Wednesday, May 25, 2011

Markets edge higher after a decline in durable goods orders

After starting lower, markets went into the black. Dow is up 26, advancers ahead of decliners 3-2 & NAZ gained 9. The Financial Index also pulled into the black.

S&P 500 FINANCIALS INDEX

Value	208.84
Change	0.60 (0.3%)

The MLP Index was up 1+ to the 363s & the REIT fell a fraction to below 241. Junk bond funds rose to near or at their best levels in a few years & Treasuries were flattish although the yield on the 10 year Treasury bond slipped under 3.1%. Oil is stil pushing on $100 resistance & gold was strong on the financial turmoil coming from Europe.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.046%
U.S. 2-year		0.531%
U.S. 10-year		3.098%

CLN11.NYM

...Crude Oil Jul 11

...99.33

...

0.26

(0.3%)

GCK11.CMX

...Gold May 11

...1,527.20

...

4.00

(0.3%)

Durable Goods Orders in U.S. Probably Fell on Aircraft

Photo: Bloomberg

New orders for long-lasting US manufactured goods recorded their largest decline in 6 months in Apr as aircraft & motor vehicle bookings tumbled. The economy remained stuck in a soft patch. The Commerce Dept reported durable goods orders dropped 3.6%, worse than expectations of a 2.2% decline. Part of the decline was related to rising Mar orders were revised up to a 4.4% rise from a 4.1% increase. While durable goods orders are extremely volatile, details of the report pointed to some cooling in factory activity. It was also the latest in a series of reports to suggest that the loss of growth momentum encountered as the year started persisted into the early part of Q2. The weak durable goods report could prompt economists to lower forecasts for Q2 growth. So far, data ranging from retail sales to industrial production have been generally lackluster.

U.S. Durable Goods Orders Fall 3.6%, Most in Six Months

Photo: Yahoo

Hormel, a Dividend Aristocrat, Q2 profit climbed 41% despite facing rising food costs, helped by strong performance from refrigerated foods like deli meats & Jennie-O Turkey. Like many food makers, HRL has been dealing with higher ingredient costs & has raised prices to help cope. It expects to face higher costs for the rest of the year & will continue to raise prices & cut costs to offset this. "We believe our strong portfolio of brands and our balanced model will allow us to overcome those obstacles," said CEO Jeffrey Ettinger. EPS rose to 40¢ (ended May 1), up from 29¢ last year but just under expectations of 41¢. Revenue increased 15% to $1.96B, better than the $1.82B predicted (but this includes price increases). The company now expects EPS for 2011 of $1.67-$1.73, up from prior guidance of $1.62-$1.68 & compares with analyst expectations of $1.71. The stock was punished, down 2.35, after a nice run in the last year.

Hormel 2Q profit rises, boosts full-year outlook AP

Hormel Foods Corporation (HRL)

Polo Ralph Lauren Falls, Profit Misses Analysts’ Estimates

Photo: Bloomberg

Polo Ralph Lauren fiscal Q4 net income fell 36%, partly dragged down by higher operating expenses & a calendar shift. The clothing company had EPS of 74¢ for the qtr ended April 2, down from $1.13 last year & below forecasted 79¢. An extra week in last year's qtr contributed about 13¢ to EPS & approximately $70M to revenue. Plus a shift of the Easter holiday & the week between Christmas & New Year had an effect on comparisons. Revenue increased 7% to $1.38B from $1.29B, mostly helped by better retail sales. Revenue at stores open at least a year climbed 7% in Q4. For the fiscal 2011,EPS climbed 18% to $5.75 from $4.73. RL anticipates Q1 revenue climbing in the mid-20 percent range. Revenue at stores open at least a year is expected to rise at a low double-digit rate. Fiscal 2012 revenue si predicted to rise by a percentage in the mid-teens. The stock dropped $9+.

Polo Ralph Lauren Falls After Retailer’s Profit Misses Analysts’ Estimates

Polo Ralph Lauren Corporation (RL)

Markets continue to mark time. Earnings releases are coming in soft which hurt individual stocks, but buyers are snapping up other stocks. Volume is low. NYSE floor volume will probably come in under 1 B shares. The rebound for MLPs may be part of the ordinary bobbing around. This could be another sleepy day as the markets are going into a long weekend.