Thursday, January 5, 2012

Lower markets on increased European debt worries

Dow fell  77, decliners over advancers better than 2-1 & NAZ was off just 1.  The Financial Index was up a fraction in the179s. 

The MLP index was fractionally higher to a new record in the 395s & the REIT index gained 1 to 231.  Junk bond funds slipped while Treasuries rose, taking the yield on the 10 year Treasury below 2%.  Oil  remains in frothy territory awaiting developments regarding the Strait of Hormuz.  Gold was hit with profit taking after its recent run up.



Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year

CLG12.NYM...Crude Oil Feb 12...102.78 ...Down 0.44  (0.4%)

GCF12.CMX...Gold Jan 12........1,604.50 ....Down 7.40  (0.5%)

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Jobless Claims in U.S. Dropped 15,000 Last Week to 372,000

Photo:   Bloomberg

Applications for jobless benefits decreased 15K to 372K in the latest week according to the Labor Dept, slightly better than the median estimate of 375K.  The average over the past 4 weeks declined to the lowest level in more than 3 years.  The decrease in layoffs indicates employers may be getting more comfortable with their headcounts & their economic outlooks.  In addition, companies added 325K workers in Dec, more than forecast, heading into 2012  according to ADP Employer Services.  The ADP number may have reflected the so-called purge effect.  Workers, regardless of when they are dismissed or quit, sometimes remain on company records until Dec, when businesses update, or purge, their figures with ADP.  Once again, encouraging data but gloomy unemployment figures will continue for some time.

Initial Jobless Claims in U.S. Fall to 372,000

Macy's raised its earnings outlook for Q4 & full year due to a strong holiday season & will double its quarterly div to 20¢.  It's also increasing the share repurchase program by $1B. This  follows an announcemnt that revenue at stores open at least a year climbed 6.2% in Dec, better than a 5% rise expected.  In its latest earnings projections, Macy's expects quarterly EPS of $1.55-$1.60, with full-year EPS of $2.73-$2.78.  Analysts were forecasting Q4 EPS of $1.62 & full-year EPS of $2.78.  Revised outlooks exclude $25-$3M in costs tied to the 5 Macy's stores & 4 Bloomingdale's stores that it plans to close.  Macy's also boostied its outlook for quarterly & full-year revenue growth at stores open at least a year.  For Q4 the company predicts the figure will now rise 5.3-5.5%, up from a prior guidance to rise 4-4.5%.  Macy's now expects full-year revenue at stores open at least a year to climb about 5.3%, above the previous guidance of 4.8-5%.  The stock was up 29¢.

Macy's raises profit outlook; doubles dividendAP 

Macy's Inc (M)

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The Institute for Supply Management Index of non- manufacturing industries rose to 52.6 last month from 52 in Nov, a little below an increase to 53 that was expected.  Slow wage growth, limited job gains & depressed real estate values may make it tougher for Americans to boost their spending going forward.  The employment gauge rose to 49.4 from 48.9.  The measure of new orders was little changed at 53.2 & a gauge of business activity held at 56.2.  The index of prices paid decreased to 61.2 from 62.5.

Today's news was fairly positive, but did not get a warm response from stock buyers.  Worries about the European debt mess getting worse are not much help.  The US economy is also getting a so-so grade.   Estimates for Alcoa (AA), a Dow stock, EPS in Q4 plunged the most in 3 years & some fear it may report a loss.  The official estimate is just a penny, the report will be released after the close on Mon.  Meanwhile, MLPs continue to fly.  

Dow Industrials

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