Friday, July 22, 2011

Mixed markets as sovereign debt problems remain unresolved

Stocks were lower during the session, not quite sure what to do while European debts issues linger & on the inability to raise ithe debt ceiling in the US.  Dow fell 43, advancers & decliners were about equal but NAZ gained 24.  Bank stocks slipped after recent gains (shown in the chart below).

S&P 500 Financials Sector Index


Value 206.45 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change   -0.55    (-0.3%)


MLPs edged higher & the REIT index rose 1 to its 2011 highs reached yesterday.  Junk bond funds were mixed & Treasuries rose on rising uncertainties about European debts.  Oil is pushing on $100, sensing the end of forced gov selling of oil next week.  Gold is hovering near its record highs over $1600.

Alerian MLP Index


Value 373.63 One-Year Chart for Alerian MLP Index (AMZ:IND)
Change    0.39    (0.1%)


The latest market update below:


Treasury yields:


U.S. 3-month

0.030%

U.S. 2-year

0.387%

U.S. 10-year

2.962%


CLU11.NYM...Crude Oil Sep 11...99.83 ...Up 0.70  (0.7%)

Live 24 hours gold chart [Kitco Inc.]




Photo:   Yahoo

Continued robust demand for Caterpillar heavy equipment boosted Q2 profits 44%, but higher costs & cautious comments from CAT about China's economy caused the stock to sell off.  The company even bumped up its sales outlook for the year.  EPS was $1.52, up from $1.09 last year.  But the Bucyrus acquisition cut into profits & weighed down the company's outlook. Without it, EPS would have been $1.72, still below expectations of $1.74 (with many investors expecting EPS above $2).  Revenue grew 37% to $14.2B, topping estimates.  CAT predicts 2011 sales of $56-$58B with Bucyrus. Previously it predicted sales between $52-$54B.  However, overall sales growth that would have added 50¢ to EPS this year have been offset negatively by about $700M of costs associated with the Bucyrus deal ($200M higher than expected). The stock fell 6.45, one of it biggest losses in years!

Caterpillar Profit Misses Estimates on Japan

Caterpillar, Inc. (CAT)


stock chart


General Electric, another Dow stock, has a stake in almost every sector of the economy & its mixed bag of businesses have propped up the company since the recession.  A rebound at GE Capital has offset weaker industrial business this year. The lending unit helped GE boost Q2 EPS  to 35¢, 21% ahead of 28¢ last year.  Revenue fell 4% to $35.6B, in part because of GE's sale of a majority stake in NBC Universal to Comcast.  These results beat estimates for 32¢ on revenue of $34.7B.  The lending business continues to improve after booking billions of dollars in losses & impairments during the recession. "We continue to see strong demand for credit," said CEO Jeff Immelt. Income at GE's consumer & commercial lending businesses grew 57% & 100%, respectively.  GE said it is seeing "especially strong" growth internationally in India, China, Southeast Asia, Africa, Russia, Australia, Canada & Latin America as intl sales grew 23% to $13.4B.  The stock fell 12¢.

GE 2Q profit up 21 percent, financial arm improvesAP

General Electric Company (GE)


stock chart


Markets are not sure what to do.  Earnings are getting good reviews although some of the ones I have been reported saw stock declines.  Even the good ones have a common theme (as they did in Q1) of strong business overseas while US business is only so-so.  Then there are the 2 whopper debt problems.  European ministers are trying to sell their program to deal with Greece & debts of other countries which looks to be getting mixed reviews at best.  Raising the debt ceiling in DC is dead in the water.  I watch news analysis at night & I'm not encouraged that in a few days the politicos will be able to avoid a default that could crush stocks.  But the Dow chart shows it has been taking the increased uncertainty with a sense of equanimity.  The question is, how long will that emotion last?

Dow Industrials (INDU)


stock chart



Get your favorite symbols' Trend Analysis TODAY!  





Find out what's inside Trend TV  

No comments: