Monday, January 28, 2013

Lower markets on pending homes sales

Dow slid 13, decliners ahead of advancers 2-1 & NAZ was up 6.  The Financial Index fell 1 to the 234s.  The MLP index gained another 1+ to the 428s, good enough for another record, & the REIT index lost 1 to 280, still near its 4+ yearly high.  Junk bond funds were mixed to higher & there was selling in Treasuries, raising the yield on the 10 year Treasury to almost 2%.  Oil fell for a 2nd day as pending U.S. home sales declined in Dec for the first time since Aug.  Gold was off pocket change at 1657.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLH13.NYMCrude Oil Mar 1396.59 Up 0.71 (0.7%)

Orders for Durable Goods in U.S. Rose 4.6%; Ex-Transport Up 1.3%

Photo:   Bloomberg

Demand for long-lasting manufactured goods in the US rose sharply in Dec, helped by a strong gain in volatile aircraft orders.  But companies slowed orders for computers & other goods that signal investment plans, indicating manufacturing could stay weak in 2013.  The Commerce Dept said that overall orders for durable goods increased 4.6% compared with Nov.  The gains were led by a 56.4% increase in military aircraft orders & a 10.1% increase in commercial aircraft orders.  Orders for machinery, communications equipment & primary metals such as steel also showed increases.  Still, demand for core capital goods, a measure of business investment plans, rose just 0.2%, following 2 straight monthly gains of 3%.  For all of 2012, durable goods orders rose 4.1% but demand for core capital goods fell 0.3%.  Slower growth in business orders has hurt manufacturing, which struggled to gain momentum in 2012.  While orders for durable goods rebounded in the final months of last year, the overall trend is expected to stay weak this year

Goods Orders Exceed Forecast in Sign of U.S. Factory Rebound

Pending Sales of Existing U.S. Homes Decreased 4.3% in December

Photo:   Bloomberg

A measure of Americans who signed contracts to buy homes fell last month after reaching a 2½ year high in Nov . Sales were held back by a limited supply of available homes.  The National Association of Realtors says its index for pending home sales dropped 4.3% to 101.7.  That's still 6.9% higher than it was a year ago.  The decline signals that sales of previously occupied homes may drop in the coming months because there's generally a 1-2 month lag between a signed contract & a completed sale.  Still, sales of previously occupied homes rose last year to their highest level in 5 years & the Realtors' group forecasts that sales will rise 9% this year as the housing market steadily recovers.

Pending Sales of Existing Homes in U.S. Decreased 4.3%

Photo:   Yahoo

Caterpillar, a Dow stock, Q4 earnings fell, hurt by a big write-down in China.  The company reported EPS of $1.91 a share, excluding a write-down of 87¢ relating to a China holding.  That compared to EPS of $2.32 a year-earlier period.  Earlier this month, CAT said it would take a massive charge of $580M in Q4, after having to write off most of a Chinese deal that collapsed under fraud allegations.  Revenue fell to $16.1B from $17.2B during the same period last year.  Analysts had expected $16.1B in revenue, with EPS of $1.70 a share.  The company also forecast full-year EPS of $7-$9 a share, compared to the average forecast of $8.54.  The company said that while the top end of the profit & sales ranges may make 2013 another record year, Q1 revenue may drop & profit may be “significantly lower” as dealers continue to order fewer machines to reduce inventory.  The former chairman of a Chinese mining equipment firm bought by CAT said that he was dismayed by allegations of accounting misconduct at a subsidiary that prompted the firm to take the $580M write-down.  The stock added $1.06.

Caterpillar Forecasts Growth in ’13 Second Half as Global Economy Recovers

Caterpillar (CAT)

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Stock averages are near multi near highs but there is a fair amount of nervousness underneath the trading.  Earnings are beating lowered estimates & guidance for the new year is typically wishy washy.  Q4 sales are generally sluggish at best.  Nobody is quite sure what to make to the goings on in boom-town DC as out of control budget spending continues.  Q4 GDP data will be released on Wed & expectations are not high.

Dow Jones Industrials

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