VerySmartInvesting: Earnings send markets higher

Wednesday, February 16, 2011

Earnings send markets higher

Dow gained 52, advancers over decliners almost 4-1 & NAZ was up 16. Bank stocks as market leaders are having a good day, the Financial Index is topping its highs in Apr 2009.

S&P 500 FINANCIALS INDEX

Value	230.78
Change	1.17 (0.5%)

The Alerian MLP Index is up 10 this week (hard to believe) & gained another ½ in the 379s for new record. The REIT index added 1+ to another interim high in the 236s. Junk bond funds edged higher while Treasuries sold off. The yield on the 10 year Treasury bond was up 2½ basis points to 3.64%.

Treasury yields:

U.S. 3-month		0.11%
U.S. 2-year		0.85%
U.S. 10-year		3.64%

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

10-Year Treasury Yield Index --- 2 weeks

Oil extended gains after an Energy Dept report showed that stockpiles increased less than forecast. Gold is sidways after recent gains (up 50 off its lows).

CLH11.NYM

...Crude Oil Mar 11

...84.74

...

0.42 (0.5%)

GCG11.CMX

....Gold Feb 11

......1,370.80

...

2.80

(0.2%)

Gold Super Cycle Link! Click Here

In Jan factories produced more goods for the 5th straight month. A strong auto sales spurred demand for new cars & trucks. But overall industrial production fell (1%) for the first time in 19 months according to the Federal Reserve. The decline was caused mostly by a decrease in output by utilities after a weather-related peak in Dec. Industrial production increased in every month but one last year & has risen more than 11% since hitting its recession low in Jun 2009. But it still remains about 6% below its pre-recession peak in 2007. Demand for exports, business equipment & long-lasting consumer goods (such as autos) should boost factory output by at least 5.5% this year, the same as in the last 12 months.

Industrial Production in U.S. Fell 0.1% in January, Fed Says

U.S. Housing Starts Rise More Than Forecast

Photo: Bloomberg

Home construction rose at the fastest rate in 20 months, pushed up by a spike in apartment building. But construction of single-family homes declined, a sign that demand for housing remains weak. Builders broke ground on new homes & apartments at an annual rate of 596K units, a 14.6% jump from Dec. Single-family homes, which make up nearly 70% of new construction, fell 1% to an annual rate of 417K units. Multifamily construction, a more volatile category, skyrocketed 80% to an annual rate of 171K units (from a depressed level in Dec). Last year, builders worked on 587K new homes, barely better than the 554K started in 2009. & far below about 1M homes a year which is considered a healthy pace. Millions of foreclosures have forced home prices down & more are expected this year. Building permits, an indicator of future construction, fell more than 10% in Jan, but code changes in California, Pennsylvania & New York caused an artificial spike in Dec.

U.S. Housing Starts Rose 15% in January, Above Forecast

Dell (DELL) reported net income more than doubled in Q4 to handily beat expectations, as businesses spent more on computers, servers & other technology. DELL also issued annual revenue guidance for the current fiscal year that beat current forecasts. Companies that clamped down on spending during the economic downturn continued to upgrade technology in the qtr, helping Dell offset sluggish consumer spending on computers. DELL expects the consumer PC business will remain weak this fiscal year, in part because people are thinking about buying tablets. In Q4 EPS was 48¢, up from 17¢ in the prior year. Excluding certain items, DELL earned 53¢, easily beating expectations of 36¢. Revenue rose 5% to $15.7B, just under $15.75B predicted. Gross margin was 21%, better than the 18.6% analysts were expecting. For Q1 in 2011, DELL expects revenue to decline slightly from Q4.but for fiscal year, DELL expects revenue to grow 5-9% to $64.6-$67.0. The stock rose 1.39, but has a longer term trend of sideways motion.

Dell 4Q net income more than doubles, shares soarAP

Dell --- 1 year

Bulls rested & now are ready to take the markets higher. Dow hasn't been this high since Jun 2008. The MLP index is setting a new record, which brings the yield below 6%. For the time being, the path of least resistance is up, but gains day after day can not continue (just as losses day after day did not last in late 2008)..

Dow Jones Industrials --- 2 weeks