Markets lumber along awaiting developments

Dow rose 15, advancers ahead of decliners 5-2 & NAZ was up a strong 15 on favorable earnings from Dell.  Bank stocks continue to do little with the Financial Index hovering near its lows for 2011.

S&P 500 FINANCIALS INDEX

Value	213.50
Change	0.16    (0.1%)

The Alerian MLP Index had a strong rebound, up 6+ to almost 358.  It's difficult to tell how meaningful this is after its drop of 40 this month.  Maybe buyers are forgetting threats of higher taxes.  Meanwhile the REIT was up a more modest 1 to the 243s.  Junk bond funds edged higher while Treasuries were weaker.  But the yield on the 10 year Treasury remains near its low for this year.  Oil increased from a 3-month low after an industry report showed US fuel stockpiles declined as consumption rebounded.  Gold also found buyers after declining almost $100 from its recent record highs.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.04%
U.S. 2-year		0.54%
U.S. 10-year		3.14%

CLM11.NYM

...Crude Oil Jun 11

...98.62

..... 1.71  (1.8%)

GCK11.CMX

...Gold May 11

...1,483.50

... 11.70 (0.79%)

Photo:   Bloomberg

Target, a Dow stock & Dividend Aristocrat, posted a bigger-than-expected rise in quarterly profit as soaring profitability in its credit card business mitigated the impact of some sluggish sales at its stores.  Shoppers visited the discount chain for food & other basics, but spent cautiously.  Sales of discretionary goods like apparel have been under pressure.  TGT has been adding fresh groceries to more of its stores & signing up more shoppers for its credit cards. But groceries carry lower margins than other parts of the store & the credit cards' 5% discount further reduces margins.  Still, those initiatives have led to more visits & sales. EPS was 99¢ in Q1 (ended Apr 30), up from 90¢ a year earlier & beat expectations of 94¢.  Sales rose 2.8% to $15.5B, with sales at stores open at least a year up 2%. Total revenue, including credit card revenue, rose 2.2% to $15.9B.  More shoppers are using the company's credit & debit cards, with 7.6% of sales in stores paid for with the cards in Q1, up from 4.9% a year earlier.  Profit in the credit card business jumped 75% to $194M when bad debt expense was slashed to $12M from $197M last year.   The stock was off 1.31 & has not done much in the last year.

Target First-Quarter Profit Rises 2.7%

Target Corporation (TGT)

Photo:   Bloomberg

Dell net income for the qtr ending Apr 30 nearly tripled as it benefited from lower computer component costs & growth in more profitable product lines. EPS was 49¢, sharply ahead of last year's 17¢.  Excluding one-time items, Dell earned 55¢, easily beating expectations of 43¢.  But revenue rose just 1% to $15B, missing estimates for $15.4B.  Product revenue remained flat at $12.1B, while services revenue climbed 6% to $3.0B.  Consumer segment sales (20% of the total) dropped 7% to $3.0B as demand fell more than DELL anticipated.  CFO Brian Gladden attributed some of this to the market for consumer PCs being saturated in developed countries.  He added that while tablet computers are still a small portion of the PC market, there's "clearly an impact" from them on consumer demand for traditional PCs.  Revenue from large enterprises climbed 5% to $4.5B, while revenue from small & medium-size businesses increased 7% to $3.8.  The gross margin was 22.9%, higher than the 20.4% expected by analysts.  For fiscal Q2, DELL predicted revenue will rise by a percentage in the mid-single digits (slightly faster than its seasonal 2-3% growth).  For the full year, the company continues to expect revenue grow of 5-9%, implying sales of $64.6-67.0B (above expectations of $64.4).  The stock rose 75¢ after working its way higher in 2011. 

Corporate Spending Gives Dell Edge Over HP

Dell Inc. (DELL)

Markets are looking for direction.  There is an upward bias but volume remains very low.  The jump for the MLP index is a good sign but difficult to make too much after this market is sooo oversold.  Fundamental problems are still weighing on the markets & there is a growing awareness that the economic recovery is slowing or stalling, depending on who is talking.  Reports from retailers are a reminder that high priced gas is pinching everywhere.

Dow Industrials (INDU)

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