Friday, April 29, 2011

Mixed markets digest strong earnings reports

Dow rose another 44 taking it above 12.8K, advancers ahead of decliners 5-4 & NAZ slipped 3. Banks stocks settled back, with the Financial Index not straying far from 220.

S&P 500 FINANCIALS INDEX

Value	220.20
Change	-0.74 (-0.3%)

The MLP index was up a fraction, above 390, to a new record high, while the REIT fell 3 to the 247s (yesterday's yearly high). Junk bond funds were higher as were Treasuries. Oil is lingering around its 3 year highs & gold keeps rising to new heights on inflation fears (among other looming problems).

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.04%
U.S. 2-year		0.62%
U.S. 10-year		3.31%

CLM11.NYM

...Crude Oil Jun 11

...112.98

.....

0.12

(0.1%)

GCK11.CMX

....Gold May 11

.....1,543.00

...

12.20

(0.8%)

Microsoft, a Dow stock, had lower sales of its core Windows operating system (down 4.4%), mirroring a recent downturn in personal computers, but strong sales of Office suite & Xbox games took up the slack. MSFT has sold a record-breaking 350M licenses for its Windows 7 since its launch 18 months ago, but demand appears to be waning in an uncertain economy. PC sales, the engine guiding its financial success, fell 1% in Q3. CFO Peter Klein said the company expects corp spending on PCs to outpace consumer PC sales through the next 12 months. He acknowledged that sales of low-end netbooks were suffering particularly, partly because of the success of tablets & other mobile devices. Net income was $5.2B, below $5.99B reported by Apple (AAPL) last qtr. MSFT fell $1.06 & has gone nowhere for over 10 years.

Microsoft Net Falls Below Apple’s as IPad Eats Into Sales

Microsoft Corporation (MSFT)

Merck, a Dow stock, said Q1 profit more than tripled from strong sales of key drugs & lower costs from integrating its Schering-Plough acquisition offset sales lost to competition from generic versions of its drugs, beating expectations by analysts. EPS was 34¢, up 9¢ from last year & revenue edged up 1% to $11.58B (including several billion dollars from products Schering-Plough bought 2009). Excluding numerous one-time items, 92¢ beat forecast EPS of 84¢ & revenue of $11.38B. MRK raised the bottom end of its 2011 adjusted profit forecast by 2¢, predicting $3.66-3.76. Including charges, it expects $2.04-2.39. "We're very much committed to growth and we think we're off to a terrific start in the first quarter," CEO Kenneth Frazier said. The stock rose 25¢.

Merck Profit Tops Analyst Estimates on Higher Drug Sales

Merck & Company, Inc. (MRK)

Photo: Yahoo

Chevron, Dow stock, Q1 net income rose 36%, the latest strong earnings report from a major oil company, as it earned higher prices for its oil around the globe. In the US, oil was sold for an average price of $89 per barrel, compared with $71 last year. Internationally, oil was sold for an average price of $95 per barrel, compared with $70 last year. This was partially offset by lower prices in the US for natural gas. EPS rose $3.09 from $2.27 last year, topping expectations. Chevron's revenue rose 25% to $60.3B. The stock was up 14¢.

Chevron’s First-Quarter Profit Climbs 36% as Oil Prices Gain

Chevron Corporation (CVX)

After another strong week for the markets, traders are taking it easy. Some may have already started their long weekends. Earnings season has past the midpoint & grades being given are quite good. Just take a look at the Dow chart below. The MLP index is at a new record high, bringing its yield below 5.8%, & approaching the 5.37% record low set in Jul 2007. There should be no dramatic changes in the PM which will give the Dow another excellent week, up about 300.