expectations. Year over year, inventories were up just more than 5%.

Today is markedly more negative than yesterday, with 17 of 30 Dow stocks down for the day.

Today's Dow leader
Today's Dow leader is General Electric (NYSE: GE  ) , up 3.4% to $23.35, beating its previous 52-week high of $23.18. The move follows Comcast's (NASDAQ: CMCSA  ) (NASDAQ: CMCSK  ) announcement it would buy the 49% of GE's NBCUniversal unit that it does not already own for $16.7 billion. GE plans to use the funds to return $18 billion in cash to shareholders through buybacks and dividends. GE sold 51% of its NBCUniversal unit to Comcast in 2009 for $13.8 billion with an agreement to buy the remaining 49% in 2014. Comcast is taking advantage of today's historically low interest rates, as well as cash built up on NBCUniversal's balance sheet.

The purchase comes at a tricky time for cable TV companies, as consumers are beginning to consider dropping their cable subscriptions for on-demand services from Netflix and Amazon. It will be interesting to see how cable companies' business models change (or don't) in the coming years in response.

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