Tuesday, February 15, 2011

Lower stocks from a weak energy sector

Dow dropped 41 (led by oils), decliners over advancers 3-2 & NAZ fell 12.  Banks stocks were also soft, taking the Financial Index below its post Apr 2010 high of 230 recorded yesterday.


Value229.61One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  -0.45  (-0.2%)

The Alerian MLP Index rose another 2½ to 377, bringing its yield below 6%, while the REIT index fell 1+ from its interim high set yesterday.  Junk bond funds were mixed as were Treasuries.  The yield on the 10 year Treasury bond hardly budged from 3.61%.

Treasury yields:

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

Alerian MLP Index   ---   2 months

Dow Jones REIT Index   ---   2 months

10-Year Treasury Yield Index   ---   2 months

Oil tumbled to the lowest price in 11 weeks on forecasts US supplies will increase. Gold futures climbed to the highest in almost 4 weeks as rising consumer prices boosted demand for the precious metal as a hedge against inflation.

CLH11.NYM...Crude Oil Mar 11...84.38 .....Down 0.43  (0.5%)

GCG11.CMX...Gold Feb 11.......1,374.50 ...Up 9.90  (0.7%)

** Gold Super Cycle **  

FedEx Lowers Earnings Forecast

Photo:  Bloomberg

FedEx (FDX) sharply cut its profit forecast, citing higher-than-expected fuel costs & severe winter weather that disrupted delivery operations in the US & Europe.  It expects adjusted EPS of 70-90¢ for its fiscal Q3 (ending Feb 28), down from an earlier forecast for 95¢ - $1.15.  Analysts were looking for $1.06.  The updated forecast assumes no further weather impact & stable fuel prices for the rest of the qtr.  This adjustment comes after unusually bad weather in the eastern US & higher fuel costs (up 13% since the forecast in mid-Dec). But FDX continues to see strength in its business across all of the transportation segments & geographic regions.  Previously, FDX projected its earnings for 2011 would rise 16-22% compared with 2010, & exceed pre-recession levels.  The stock rose 1.99 to 96, a 3½ year high, as investors focused on the favorable outlook.

FedEx Rises as Investors Focus on Demand After Company Lowers Forecast

FedEx   ---   1 year

Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat, said it added 3½B barrels of oil & gas last year to its massive reserves. The amount, more than twice what XOM produced in 2010, is its largest addition since it merged with Mobil in 1999. It includes expansions of existing fields as well as acquisitions of other petroleum-rich fields around the world including Russia, Canada, the US, Nigeria, Norway & Abu Dhabi.  In total, XOM proven reserves are 24.8B barrels of oil & gas (including 2.8B barrels from its acquisition last year of natural gas company XTO Energy).  The markets didn't like the news, taking the stock down 1.94 after a nice run in the last year (helped by rising oil prices).

Exxon Mobil adds 3.5 billion barrels to reservesAP

Exxon Mobil   ---   1 year

Once again, little went on in the markets.  Problems in the Mideast are being ignored, massive future budget deficits are accepted & MLPs are hot again.  The MLP index is up over 220 from its lows 2 years ago with only 2 pauses along the way.  The 2 month chart for the Dow below shows a virtual straight up run which really began 10 weeks ago.  Even though they have taken a breather in the last week, bulls remain in charge & don't want to give up.

Dow Jones Industrials   ---   2 months

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