S&P 500 FINANCIALS INDEX continues sliding after yesterday's decline, down 1. The Alerian MLP Index fell 2½ taking it pennies under the 200 floor, dangerous territory for those watching technical indicators. REITs are weak while junk bonds are mixed. VIX, volatility index, is up 1 but in the flattish range where it's been for the last week (low 40s). Oil is slightly higher.
The US economy shrank at its fastest rate since 1982, sinking deeper into a recession. Gross domestic product (GDP), which measures total goods and services output in the U.S., plummeted at a 3.8% annual rate in Q4, after falling at a 0.5% rate in Q3. These were the first consecutive declines in GDP since 1990-91.
•U.S. Economy Shrinks at 3.8% Pace, Most in 26 Years, as Spending Crumbles
Exxon Mobil, a Dow stock & recent addition as an S&P 500 Dividend Aristocrat, earned a record profit for any company, $45B last year. Q4 EPS was down from the prior year, but beat forecasts. The stock was up 89¢. Chevron (CVX), Dow stock & 2nd largest US oil company, also had an excellent report for last year thanks to high oil prices for much of the year. Royal Dutch Shell (RDSA), 2nd largest oil company in the world, reported a loss in Q4, but still achieved record annual profits for a European company. Oil stocks are strong today.
- Exxon Mobil shatters US record for annual profit- AP
- Chevron earnings rise on asset swap gain- Reuters
Caterpillar (CAT), another Dow stock, after reporting dreary earnings along with layoffs, just announced more than 2K additional workers were to be laid off. This brings total layoffs to 20K out of a workforce of more than 110K. I consider CAT as representative of many companies.
Asian stock markets have to endure the same problems as in the US. This is their earnings season & they also have dismal reports. Companies we all know, Sony, Toshiba, Toyota, Honda, Canon, Samsung, LG, Lenova, are all reporting the worst numbers in 2 decades (if not the worst in history) resulting in large layoffs. This week, the Shanghai stock market is closed for Chinese New Year.
While still trading in the same trading range, above 8K, Dow is on defense again. But now it's hovering near the 8K floor.
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