Wednesday, December 5, 2012

Markets drift lower on fiscal cliff worries

Dow lost 9, decliners over advancers 3-2 & NAZ fell 30, largely because Apple (AAPL) is down 27.  The Financial Index rose a fraction to almost 211 (where it was a month ago).  The MLP index was off a fraction to 388 & the REIT index lost 2 to 259.  Junk bond funds were mixed & Treasuries gained, bringing the yield on the 10 year Treasury to a 4 month low.  Oil is  slipping lower & gold is showing down again (the reading be;low is not accurate). 

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF13.NYM...Crude Oil Jan 13...88.49 .....Down 0.01  (0.0%)

GCZ12.CMX...Gold Dec 12....1,725.70 ...Up 31.30 (1.9%)

New orders received by US factories unexpectedly rose in Oct as demand for motor vehicles & other goods offset a slump in defense & civilian aircraft orders.  The Commerce Dept said orders for factory goods increased 0.8% after a revised 4.5% rise in Sep.  Oct was the 2nd straight month of gains & beat expectations for a flat reading.  Factory orders were previously reported to have jumped 4.8% in Sep.  Oct factory orders suggest that manufacturing was not heading for a hard landing, even though factories are struggling to regain momentum.  The report showed orders for transportation equipment fell 2.3% on weak civilian & defense aircraft.  Orders for motor vehicles & parts rose 3.0%.  Factory goods orders excluding transportation rose 1.3% after advancing 1.2% in Sep.  Unfilled orders rose 0.3% after increasing 0.1% in the prior month.  Shipments of factory goods increased 0.4% after rising 0.7% the prior month, while inventories edged up 0.1%.  Orders for durable goods rose 0.5% instead of being flat as reported last week.

Factory orders rise for second straight month in October

ADP Says U.S. Companies Added 118,000 Workers in November

Photo:    Bloomberg

US companies added fewer workers in Nov than a month earlier after superstorm Sandy battered the East Coast & temporarily shuttered some businesses.  The 118K increase followed a revised 157K gain in Oct that was less than initially estimated, according to ADP Research & was below the forecast of 38 of a 125K rise.  The report estimated that Sandy reduced payrolls by about 86K.  Hiring plans were put off by companies in the mid-Atlantic, a 3-state region that employs about 14% of US workers, as they recovered from Sandy.  Firms are also awaiting a solution to the fiscal debate in DC.  Aside from Sandy, the job market turned in a fairly good performance.

ADP Says U.S. Companies Added 118,000 Workers in November

Walgreen, a Dividend Aristocrat, revenue from stores open at least a year fell 6.2% last month.  That included an 8.8% drop in pharmacy revenue & a 1.7% from the rest of the store.  All 3 figures reflected steeper drops than an overall decrease of 5.5% that was predicted.  An 8.1% drop was forecast for pharmacy revenue, to be blunted in part by a decline of less than 1% from the front end.  WAG cited generic drug introductions as the main factor behind the revenue drop.  The introduction of generic equivalents to popular brand-name drugs like the cholesterol fighter Lipitor has hurt revenue this year drugstore chains because they cost less than their brand-name counterparts.  On the flip side, these generics also boost profitability, because they come with a wider margin between the cost for the pharmacy to purchase the drugs & the reimbursement it receives.  Overall Nov sales fell nearly 4% to $5.85B compared with last year, with the pharmacy accounting for 63% of that total.  WAG revenue has slumped throughout 2012 partially because it had stopped filling prescriptions for Express Scripts (ESRX), which runs prescription drug plans for employers, insurers and other clients as the nation's largest pharmacy benefits manager.  The companies had let an agreement expire at the end of 2011, & their new deal didn't start until Sep 15.  Total revenue for fiscal Q1 dropped nearly 5% to $17.3B, below the $17.6B estimate.  Stockholders accepted the news & the stock went up 38¢.

Key Walgreen revenue metric sinks 6.2 pct in Nov A

Walgreen (WAG)

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Stocks are having another bad day after the pre trading markets were showing higher averages.  AAPL, with the largest market cap in the world, sold off because a forecast was made that its market share in the global tablet market will slip to less than half by 2016.  More importantly, more investors are worried about going over the fiscal cliff.  Obama is putting out word that it has to be my way, period.  The Reps proposed raising revenues by closing loopholes & putting high caps on key deductions (affecting only those with high incomes).  But the pres is not interested & looks like he won't mind going over the cliff.  He will be taking a vacation!  Even though these are dangerous times for stocks, there has not been significant selling.  However nervous investors are running out of patience.

Dow Jones Industrials

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