Tuesday, April 26, 2011

Higher markets on strong earnings reports

Dow rocketed ahead 91, advancers over decliners 3-1 & NAZ jumped 22. Banks stocks gained.

S&P 500 FINANCIALS INDEX

Value	217.38
Change	0.82 (0.4%)

The MLP index jumped almost 2 to the 389s, another record high, while the REIT index gained 1½ to the 244s, not seen since 2008. Junk bond funds were fractionally higher & Treasuries gained while waiting to hear word from the FOMC meeting. The yield on the 10 year Treasury bond fell to the lowest level in a month, although not far from the 3.40% level it has been near for months. Oil was little changed & gold saw profit taking, it was only a few months ago when 1500 seemed to be a distant objective.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.06%
U.S. 2-year		0.63%
U.S. 10-year		3.34%

CLM11.NYM

...Crude Oil Jun 11

...112.15

....

0.13 (0.1%)

GCJ11.CMX

.....Gold Apr 11

......1,503.30

...

12.20 (0.8%)

Consumer Confidence in U.S. Rose More Than Forecast in April

Photo: Bloomberg

A monthly survey said that concerns about jobs & inflation eased in Apr, pushing the Consumer Confidence Index above expectations. The Conference Board index rose to 65.4 from a revised 63.8 in Mar, better than an expected rise to 64.8. The increase comes after an unexpected drop in Mar stemming from worries about rising gas prices & other household costs. But the measure had risen for 5 consecutive months before that & hit a 3 year high in Feb. However, the index is still far from the reading of 90 that indicates a healthy economy which it hasn't approached since the recession began in December 2007. The Conference Board said views about income & the job market improved during the month & expectations about inflation declined. Higher gas prices at the pump should be felt more strongly in May.

Consumer Confidence in U.S. Rose More Than Forecast in April

Photo: Yahoo

Coca-Cola (KO), a Dow stock & Dividend Aristocrat, quarterly results slightly missed estimates, as the Japan earthquake & the timing of marketing expenses overshadowed strong sales volume. EPS for Q1 was 82¢, ahead of 69¢ last year. EPS was reduced by 1¢ because of lost revenue in Japan following the earthquake in Mar & 1¢ cent from the timing of marketing expenses as the company conforms its newly acquired bottling business to its accounting schedule. Excluding those items & other charges, EPS was 86¢, missing the average estimate by a penny. Revenue rose 40% to $10.52B, in part because of last year's acquisition of North American bottling operations. Worldwide volume rose 6% in Q1, with North American volume, excluding new cross-licensed brands like Dr Pepper, up 2%. Sales rose 7% in Latin America, 1% in Europe & 8% in Eurasia & Africa. The Pacific region was up 5%. KO expects currency exchange rates to boost full-year operating income by a low- to mid-single-digit percent rate. The stock fell 1.50 to the 66s.

Coca-Cola Profit Misses Analyst Estimates on Japan Quake Damage

Coca-Cola Company (The) (KO)

Photo: Yahoo

United Parcel Service (UPS) reported Q1 profits beat estimates as price hikes stuck & it raised the 2011 forecast for record results. There has been little resistance from customers to higher rates imposed as the company's fuel costs increase, UPS said. But it remains concerned about how much longer & higher oil prices will rise & whether it will stifle consumer demand. Revenues for US domestic deliveries rose 6.2%, driven by higher rates & fuel surcharges. Intl deliveries revenue rose 10% from rate hikes & fuel surcharges partly offset by currency. "So far the global economic recovery has been resilient," in the face of Japan's crisis, spiking fuel costs, North Africa & Middle East unrest, CEO Scott Davis said. UPS handles goods equal to 6% of the US GDP & 2% of global GDP, its shipment trends give a tangible view of consumer demand. Q1 EPS rose to 88¢ from 53¢ in the prior year & beat expectations of 85¢. Revenue rose to $12.58B from $11.73B a year ago. UPS raised its 2011 share guidance to $4.15-$4.40. from its Feb estimate of $4.12-$4.35. The stock rose1.06 & is up nicely from the low 40s at the bottom of the recession.

UPS Boosts 2011 Forecast as Shipping Demand Fuels Profit

United Parcel Service, Inc. (UPS)

Bulls are back & firmly in command of the markets. Earnings reports are getting good grades while markets wait for an announcement by the Federal Reserve on interest rates & winding down of QE2. The idea of a QE3 is largely ruled out given strength in the economy. But global problems have not gone away. The Greek deficit has topped estimates, Syria is bubbling, fuel prices keep shooting up & Japan is cleaning up an awful nuclear mess.