Tuesday, January 25, 2011

Lower markets despite favorable earnings reports

Dow slipped 27, decliners over advancers 3-2 & NAZ was off 6. Markets have been rebounding in the last hour, limiting losses.  Selling in bank stocks is taking the Financial Index down.


Value 219.87 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   -1.62  (-0.7%)

The MLP index fell 1½ while the REIT index gained 1½.  Junk bond funds inched higher as did Treasuries.

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 fell to its lowest level in almost * weeks on signals that the economies of the US & UK U.K. are struggling to recover.  Gold hit its lowest level since Oct (100 below the recent record) as traders dumped the metal forcing gold to test a key support level.

CLH11.NYM...Crude Oil Mar 1186.72 ....Down 1.18  (1.3%)

GCF11.CMX...Gold Jan 11....1,326.90 ...Down 17.60  (1.3%)

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The Conference Board’s consumer confidence index increased to 60.6 from 53.3 in the prior month & above the estimate of 54.  Growing optimism, an improving labor market & tax relief may combine to help spur consumer spending.  But at the same time, the absence of a sustained housing rebound & unemployment above 9% are among reasons the Federal Reserve may announce tomorrow it will stick to a plan for more stimulus.  The share of Americans who said jobs were plentiful rose to the highest level since May 2009, while those expecting an increase in incomes climbed to an 8 month high.

Consumer Confidence in U.S. Rose More Than Forecast

DuPont (DD), Johnson & Johnson (JNJ) & Verizon (VZ), all Dow stocks, reported earnings.  Kimberley Clark (KMB), a Dividend Aristocrat (like JNJ), also reported & shot up $2 on a good report.  DD posted Q4 that beat estimates as paint-pigment & solar-materials jumped & taxes plunged & raised its 2011 profit forecast. Net income fell 15% resulting in EPS of 40¢. Profit was 50¢ after excluding gains related to tax accruals & restructuring & costs for a licensing accord & debt refinancing. That topped the 31¢ average estimate.  DD said EPS this year will rise to $3.45-3.75, compared with its Dec forecast of $3.30-3.60 according to CFO Nicholas Fanandakis.  JNJ reported a 12% decline in Q4 earnings & issued a forecast for 2011 that fell short of expectations.  It posted back-to-back years of sales declines, the first time since it went public in 1944. J&J had previously posted 3 consecutive years of sales declines in the early 1930s. VZ, 2nd-largest US phone company, forecast revenue growth this year that topped estimates, as it sells more smartphones including the iPhone.  The company will increase revenue 4-8% this year, according to Fran Shammo, CFO (beating estimates of 2%).  KMB reported flat Q4 net income & unveiled restructuring plans to deal with rising costs tied to its pulp & tissue business.  In addition, it raised its dividend 6% & expects to buy back $1.5B in shares during 2011.  It predicts 2011 adjusted EPS of $4.95.05 per share, excluding costs related to the restructuring.  JNJ fell $1.25, but the other 3 stocks are doing well.

DuPont   ---   1 Year

Johnson & Johnson   ---   1 Year

Verizon   ---   1 Year

Kimberley-Clark   ---   1 Year

After starting lower, stocks are making a comeback.  If the bulls regain control, they will take the Dow above the magical ceiling of 12K.

Dow Jones Industrials   ---   2 weeks

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