Friday, May 24, 2013

Markets fluctuate ahead of a long weekend

Dow eked a gain of 8, decliners ahead of advancers 3-2 & NAZ lost 4. The MLP index was off 1+ to the 463s while the REIT index slipped 1+ to 301.  Junk bond funds slid lower & Treasuries were flattish.  Oil & gold also sold off.

AMJ (MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN13.NYMCrude Oil Jul 1394.18 2:35PM EDTDown 0.07 (0.07%)

Live 24 hours gold chart [Kitco Inc.]

German Ifo Sentiment Rises for the First Time in Three Months

Photo:   Bloomberg

German business confidence increased in May for the first time in 3 months.  The Ifo institute’s business climate index climbed to 105.7 from 104.4 in Apr, the first gain since Feb.  Expectations were for the sentiment to remain unchanged.  The German economy, Europe’s largest, grew just 0.1% in Q1 after a 0.7% contraction in Q4 as an unusually long winter damped construction & investment.  While risks stemming from Europe’s debt crisis persist, the economy will gather pace in the current qtr, the Bundesbank said this week.  Factory orders surged for a 2nd month in Mar & exports increased.  Ifo’s gauge of executives’ expectations remained unchanged at 101.6, while a measure of current business conditions increased to 110 from 107.3.  Q1 growth in Germany was driven mainly by household spending, which rose 0.8% from the Q4 of 2012, the Federal Statistics Office in Wiesbaden said.  At the same time, construction fell 2.1% & capital investment dropped 1.5%.

German Ifo Sentiment Rises for First Time Since February

<p> FILE - In this Dec. 6, 2012, photo, an employee walks through the appliance department at a Sears in North Olmsted, Ohio. Sears Holdings Corp. reports quarterly financial results before the market opens on Thursday, May 23, 2013. (AP Photo/Mark Duncan, File)

Photo:   Yahoo

Sears reported a steeper-than-expected loss for its Q1 on slumping sales.  It also announced that it is considering selling its protection-agreement business in an ongoing effort to raise cash as it struggles to reverse its fortunes.  The unit runs the part of the business that sells customers service contracts that guarantee to fix or replace appliances if they break within a certain timeframe.  Like many retailers, its business was hurt by poor weather & new economic pressures on its customers, including rise in the payroll tax.  But the latest results show that the path toward profitability will be more elusive than the chain may have thought.  "I do not subscribe to the view that the macro factors are the sole reason for our poor performance," Sears Chairman Eddie Lampert said.  "They have an impact. But even with that impact, we should have been doing a lot better than we are," Lampert said.  Last year, the company announced plans to restore profitability by aggressively cutting costs, reducing inventory, selling off some assets & spinning off others.  Those moves helped it reduce net debt by $400M & generated $1.8B in cash from the asset sales in the latest fiscal year.  But the company has struggled with its stores.  Middle-income shoppers have been hit hard by a slowly recovering economy.  SHLD shares had a loss of $2.63, compared with a profit of $1.78 a year earlier.  Not including one-time items, the company lost $1.29 per share, worse than the 60¢ expected.  Revenue fell 9% to $8.45B, above the $8.37B expected.  The company said that the decrease in revenue was due primarily because it has fewer Kmart & Sears full-scale stores in operation and lower revenue at stores opened at least a year.  Revenue at stores open at least a year fell 3.6%, with the company noting that much of the country experienced a cooler spring than last year.  The stock plunged 7.94 after rebounding in 2013.

Sears reports bigger-than-expected 1Q lossAP

Sears Holdings (SHLD)

stock chart

Yahoo submitted an offer for Hulu, the online video site, expanding the number of suitors for the service to at least 7.  YHOO, which said this week it’s buying Tumblr for $1.1B, made the offer today but the value of the offer wasn’t immediately known.  The stock rose 31¢.

Yahoo Said to Make Offer for Hulu as Bidding Escalates

Yahoo! (YHOO)

stock chart

Stocks did little going into a long holiday weekend.  There was no significant news to excite investors.  After weakness late in the week, Dow finished the week with a loss of less than 100.  There are concerns the Federal Reserve could reduce its monthly bond purchases, but those worries are fading.  Dow is still up 460 in May (& a massive 2.2K YTD), hardly chump change.  As long as ugly scandals in DC & sluggish retail sales in the US are of no concern, buyers could continue to bid stocks higher.

Dow Jones Industrials

stock chart

No comments: