Wednesday, August 8, 2012

Markets fluctuate on worries over getting additional stimulus

Dow inched up 7, advancers & decliners were even & NAZ lost 4.  The Financial Index was off a fraction to just under 201.

The MLP Index fell 3+ to the 388s & the REIT index dropped 2+ to 263.  MLPs have slipping back (following a 7 week rally) over the last 3 weeks.  Junk bond funds inched higher but Treasuries were a little lower.  Oil fell for the first time in 4 days after a gov report showed fuel demand weakened last week & on concern that the Federal Reserve won’t implement additional stimulus measures.  Gold advanced for the 3rd time in 4 sessions on speculation that central banks will take steps to bolster their economies, increasing the appeal of the precious metal as a store of value.

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CLU12.NYM...Crude Oil Sep 12...93.39 ...Down 0.28  (0.3%)

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Productivity in U.S. Rebounds as Employers Try to Curb Costs

Photo:   Bloomberg

The productivity of US workers rebounded in Q2 as employers sought to protect earnings by squeezing more out of existing staff.  The measure of worker output per hour increased at a 1.6% annual rate following a revised 0.5% drop in Q1 according to the Labor Dept.  Q2 productivity was projected to rise at a 1.4% annual rate.  Expenses per employee climbed at a 1.7% rate after surging a revised 5.6%.  The drop in productivity at the start of 2012, combined with a slowdown in profits, may be prompting companies to focus on enhancing efficiency to curb costs, making a pickup in employment more difficult.  A jobless rate holding above 8% for more than 3 years is among reasons the Federal Reserve said it is ready to take additional action if needed.

Productivity in U.S. Rebounds as Employers Try to Curb Costs

  • <p>               FILE - In this May 10, 2011 file photo, people carrying Macy's shopping bags walk past the Macy's flagship store, in New York. Macy's Inc. is reporting a nearly 16 percent increase in net income for its second quarter Wednesday, Aug. 8, 2012, as the department store chain continues to benefit from its strategy to tailor its merchandise to local markets. Macy's says that its net income rose to $279 million, or 67 cents per share, for the three-month period ended July 28.  (AP Photo/Mary Altaffer, File)
Photo:   Yahoo

Macy's reported a 16% increase in net income for Q2, helped by cost-cutting & its strategy to tailor its merchandise to local markets.  The department chain, which also raised annual earnings guidance.  Macy's has been a standout among its peers throughout the economic recovery & is the first in a series of major retailers to report Q2 results, providing insight into how consumers are spending.  "Clearly, we are not operating in an ideal macroeconomic environment," CFO Karen Hoguet said.  "Issues like unemployment and housing prices continue to be on the minds of our customers. But we believe that Macy's and Bloomingdale's still have the opportunity to grow sales and earnings by listening closely to our customer and delivering exactly what they need, when and where they need it. That is the underlying principle behind our core strategies."  It also conceded business was hurt in Q2 by lower spending by intl tourists & temporary disruptions related to its major renovation of its flagship store in Manhattan.  Terry J. Lundgren, CEO, said Macy's is staying firmly focused on driving profitable sales growth while running the business with discipline.  EPS rose to 67¢ from 55¢ last year.  Revenue rose 3% to $6.1B.  Analysts expected EPS of 64¢ on revenue of $6.1B.  Revenue at stores open at least a year also rose 3%, helped by surging online sales.  However, sales were uneven with Jun sales below expectations followed by a Jul rebound.  The stock gained 1.03.

Macy's posts 16 percent hike in 2Q net income AP

Macy's (M)

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Greece Credit-Rating Outlook Lowered by S&P as Economy Weakens

Photo:   Bloomberg

Greece's credit rating may be cut again by S&P on concern the country will need more support from the EU.  The outlook on its CCC rating (8 levels below investment grade) was revised to negative from stable.  The change reflects the risk of a downgrade if Greece is unable to obtain its next disbursement of bailout loans from the EU & IMF rescue package.  Representatives from the troika of the European Commission, ECB & IMF return to Athens next month to review Greece’s economic program, which will determine whether the nation will receive additional funds from rescue packages, amounting to €240B ($297B), needed to remain in the 17-nation euro area.  Prime Minister Samaras has held meetings with the leaders of the 2 parties supporting his coalition gov to hash out a €11.5B package of budget cuts demanded by the creditors for the next 2 years.  Finance Minister Yannis Stournaras said yesterday the gov is still working on identifying almost a third of the cuts.  Greece’s economy has been squeezed by the fiscal tightening needed to qualify for rescue-loan disbursements, with GDP set to drop for a 5th straight year.  The country may need as much as €7B in loans this year, with GDP seen shrinking as much as 11% in 2012 & 2013, S&P said.  These are not encouraging words.

Greece’s Rating Outlook Lowered by S&P as Economy Weakens

Stocks are back to looking for direction with no significant news to inspire buyers or sellers.  Much of the reasoning behind recent stock buying has been on hopes for more stimulus in Europe & the US.  That is a tricky call & hardly a fundamental reason for higher stock prices.  The US economy continues to lumber along, getting a good but not great review.  Europe is dismal, as it has been for most of the last year or 2.  But bulls are in charge & have given the Dow a substantial gain since last Oct.

Dow Jones Industrials

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