Stocks paused after yesterday’s record close above 2,000 for the S&P 500 Index. Weighing down stocks were escalating battles in Ukraine and a downgraded assessment of the U.S. economy for the rest of the year from the Congressional Budget Office.
The Dow rose 15 points, with 17 of its 30 components gaining ground; the S&P 500 Index gained a fraction of a point; and the Nasdaq lost 1. Advancers led decliners by four to three on the NYSE, and decliners edged out advancers by five to four on the Nasdaq. The prices of Treasuries strengthened. Gold futures fell $1.80 to close at $1,283.40 an ounce, and the price of crude oil gained 2 cents to settle at $93.88 a barrel.
In Earnings News:
- Chinese e-commerce company Alibaba’s second-quarter net income jumped to 12.3 billion renminbi (about $2 billion) from 4.3 billion renminbi in the prior-year quarter. Quarter over quarter, smartphone users of Alibaba’s e-commerce sites rose 25 million to 188 million. Alibaba is expected to hold its initial public offering in the U.S. in the next few months, with some estimates putting the company’s valuation at nearly $150 billion. The company previously announced it would trade on the New York Stock Exchange. Shares of Yahoo! Inc. (YHOO), which owns about 24% of Alibaba, gained 1.03%.
In Other Business News:
- Revenue at nonprofit hospitals continued to lag their publicly traded counterparts in 2013, according to Moody’s Investors Service. The hospital industry in general suffered from falling admissions, lower reimbursement rates, and patients putting off care due to higher deductibles, with revenue rising 3.9%, nearly half of the average increase the past several years. For-profit hospitals in states that expanded Medicare under the Affordable Care Act performed well in recent quarters, the report noted, in part due to lower amounts spent on providing services to uninsured patients.
- The U.S. economy will grow only 1.5% in 2014, according to the latest estimate from the Congressional Budget Office, a drop from its February estimate of 3.1%. However, the CBO expects better economic growth in 2015 and 2016, estimating a 3.4% annual growth rate for each year. The CBO also forecast that the U.S. will record a fiscal 2014 budget deficit of $506 billion for the year ending September 30. For the next decade, the CBO reduced its cumulative deficit estimate by $400 billion to a total of $7.196 trillion.
- More than 11 million U.S. customers were without internet access today after a national outage at internet service provider Time Warner Cable. In response to the outage, New York Governor Andrew Cuomo called for an investigation in light of Comcast’s proposed acquisition of Time Warner. Time Warner’s shares (TWC) gained 0.35%.
The U.S. Department of Agriculture released its annual estimate of what it would cost to raise a child born this year until their 18th birthday. Once again, raising a child didn’t become cheaper, even though parents have had collective eons of child-raising experiences that should have gotten this spending under control via some coordinated hand-me-down system and group purchases of peanut butter. The USDA estimates that it will cost $245,340 for a middle-income, married couple to raise a child in a two-child household, or about $37 a day. That’s up from $241,080 for a child born the previous year. No word on what this average couple will spend on the other kid in the two-child household, although it could lead to some awkward conversations (“Sorry, but we just spent $245,000 on your brother. Here, have his old shirt.”)
The biggest projected expense was housing, specifically the extra costs involved in paying for a house with an extra bedroom (parents could, of course, house their children in the cupboard under the stairs, but there’s no need to inspire any more young adult fantasy stories). The next most expensive items were education and child care, which together account for 18% of the costs of raising a child. Food was in third place, at 16% of the total.
That cost breakdown contrasts sharply with 1960. Back then, the USDA estimates parents spent a total of $198,560 to raise a child to 18 (in 2013 dollars). Only 2% of that went toward education and child care, while parents spent 24% of their child-related costs on food. It’s not that children ate more; it’s that food and clothing were more expensive before the global mass-production revolution in outsourced manufacturing.
If my parents had known about this lofty figure, I can imagine them hanging a sign over my bedroom door that said, “This door costs $37 a day. What have you done to be worth it?” And I can just as easily imagine myself handing them an itemized receipt every day, stating, “Congrats on being the recipient of $50 worth of joy and happiness. You owe me $13. You’re welcome.”