Other than a headline-grabbing comment from St. Louis Federal Bank President James Bullard that unsettled the market on Thursday, it was a relatively quiet week as we head into second quarter earnings season. Bullard believes that the economy is getting strong enough to get the Fed to begin raising interest rates as early as March of next year; a position not widely accepted by the full governance of the central bank. To wit – first quarter GDP was revised downward to a negative 2.9%. In all, the Dow fell less than a point and the S&P 500 was basically flat on the week, but the NASDAQ was able to buck the downward trend closing up 0.68%. Crude oil prices, as indicated by domestic light crude, were lower on the week by $1.52 and gold trended higher to $1,319.
In portfolio news, The Manitowoc Company (NYSE: MTW – $32.93) rose over 10.8% on Friday as activist group Relational Investors, declaring an 8% stake in the company, suggested that the board consider a split of its food service business from its crane operations. While I would not be against such a plan, it may be difficult for Relational to exercise much influence and seek board representation at the Wisconsin-based manufacturer that has strong anti-takeover provisions at both the state and company levels. I still like Manitiwoc in its current configuration, but a separation of the two disparate businesses would, I believe, unlock shareholder value and should at least be considered by management. Dow Chemical Co. (NYSE: DOW – $51.61) took a hit on Friday in sympathy with rival DuPont’s subdued forecast for the remainder of the year. Dow announced it will begin construction on a new ethylene production facility in Freeport, Texas and says that it will support market growth and expansion of Dow’s plastics business. The company, down $0.86 on week, hit a multi-year high of $53.25 on Tuesday. Applied Materials (NASDAQ: AMAT – $22.40), trading at a 10-year high, announced that Taiwan Semiconductor placed an order worth $71.9 million on Friday, as the shares of the equipment maker continue to gain favor by analysts. The New York State Court of Appeals shot down the absurd plan to limit the sale of “large sugary drinks” citing the big apple in overstepping its bounds for citizen’s freedom of choice. With the City of New York having bigger issues to worry about, the shares of conservative candidate Coca-Cola Co. (NYSE: KO – $42.19) moved ahead on the news and set a multi-year high for the week.
In the coming holiday-shortened week, June auto sales, non-farm payroll news and the latest report on manufacturing will likely move the markets, not to mention some speeches from Federal Reserve Chair Janet Yellen and San Francisco Fed President John Williams. In the meantime, enjoy the holiday.