Thursday, January 26, 2012

Mixed markets on mixed earnings and economic data

Dow fell 22, decliners barely ahead of advancers & NAZ was down 13.  Bank stocks also had a restful day.

S&P 500 Financials Sector Index

Value189.62One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change   -1.72    (-0.9%)

MLPs took a breather after yesterday's record run & the REIT index was up 1+ to the 246s.  Junk bond funds inched higher & Treasuries had a good day.  Oil rose on hopes that low interest rates will drive more demand for oil.  Gold shot up 22, a 6 week high.

Alerian MLP Index

Value400.74One-Year Chart for Alerian MLP Index (AMZ:IND)
Change   -0.83    (-0.2%)

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CLH12.NYMCrude Oil Mar 1299.75 2:56PM ESTUp 0.35 (0.35%)

Live 24 hours gold chart [Kitco Inc.]

Orders for U.S. Durable Goods Probably Climbed

Photo:   Bloomberg

Durable goods orders climbed more than forecast in Dec, pointing to a rebound in business investment that could help support the US economy in early 2012.  Bookings for long-lasting goods advanced 3% after rising 4.3% in Nov, the biggest back-to-back gains in almost a year, according to the Commerce Dept.  Growing demand for raw materials from emerging markets & the need to replenish depleted inventories & update equipment are swelling order backlogs.  Combined with fewer layoffs & added confidence, the gains may help shield the US from a slowdown in Europe caused by the region’s debt crisis.  Orders climbed 10 % last year after a 15.5% gain in 2010.  

Durable Goods Orders in U.S. Climb 3%, Stronger Than Economists Estimated

  • <p>               FILE - In this April 25, 2012 file photo, 3M's address labels are displayed for sale at Office Depot in Mountain View, Calif. 3M is raising its earnings expectations for the year Thursday, Jan. 26, 2012, saying higher sales around the globe will offset the disruption to its business in Japan from the earthquake there.  (AP Photo/Paul Sakuma)
Photo:   Yahoo

3M, a Dow stock & Dividend Aristocrat, profit inched up 3% in Q4 as more demand for products for the home, office & automobile offset declining sales of high-tech products.  Growth in developing countries, where MMM now derives more than half of its sales, is slowing.  But MMM believes rapid growth in China & other emerging nations will resume in H2.   MMM is maintaining its current profit forecast for 2012 for EPS of $6.25-$6.50.  Analysts are predicting EPS of $6.33.  Q4 EPS was $1.35 compared with $1.28 in the prior year.  Revenue rose 6% to $7.09B.  The stock gained 1.10.

3M posts small profit increase in 4Q AP

3M Company (MMM)

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AT&T Sales Beat Estimates

Photo:   Bloomberg

AT&T, another Dow stock & Dividend Aristocrat, predicted 2012 earnings that trailed expectations as record demand for smartphones such as the iPhone drive up subsidy costs, projecting “mid-single-digit or better earnings growth” for 2012.  Analysts are predicting 11%.  ATT reported a Q4 loss of $6.7B because of a pretax charge of about $4B for the failed takeover of T-Mobile & expenses for revaluing benefit plans & other assets.  Activations of the iPhone soared to 7.6M in Q4, boosted by the new 4S model & a previous version offered for free with a contract.  ATT gained 717K subscribers on monthly contracts, more than the 574K projected.  Sales rose 3.6% to $32.5B.  The net loss was $1.12 a share, compared with a profit of 18¢ in the prior year.  EPS, excluding some items, fell to 42¢, under the 43¢ predicted.  Revenue at the wireless business increased 10% to $16.7B, boosted by web browsing &-mailing by smartphone users.  Smartphone subsidies helped reduce operating profit to 15.2% of sales from 22.9%.  Making money in the phone business is getting tougher.  The stock was off 76¢,

AT&T Earnings Forecast Falls Short as IPhone Demand Boosts Subsidy Costs

AT&T Inc. (T)

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This was another uneventful day in the markets, but Jan has been a good month.  Dow is up 270 this week & over 500 in Jan.  Meanwhile, long term Treasuries & gold (traditional safe havens) are also having a good run in Jan.  Back to reality, debt relief talks were restarted in Greece.  Duhh!!  I think we heard that a week ago (or was it a month ago).  MLPs took a day off after their rise to new record highs.  The index is up 13 in Jan, not bad.  New record highs bring correspondingly lower yields, the index yield is below 6%.  However, with a low interest rate environment projected to last for years, maybe "only 6%" will be less of a problem.

Dow Industrials

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