Friday, May 31, 2013

Markets collapse in late day sell-off

Dow tumbled 208 with selling into the close, decliners over advancers 4-1 & NAZ lost 35.  The MLP index dropped another 5+ to the 444s & the REIT index was off 2+ to the 286s.  Junk bond funds pulled back 1-2% & Treasuries were also weak.  Oil dropped, heading for a 2nd monthly decline, as OPEC kept its output target unchanged for a 3rd consecutive time & US inventories climbed to the highest level in 82 years.  Gold plunged again, going below 1400. 

AMJ (Alerian MLP Index tracking fund)

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CLN13.NYM...Crude Oil Jul 13....92.18 Down ...1.43  (1.5%)

Live 24 hours gold chart [Kitco Inc.]

OPEC kept its production target unchanged for a 3rd consecutive time, signaling that crude prices at about $100 a barrel are sufficient to buoy revenue as the global economy recovers.  It supplies about 40% of the world’s oil & maintained its ceiling of 30M barrels a day in Vienna.  The 12-nation group will next gather on Dec 4.  The producer group risks delaying an organized response to the challenge of its own burgeoning supply & that of non members.  Iraq, the biggest producer behind Saudi Arabia, is expanding production with the help of foreign companies, while a growing supply of US shale oil threatens to displace some of OPEC’s own crude sales.  OPEC kept the output target unchanged at its last meeting in Dec.  Actual production has fluctuated from 30.6M to 32.4M barrels a day since that target was introduced in Dec 2011.  The group pumped 31M this month, the most in 6 months, with Saudi Arabia producing 9.35M.

OPEC Keeps Output Target Unchanged as $100 Oil Satisfies National Budgets

Boeing, a Dow stock, will create new aircraft-design centers in Washington state, South Carolina & California.  The company portrayed the new centers as a way to increase its engineering & propulsion capacity as demand rises for new aircraft and services.  BA predicts that the world's airlines will need 34K new planes over the next 20 years, a potential $4.5T market.  The 3 new design centers will compete with each other on cost and engineering know-how.  "We fully expect them all to thrive," said Boeing spokesman Doug Alder. "There's a lot of work coming."  The company said that it would move most support for planes no longer in production away from Puget Sound in Washington to Long Beach, Calif., in the next 6-9 months.  The move affects work on planes such as older 737s & 757s.  BA fell 1.20.

Boeing announces changes for jet design centers AP

Samsung, the leading rival for Apple (AAPL), unveiled a smaller & less powerful version of its flagship Galaxy S4 handset as the world’s largest smartphone maker looks to widen its lead.  The Galaxy S4 mini features a 4.3" screen, 1.7 Gigahertz dual-core processor & 8-megapixel camera it said.  The Galaxy S4, which went on sale last month, has a 5" screen, 1.9Ghz quad-core processor & 13-megapixel camera.  Samsung’s new handset may help the company maintain momentum after selling 10M units of the S4 in half the time of the previous Galaxy model.  Samsung is also the world’s largest maker of flat-panel displays & memory chips.

Samsung Unveils Less Powerful Version of Flagship Galaxy S4 Smartphone

Even with the decline late in the month, Dow still gained an impressive 275 advance in May & is up over 2K YTD, hardly chump change.  Those big gains point to the forgotten fact that the markets are vastly overbought, with hardly a setback in the last year.  This could be the start of a correction which is long overdue.  Maybe the bulls started their weekends early & will return Mon PM to bid up stocks again.  But Dow plunged 200 in the last 2 hours, an ominous sign.  Enjoy the weekend & let's see what Jun brings for the markets next week.

Dow Jones Industrials

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