Tuesday, January 11, 2011

Earnings season begins with rising markets

Dow gained 50, flirting with setting a new 28 month high.  Advancers were ahead of decliners 2-1 & NAZ was up 9.  Bank stocks led the market rise. 


Value 219.40 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   1.67  (0.8%)

The Alerian MLP Index rose 1¾, in less than a month the index has risen 19 to a new record high.  The REIT index was down a fraction to 222+ & has been trading sidways for the last 3 weeks.  Junk bond funds continued mixed, going nowhere.  10-year Treasury yields rose from near the lowest level in 4 weeks as the Treasury prepares to auction $66B in 3-, 10- & 30-year securities this week (down from $100+B in some weeks last year).  The yield on the 10-year Treasury was up 5 basis points to 3.35%.

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

10-Year Treasury Yield Index   ---   2 weeks

Oil rose for a 2nd day after the closure last week of the Trans Alaska Pipeline System threatened to curb supplies to refiners.  Of course, all the cold weather out there doesn't hurt.  Gold has returned to its winning ways after having a tough time this year.  Longer term, gold has risen for 10 consecutive years & is looking to extend that streak in 2011.  A link is provided below to learn more about gold.

CLG11.NYM...Crude Oil Feb 11...89.98 ...Up 0.73  (0.8%)

GCF11.CMX...Gold Jan 11.......1,382.10 ...Up 8.40  (0.6%)

Gold Super Cycle Link! Click Here

Businesses at the wholesale level trimmed stockpiles in Nov for the first time in nearly a year, even though sales rose for a 5th consecutive month.  The Commerce Dept reported wholesale inventories dipped 0.2%, the first decline since Dec 2009. But sales rose 1.9% after a 2.6% surge in Oct, the largest monthly gain since Mar.  The Nov drop in inventories came as a surprise, analysts had expected another increase. However it will likely be viewed as a temporary setback & not the start of a trend in cutting back on stockpiles. Inventory rebuilding has been a major support to the economy over the past year.

Wholesale Inventories in U.S. Declined 0.2% in November as Sales Increased

Alcoa (AA), a Dow stock, reported a Q4 profit & projected a 12% rise in demand for aluminum in 2011, driven by aerospace & auto manufacturing. But the stock, which hit a 12-month high last week, dropped 29¢ to $16.20 on doubts that the company's bullish forecast was realistic. "Pretty much every one of our end markets is improving," said CEO Klaus Kleinfeld.  "We do not expect the substantial growth to come from the U.S. and Europe. We believe that those emerging economies will accelerate and there the driver pretty much is infrastructure building, and all the other end markets that we are seeing, from automotive to packaging to building and construction."  Kleinfeld said AA expects demand growth in the aerospace sector to increase 7% in 2011 & 5-11% in the auto industry.  The beverage can sector was likely to be flat to 2% higher this year, but AA sees commercial construction industry demand for aluminum increasing 2-3% as the building sector appears to be improving.  "When you look at the monthly contracts awarded and the construction starts ... it looks really like a bottoming out. It is not dropping further.  So it could well be, if you take an optimistic perspective, that we might be seeing the bottoming out of this market here in the U.S."  EPS in Q4 was 24¢ (21¢ excluding special items), below 27¢ last year.  Revenue rose 4% to $5.7B.  These comments give insights into what to expect from their client businesses.

Alcoa Sees `Headwinds' in Growth in China Aluminum Use as Car Demand Slows

Alcoa   ---   1 year

Photo:  Yahoo

Sears Holdings (SHLD) expects Q4 & full-year adjusted earnings to top expectations as better sales at its Kmart chain cushioned the blow from declines at Sears stores.  The company, which runs Sears & Kmart, predicted that EPS for the year (ending Jan 29) will be $1.16-$1.88 per share, beating expectations of 88¢.  In Q4, SHLD expects adjusted EPS of $3.39-$4.12, above $3.12 estimated by analysts.  Revenue at stores open at least a year dipped 1.7% in Dec.  Results for Sears domestic stores dropped 6% in Dec while Kmart reported a 2.3% increase.  For the qtr to date, revenue at stores open at least a year dipped 1.1%, with results at Sears domestic locations off 5.3% (hurt by soft sales of consumer electronics, appliances & tools).  Qtr to date results at Kmart climbed 3.4%, benefiting from its layaway program as well as strength in toys, home, sporting goods, clothing & shoes. Weaker categories included pharmacy & groceries.  In Q3, SHLD posted a 4.8% drop in revenue at stores open at least a year.  YTD revenue at stores open at least a year declined 1.6%, again pressured by Sears domestic stores, which fell 3.8%. Kmart edged up 0.8% YTD.  The stock rose $4.89 to $75.49 (where it was in Jun).

Sears Rises After Fourth-Quarter Profit Forecast Tops Estimates

Sears Holdings    ---   1 year

Even with doubts about  the optimistic forecast by AA, markets were encouraged by what they heard & are rising,  JPMorgan (JPM) & IBM (IBM) , 2 Dow stocks, report later this week.  The standout performance today is for MLPs, reaching a new record.  The yield on the index is below 6.2%, very low by historical standards.  Low yields for yield securities will be difficult to maintain.

Dow Jones Industrials   ---   2 weeks

Find out what's inside Trend TV!  

Link to the 2 week Free Trial  

Get your favorite symbols' Trend Analysis TODAY!  

No comments: