Wednesday, April 30, 2014

Markets marginally lower on weak tech sector

Dow went up 5, decliners barely ahead of advancers & NAZ lost 8.  The MLP index fell 1 to 483 & the REIT index was down fractionally to 292.  Junk bond funds were mixed & Treasuries fluctuated ahead of the FOMC press release.  Oil is now below 100 & gold pulled back again after attempting to top 1300.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM14.NYM...Crude Oil Jun 14...100.16 Down ...1.12  (1.1%)

GCK14.CMX...Gold May 14......1,294.20 Down ...4.50  (0.4%)

Companies added more workers in Apr than at any time in the previous 5 months, signaling further progress in the labor market.  The 220K increase in employment followed a revised 209K gain the prior month that was stronger than initially estimated, according to the ADP Research Institute.  The forecast called for an advance of 210K.  The additions indicate companies are upbeat about the outlook for demand after harsh weather took a toll on spending at the start of the year.  The Labor Dept report on Fri is projected to show private payrolls rose 215K.  ADP’s numbers have been inconsistent in tracking the gov jobs data.  Goods-producing industries, which include manufacturers & construction companies, increased headcount by 24K.  Employment in construction rose by 19K, while factories added only 1K jobs.  Payrolls at service providers advanced 197K (typically low paying jobs).  Companies employing more than 499 workers added 57K jobs.  Medium-sized businesses, with 50-499 employees, took on 81K & small companies increased payrolls by 82K.

ADP Says Companies in U.S. Add Most Workers in Five Months

The US economy barely grew in Q1 as harsh winter weather chilled investment & exports dropped.  The expansion stalled even as consumer spending on services rose by the most in 14 years.  GDP inched up at a 0.1% annualized rate, compared with a 2.6% gain Q4, according to the Commerce Dept. The forecast called for a 1.2% increase.  Household purchases rose at a 3% pace, spurred by utility outlays & spending on health care tied to Obamacare.  The pullback in growth came as snow blanketed much of the eastern half of the country, keeping shoppers from stores, preventing builders from breaking ground and raising costs for retailers.  Gains in retail sales, employment & manufacturing at the end of Q1 indicate the setback will be temporary, so Federal Reserve policy makers meeting today will probably take little heed.  For all of 2013, the economy expanded 1.9% after a 2.8% gain in the prior year.  The gain in consumer purchases exceeded the 2% forecast.  Personal consumption added 2 percentage points to growth.  Spending climbed at a 3.3% in Q4.  While the wintry weather held back purchases of goods, which climbed at a 0.4% pace (the least in almost 2 years), it also boosted outlays on utilities to keep warm & did little to prevent spending on Obamacare.  Expenditures on services climbed at a 4.4% pace, the biggest gain since 2000.  Outlays of health care jumped by $43.3B at an annualized rate to $1.85T, contributing 1.1 percentage points to growth (the most since records began in 1947).

Growth Frozen as U.S. Business Investment Drops With Exports

Time Warner raised its full-year forecast & beat Q1 profit estimates as “The Lego Movie” boosted box-office receipts & “Game of Thrones” helped drive higher licensing fees.  EPS rose to 97¢, excluding one-time items & the results of Time Inc, the company said.  Analysts predicted 88¢.  Sales increased to $6.8B (excluding Time Inc), surpassing the estimate of $6.63B.  The Warner Bros studio reported operating income of $369M, up 40%.  Pay-TV distributors also paid more to carry programming such as professional basketball playoff games.  “We are off to a very strong start in 2014,” CEO Jeff Bewkes said.  “Warner Bros. picked up where it left off after a record-breaking year in 2013, with ‘The Lego Movie’ launching yet another franchise for us.”  The company raised its 2014 forecast & now expects adjusted EPS to expand by a “low teens” percentage, up from a prior projection of a “low double digit” percentage, from $3.51 in 2013.  Analysts were estimating 2014 adjusted EPS of $3.92, up 12%.  The stock rose 51¢.  If you would like to learn more about TWX, click on this link for Trend Analysis:

Time Warner Raises Forecast After Beating Profit Estimates on ‘Lego Movie’

Time Warner (TWX)

Stocks aren't doing much of anything before Janet Yellen speaks.  No surprises are expected.  She will say tapering is continuing with another $10B reduction in the monthly bond buying program.  Any additional commentary will get a lot of attention.  Techs remain out of favor.  Yesterday eBay (EBAY) reported & it's down 2.88 (5%) today.

Dow Jones Industrials

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