Wednesday, April 23, 2014

Markets fluctuate on lower new home sales

Dow slid 16, advancers ahead of decliners 5-4 & NAZ lost 24. The MLP index was off a fraction in the 486s & the REIT index fell 1+ to just over 290.  Junk bond funds were mixed & Treasuries flattish.  Oil crawled higher & gold rebounded but is still under 1300, a key support level.

Dow Jones Industrials

Treasurey yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM14.NYM...Crude Oil Jun 14...101.60 Down ...0.15  (0.2%)

GCJ14.CMX.....Gold Apr 14......1,287.70 Up ...7.10 (0.6%)

Russia edged closer to a new round of hostilities after the gov in Kiev said it’s resuming operations to oust militants from eastern cities & Russia pledged to defend its citizens in the neighboring country.  Russian Foreign Minister Lavroy said his country is prepared to retaliate if its “legitimate interests” are “attacked directly,” drawing a parallel with its actions during a 2008 war over the Georgian breakaway region of South Ossetia.  A military operation is under way after its suspension for the Easter holiday, with security agencies seeking to eliminate all militias operating in Kramatorsk, Slovyansk & other cities.  “Russian citizens being attacked is an attack against the Russian Federation,” Lavrov said.  “If we are attacked, we would certainly respond.”  With intl efforts to defuse the crisis grinding to a halt, the US said it will send 600 troops for exercises in 4 countries bordering Russia, days after NATO bolstered the defense of frontline member states in eastern Europe.  The opposing sides traded blame over the unrest as Ukraine stepped up accusations of Russian involvement in the killing of a politician & Russia pointed to signs of the US meddling.

Russia Renews Threat to Intervene in Ukraine as Truce Falters

Boeing, a Dow stock, Q1 profit beat estimates, with commercial jets rolling off assembly lines at a faster pace.  EPS excluding some pension expense of $1.76 exceeded the $1.54 estimate.  Citing a tax settlement, the company increased its 2014 forecast for "core earnings" to $7.15-$7.35, a 15¢ boost.  The results extended a 3 year streak of topping estimates & showed the strength of the civilian business, which posted an 18% gain in airliner deliveries.  Free cash flow was $615M, up from $3M a year earlier when the global grounding of the 787 Dreamliner halted handovers of that plane.  Sales increased 8.3% to $20.5B, topping the $20.2B estimate.  BA Commercial Airplanes drove that gain, with revenue rising 19% to $12.7B while the defense, space & security unit declined 5.9% to $7.63B amid a US military budget squeeze.  BA introduced its core earnings measure in 2013, saying that figure gives a clearer picture of profit by adjusting for market fluctuation in pension expenses.  Without the adjustment, EPS fell 13% to $1.28 from $1.44, a year earlier.  The company repurchased 19.4M shares for $2.5B after authorizing a $10B buyback plan, the largest in its history, in Dec.  Dreamliners left factories at a rate of 10 a month, the highest-ever tempo for a wide-body jet, while the assembly line for the narrow-body 737 achieved a 42-plane monthly rate in Apr.  New orders totaled $19B.  The company delivered 161 commercial jets, including 18 Dreamliners.  Last year’s tally was 137, with only one 787 in that total.  The stock rose 2.19.  If you would like to learn more about BA, click on this ink for Trend Analysis:

Boeing Profit Beats Estimates With Jet-Delivery Boost

Boeing (BA)

New-Home Sales in U.S. Unexpectedly Plunge to Eight-Month Low
Photo:   Bloomberg

Sales of new homes in the US unexpectedly plunged in Mar to the lowest level in 8 months, reflecting a broad-based retreat that signals the industry is facing bigger challenges than just bad weather.  Sales dropped 14.5% to a 384K annuallized rate, lower than any forecast & the weakest since Jul, according to the Commerce Dept.  The forecast called for the pace to accelerate to 450K.  The housing recovery has slowed as higher borrowing costs & rising prices make properties less affordable.  Shortages of buildable lots & skilled labor also have hindered construction as the market heads into its busiest time of year.  The median sales price of a new house climbed 12.6% from Mar 2013 to a record $290K.  Purchases slumped in 3 of 4 regions, led by a 21.5% drop in the Midwest.  The supply of homes climbed to 6 months, the most since Oct 2011, from 5 months in Feb.  There were 193K new houses on the market at the end of Mar, the most since Nov 2010.

New-Home Sales in U.S. Unexpectedly Slump to Eight-Month Low

Stocks are not doing a lot.  Dow failed to reach a new record yesterday & remains in the red YTD.  Earnings are coming in so-so, but many need accounting adjustments to show improvement over last year.  Then there is the Ukrainian mess which drones with no sign of resolution.  High yield securities remain in demand.  The failure of the Dow to reach a new record yesterday was very frustrating for the bulls & sends a negative signal about the strength of the stock market..

Dow Jones Industrials

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