Wednesday, July 20, 2011

Earnings reports fail to stimulate markets

After Apple reported stellar earnings, stocks traded flattish all day. Dow finished 15 lower, advancers 3-2 ahead of decliners & NAZ fell 12 (even though Apple soared 11 to a new record). Banks gained but the Financial Index still has a soggy chart.

S&P 500 Financials Sector Index

Value	202.00
Change	2.15 (1.1%)

The MLP index slipped a fraction, treading water around 372, while the REIT index rose 1½ to 250 (2 below its yearly high). Junk bond funds were a little lower as were Treasuries. Oil climbed again after a report showed that US supplies dropped as refineries bolstered fuel output. Gold fell for the 2nd straight day on optimism that policy makers in Europe are moving closer to resolving the region’s debt woes, cutting demand for the precious metal as a haven. However, it climbed to almost $1600 in late day trading (the green line in the chart below), indicating nervousness is on the rise.

Alerian MLP Index

Value	373.34
Change	-0.66 (-0.2%)

Treasury yields:

U.S. 3-month	0.020%
U.S. 2-year	0.375%
U.S. 10-year	2.933%

CLQ11.NYM

...Crude Oil Aug 11

...98.09

...

0.69

(0.7%)

Get the latest daily market update below:

Photo: Yahoo

American Airlines (AMR) is buying at least 460 new planes over the next 5 years from Airbus & Boeing (BA), a Dow stock, in a record order that breaks BA's exclusive grip on American's fleet. AMR will buy 260 planes from Airbus, 200 from rival BA, & take options to buy hundreds more. It expects the new jets to provide much-needed savings in fuel costs as its current fleet is among the least fuel-efficient in the industry. The jets carry a sticker price of more than $38B, although big airlines regularly get discounts & routinely play one aircraft maker off the other to get better deals. The announcements overshadowed the news that AMR lost $286M in Q2, as rising fuel prices wiped out an increase in revenue. The loss equaled 85¢ per share (analysts were expecting a loss of 77¢). BA rose 1.54 while AMR was down a penny.

AMR Splits Record Order Between Airbus, Boeing

Boeing Company (The)

AMR Corporation (AMR)

Zillow (with symbol Z traded on NAZ), the real estate and housing data company, doubled in value on its debut, after pricing above the expected range. Its primary source of revenue is a strong hold in a niche segment & deals with companies like Yahoo. Z has exclusive rights to sell real estate agent advertising & certain graphical advertisements for display throughout the Yahoo! Real Estate site with 22M unique users visiting its website & mobile applications in May. It halved its losses in 2010 on revenue of $30M, up 75% from a year earlier. The stock closed at $35.77, $15.77 above the IPO price of $20 after trading at $60 at the opening. Risk lovers, enjoy.

Zillow Doubles in Trading Debut After $69.2 Million IPO Prices Above Range

Carl Icahn increased his offer for Clorox by almost 5% to $10.7B by boosting his offer to $80 per share (from $76.50), which valued the company at $10B. CLX said that its board would review the offer "in due course." Icahn, the biggest shareholder, said in a letter to the company's board that shareholders should be allowed to decide whether to accept his offer or a potentially higher one from another suitor if it materializes. Stockholders are happy, the stock rose 1.77 to 74.34.

Icahn boosts offer for Clorox to $80 per share AP

Clorox Company (The) (CLX)

Earnings news has been generally fairly good, the warm reception for the IPO & upping the price for CLX are all positive signs. But stock averages failed to respond, a discouraging sign. The debt crises in DC & Europe have serious implications & are too much for markets to ignore. Chances are the politicos in DC will congratulate themselves on a brilliant solution to the debt crisis when default is averted at the last minute. Of course, nobody is quite sure when the last minute is in all the confusion. The solution will be comparable to last minute decisions which gave us the stimulus package & Obamacare. Credit downgrades are waiting in the wings if the agencies don't like what they see.