Friday, January 17, 2014

Lower markets amid earnings

Dow clawed its way up 41, decliners over advancers 3-2 & NAZ fell 21.  The MLP index was off 2+ to the 453s & the REIT index lost 1+ to the 271s.  Junk bond funds inched higher & Treasuries were flattish.  Oil & gold gained ground.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG14.NYM....Crude Oil Feb 14....94.20 Up ...0.24  (0.3%)

Live 24 hours gold chart [Kitco Inc.]

US consumer confidence declined in Jan, a sign spending may take time to accelerate early this year.  The Thomson Reuters/University of Michigan preliminary index of sentiment fell to 80.4 from 82.5 in Dec & the forecast called for a reading of 83.5.  The report follows figures last week showing employment rose in Dec at the slowest pace in almost 3 years. While more job opportunities would help lift spirits, higher property values & rising equity prices are boosting household wealth & will keep consumers spending.  The Michigan sentiment survey’s current conditions index, which measures Americans’ view of their personal finances, fell to 95.2 in Jan from 98.6 a month earlier.  The index of expectations 6 months from now decreased to 70.9 from 72.1 last month.

Michigan Sentiment Index Decreased to 80.4 in January

American Express, a Dow stock, rose the most in more than 2 years after reporting Q4 profit doubled & one analyst raised profit estimates.  EPS  was $1.21, sharply above 56¢ last year.  Worldwide card spending increased to $254B as revenue climbed 5%.  The lender is benefiting from a pickup in household wealth & consumer confidence that has propelled card purchases. The stock went up $3.19 & if you would like to learn more, click on this link:

American Express Climbs Most in Two Years as Fourth-Quarter Profit Doubles

American Express (AXP)

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General Electric fell the most in 7 months after CEO Jeffrey Immelt failed to deliver a profit-margin forecast that he had been repeating for more than a year.  Profit margins at GE units making jet engines, medical scanners & locomotives expanded last year by 60 basis points, trailing the 70 basis points of growth that Immelt first set as a goal in Dec 2012 & affirmed as recently as last month.  The misstep comes as the CEO focuses on manufacturing growth while shrinking the company’s finance unit.  Q4 adjusted EPS was 53¢ which compares with 44¢ last year & matched the 53¢ estimate.  The industrial profit margin widened last year to 15.7%, compared with 15.1% in 2012.  Margin grew 66 basis points excluding the effect of acquisitions.  Supply-chain disruptions at the company’s wind-turbine business and worse-than-expected results at the energy management division put the growth target out of reach, CFO Jeffrey Bornstein said.  “We would have been above 70 basis points” excluding those two issues, Bornstein added.  “We’re really counting small increments here.”  Immelt said GE was “on track” to achieve the margin target during his annual presentation of year-ahead goals on Dec 18.  Sales climbed 3.1% to $40.4B, topping the $40B estimate.  Industrial sales climbed 5.6% to $28.8B.  Aviation revenues climbed 13% to $6.17B, while sales rose 17% to $5.31B at the oil & gas unit while they were little changed at $7.69B at the power & water division.  GE Capital reported sales of $11.1B, 4.5% lower than a year earlier, but profit climbed 38% to $2.49B.  Including pension costs & discontinued operations, net income rose 4.8% to $4.2B, or 41¢, from $4.01B, or 38¢ last year.  The stock fell 65¢ & if you would like to learn more, click on this link:

GE Profit Jumps 16% as Jet-Engine Sales Boost Orders

General Electric (GE)

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Stocks pulled back again & Dow remains under water in Jan, down 118 & only managed a gain of 21 this week after a strong start Tues & Wed.  GE & VISA (V) had a good day, but the other 28 stocks were flattish to lower.  Earnings reports have been largely soggy with accounting adjustments bringing higher earnings (for those reporting improvement).  Let's see what earnings reports have to say after the long weekend.   

Dow Jones Industrials

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