Dow gained 75 (but off the highs), advancers ahead of decliners 4-1 & NAZ was up 6. Bank stocks were in the lead again & the index is about 13 off its lows last week.
The MLP index rose 1 to the 356s & the REIT index was up 3 to the 228s. Junk bond funds edged higher while Treasuries slipped a tad. Oil pared gains after a gov report showed an unexpected increase in inventories. Gold climbed for a 3rd day as investors bought the metal as a hedge against inflation.
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Photo: Bloomberg
Companies paid higher prices for tobacco, pickup trucks & pharmaceuticals in Jul, driving wholesale inflation up by the most in 6 months. This measure which excludes volatile food & energy prices (the core Producer Price Index or PPI) rose 0.4%, the biggest increase since Jan. The overall PPI,rose 0.2% according to the Labor Dept following a 0.4% drop in Jun, the first decline in 17 months. Gas prices fell for the 2nd straight month but food rose 0.6%, the biggest rise since Feb. The jump in the core index is unlikely to continue because raw material prices are increasing at a slower pace than the finished goods tracked by the PPI. Tobacco prices, which are affected by seasonal factors, jumped 2.8%, the largest increase in more than 2 years. The PPI has increased 7.2% in the past 12 months, up sharply from earlier this year but below May's rise of 7.3% (which was the biggest in 2½ years). The core index increased 2½% in the past 12 months, the most in 2 years. Inflation worries persist.
Photo: Bloomberg
Corp & gov demand for PCs has been strong for the past year, but consumer demand has collapsed because of high unemployment & the lure of new gadgets such as tablet computers & smartphones. Worrisome new economic signs budget cuts threaten to hamper the recovery, casting doubt on the ability of DELL & other PC makers to lift themselves. DELL lowered its revenue forecast for the fiscal year ending in Jan, blaming "a more uncertain demand environment" than previously envisioned & a decision to focus on more profitable deals. In cutting its full-year revenue forecast, DELL cited “a more uncertain demand environment” & a strategy shift aimed at boosting sales of higher-margin products. Gov customers also have delayed spending. The public sector accounts for more than 25% of DELL sales. Even as DELL tempered its revenue outlook, it said operating income would increase by as much as 23%, up from a previous forecast of up to 18%. Acquiring technology for data centers & discontinuing sales of less profitable products have improved results. Q2 EPS was 48¢, ahead of 28¢ a year earlier. Excluding some costs, EPS was 54¢, beating projections of 49¢. Dell fell 1.38 (9%).
Dell Drops After Sluggish Spending Hits Sales
Photo: Yahoo
Target, a Dividend Aristocrat, posted a 3.7% increase in Q2 profit & said earnings for the year will beat estimates. TGT is counting on 2 key initiatives to drive revenue, a larger food offering & its 5% discount it began offering in Oct to customers who pay with Target branded credit & debit cards. As a result, TGT had a 3.9% increase in revenue at stores opened at least a year, up from a 2% pace in Q1. "We're very pleased with our second-quarter financial results," said CEO Gregg Steinhafel. "We continue to focus on strong execution of our strategy, preparing Target to perform well in a variety of economic environments." EPS was $1.03, for the qtr ended Jul 30. That compares with 92¢ last year. Revenue rose 4.6% to $16.2. Analysts were expecting 97¢ on revenue of $15.9B. The credit- card business reported a profit of $171M, up from $138M in the year-ago period. TGT expects full-year EPS to be $4.15-$4.30 & analysts are expecting $4.14. The stock rose 1.44.
Target’s Profit Beats Estimates as Sales Rise
Earnings have been fairly good (DELL aside). Deere (DE) reported good earnings, but slipped a dime. Otherwise, this looks to be a quiet day in Aug after the wild ride last week. Dow is up 200+ this week & down 650 in Aug. Congress is on holiday which is good & bad. When it returns next month, arguments in DC about reducing the budget deficit will heat up again. Every day until then, the deficit grows by more than $4B.
S&P 500 Financials Sector Index
| Value | 176.31 | |
| Change | 2.41 (1.4%) |
The MLP index rose 1 to the 356s & the REIT index was up 3 to the 228s. Junk bond funds edged higher while Treasuries slipped a tad. Oil pared gains after a gov report showed an unexpected increase in inventories. Gold climbed for a 3rd day as investors bought the metal as a hedge against inflation.
ALERIAN MLP Index (^AMZ)
DJ REIT INDEX DJR (^DJR)
Treasury yields:
U.S. 3-month | 0.010% | |
U.S. 2-year | 0.194% | |
U.S. 10-year | 2.259% |
| CLU11.NYM | ...Crude Oil Sep 11 | ...88.75 | ..... 2.10 | (2.4%) |
| GCQ11.CMX | ...Gold Aug 11 | ....1,793.10 | ... 10.70 | (0.6%) |
Get the latest market update below:
Companies paid higher prices for tobacco, pickup trucks & pharmaceuticals in Jul, driving wholesale inflation up by the most in 6 months. This measure which excludes volatile food & energy prices (the core Producer Price Index or PPI) rose 0.4%, the biggest increase since Jan. The overall PPI,rose 0.2% according to the Labor Dept following a 0.4% drop in Jun, the first decline in 17 months. Gas prices fell for the 2nd straight month but food rose 0.6%, the biggest rise since Feb. The jump in the core index is unlikely to continue because raw material prices are increasing at a slower pace than the finished goods tracked by the PPI. Tobacco prices, which are affected by seasonal factors, jumped 2.8%, the largest increase in more than 2 years. The PPI has increased 7.2% in the past 12 months, up sharply from earlier this year but below May's rise of 7.3% (which was the biggest in 2½ years). The core index increased 2½% in the past 12 months, the most in 2 years. Inflation worries persist.
Corp & gov demand for PCs has been strong for the past year, but consumer demand has collapsed because of high unemployment & the lure of new gadgets such as tablet computers & smartphones. Worrisome new economic signs budget cuts threaten to hamper the recovery, casting doubt on the ability of DELL & other PC makers to lift themselves. DELL lowered its revenue forecast for the fiscal year ending in Jan, blaming "a more uncertain demand environment" than previously envisioned & a decision to focus on more profitable deals. In cutting its full-year revenue forecast, DELL cited “a more uncertain demand environment” & a strategy shift aimed at boosting sales of higher-margin products. Gov customers also have delayed spending. The public sector accounts for more than 25% of DELL sales. Even as DELL tempered its revenue outlook, it said operating income would increase by as much as 23%, up from a previous forecast of up to 18%. Acquiring technology for data centers & discontinuing sales of less profitable products have improved results. Q2 EPS was 48¢, ahead of 28¢ a year earlier. Excluding some costs, EPS was 54¢, beating projections of 49¢. Dell fell 1.38 (9%).
Dell Drops After Sluggish Spending Hits Sales
Dell Inc. (DELL)
Photo: Yahoo
Target, a Dividend Aristocrat, posted a 3.7% increase in Q2 profit & said earnings for the year will beat estimates. TGT is counting on 2 key initiatives to drive revenue, a larger food offering & its 5% discount it began offering in Oct to customers who pay with Target branded credit & debit cards. As a result, TGT had a 3.9% increase in revenue at stores opened at least a year, up from a 2% pace in Q1. "We're very pleased with our second-quarter financial results," said CEO Gregg Steinhafel. "We continue to focus on strong execution of our strategy, preparing Target to perform well in a variety of economic environments." EPS was $1.03, for the qtr ended Jul 30. That compares with 92¢ last year. Revenue rose 4.6% to $16.2. Analysts were expecting 97¢ on revenue of $15.9B. The credit- card business reported a profit of $171M, up from $138M in the year-ago period. TGT expects full-year EPS to be $4.15-$4.30 & analysts are expecting $4.14. The stock rose 1.44.
Target’s Profit Beats Estimates as Sales Rise
Target Corporation (TGT)
Earnings have been fairly good (DELL aside). Deere (DE) reported good earnings, but slipped a dime. Otherwise, this looks to be a quiet day in Aug after the wild ride last week. Dow is up 200+ this week & down 650 in Aug. Congress is on holiday which is good & bad. When it returns next month, arguments in DC about reducing the budget deficit will heat up again. Every day until then, the deficit grows by more than $4B.
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