Thursday, April 21, 2011

Higher markets on strong Q1 earnings

Dow rose 22, advancers ahead of decliners 3-2 & NAZ was up 11 helped by an an 8+ gain at Apple (AAPL) on a strong earnings report last night. Bank stocks inched higher, but the Financial Index has been dragging all year.

S&P 500 FINANCIALS INDEX

Value	216.40
Change	0.75 (0.3%)

The Alerian MLP Index rose 1+ to the 384s, another record high, while the Dow Jones REIT Index was up a fraction to just over 240, a new high since 2008. Junk bond funds were flat at or near multi year highs & Treasuries were also little changed. Oil was also flattish & gold is digesting its record highs above $1500.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.06%
U.S. 2-year		0.65%
U.S. 10-year		3.38%

CLM11.NYM

...Crude Oil Jun 11

...111.56

...

0.11

(0.1%)

Initial Jobless Claims in U.S. Fell 13,000

Photo: Bloomberg

The number of Americans filing new claims for unemployment benefits fell last week but held above the key 400K level, hinting at some loss of momentum in the labor market recovery. Initial claims for unemployment benefits fell 13K to 403K according to the Labor Dept (a little higher than 392K forecasted). The 4-week moving average rose 2K to 399K. The number still receiving benefits under regular state programs after an initial week of aid fell 7K to 3.7M. The number on emergency unemployment benefits dropped 23K to 3.53M. A total of 8.3M were claiming unemployment benefits during that period under all programs. Improvement in the jobs data is moderating, to be expected with a less than robust economy.

Initial Jobless Claims in U.S. Fell 13,000 Last Week to 403,000

Photo: Yahoo

General Electric (GE), a Dow stock, earnings jumped 77% in Q1, led by strong results in its financial services business (which had been depressed during the financial meltdown). "As today's results show, GE has emerged from the recession a stronger, more competitive company," CEO Jeff Immelt said. EPS was 31¢, sharply ahead of 17¢ last year & beating estimates of 28¢. Revenue increased 6% to $38.4B. GE Capital profits more than tripled to $1.8% & revenue rose 3%. In addition, GE Capital took a smaller provision against possible loan losses. GE's transportation, health care, aviation, home & business solutions businesses also posted increased earnings. GE has spent about $11B recently to acquire numerous energy companies including French equipment developer Converteam, Dresser, Wellstream Holdings, Lineage Power Holdings & Well Support. The company also sold a controlling stake in NBC Universal for $6.2B (GE now has a 49% ownership in NBC). The quarterly div was raised by a penny to 15¢. GE fell 45¢.

GE Raises Dividend After Profit Tops Analysts’ Estimates

General Electric Company (GE)

McDonald’s Profit Increases 11%, Helped by New Menu Items

Photo: Bloomberg

McDonald's (MCD), a Dow stock & Dividend Aristocrat, net income rose 11% from growing business in Europe, Australia & China. Strong sales of its new fruit & maple oatmeal & its high-profit McCafe coffee drinks helped push EPS to $1.15 in Q1, up from $1.00 last year. Revenue increased 9% to $6.1B. But MCD challenges with rising food prices, while keeping its own prices low. The company expects prices for most of its ingredients to increase 4-4½% in the US & Europe in 2011. But high-profit coffee drinks have helped offset those pressures. MCD sees other bottom-line pressures on the horizon as well, it expects interest-rate expenses to increase 5-6%. The stock fell 1.18 to the 77s.

McDonald’s Profit Increases 11%, Helped by New Menu Items

McDonald's Corporation (MCD)

The chart below for the Dow tells it all. After drifting sideways with a downward bias, it shot up this week on good earnings reports. The MLP index reached a new record high & the REIT index also is at multi year highs. Today, the markets are taking a breather. Looming European sovereign debt issues, the need to raise the debt ceiling for the US, climbing gas prices & gold topping 1500 on increased worries about future inflation are not bothering the markets. Dow is at a 3 year high as it benefits from a weak dollar, among other things.