The news at a glance
Dow and S&P hit new highs; New York sues over foreclosure abuses; Senate passes Internet sales tax bill; Whole Foods posts higher profits; AOL shares slump following media losses
Markets: Dow and S&P hit new highsThe Dow Jones industrial average this week closed above 15,000 for the first time, said JeeYeon Parkin CNBC.com. The index also marked its 17th consecutive week of gains, the longest such streak in history. And in further evidence of Wall Street’s bullish mood, the S&P 500 closed at a level more than 20 percent higher than its latest major dip in November. “The market is still exhibiting good karma from last week’s employment report,” said Cam Albright of Wilmington Trust Investment Advisors. “Some of the news that’s coming out of Europe has been a bit more positive as well,” including indications that German factory orders were rising.
Unlike previous rallies, this one doesn’t appear to be “driven by blind optimism,” said Jonathan Cheng in The Wall Street Journal. “Many investors simply see few alternatives to stocks,” especially those that pay high dividends. Also fueling the bullish market“is a sense that the U.S. economy is healthy enough that recession isn’t a concern, but not so strong that the Federal Reserve will pull back on its aggressive measures to ease monetary policy.” But for some investors, strong rallies are a warning sign. “When I see all-time highs in the Dow, that’s a signal to me to back off,” said Frank Seldin, a management consultant in Rhinebeck, N.Y.
Banks: New York sues over foreclosure abusesThe state of New York is suing Bank of America and Wells Fargo, said Jessica Silver-Greenberg in NYTimes.com. Attorney General Eric Schneiderman is accusing the lenders of violating the National Mortgage Settlement, a $26 billion agreement over loan-servicing standards reached last year between five of the country’s largest banks and 49 states. Schneiderman said the two banks had “flagrantly violated” the pact, “putting hundreds of homeowners across New York at greater risk of foreclosure.”
Taxes: Senate passes Internet sales tax billThe Senate passed a bill last week “that would widely subject online shopping—for many a tax-free frontier—to state sales taxes,” said Stephen Ohlemacher in the Associated Press. The bill passed by a vote of 69–27 with bipartisan support, “but opposition from some conservatives who view it as a tax increase will make it a tougher sell in the House.” If signed into law, the Marketplace Fairness Act would allow states to require online retailers to collect sales tax, regardless of whether they have a physical presence in that state.
Companies: Whole Foods posts higher profitsWhole Foods is doing well, said Leslie Pattonin Bloomberg.com. The country’s largest natural-goods grocer reported this week that second-quarter profits climbed 20 percent, while net income rose to $142 million from $118 million a year earlier. The company has previously said it plans to triple its U.S. store count to about 1,000. “Traffic has been pretty decent,” said Joe Feldman, an analyst at Telsey Advisory Group. “They’ve continued to do a good job with their merchandising—there’s high demand for the product category, for the organic and natural.”
Tech: AOL shares slump following media lossesAOL’s share price tumbled 10 percent this week, said Jennifer Saba in Reuters.com, amid continuing concerns that the company’s profits “were still mostly coming from a shrinking dial-up platform.” AOL has steadily shifted its focus from Internet service to media, but the company posted an operating loss of $5 million from its media sites, including Patch, HuffingtonPost, Engadget, and TechCrunch. “The core issue with this company is can they make content profitable?” said an analyst with Macquarie Research. “They are clearly going in the right direction, but we want to see more progress.”