Thursday, May 15, 2014

Markets tumble on lower industrial production in the US

Dow sank 145, decliners over advancers more than 3-1 & NAZ fell 43 (down 300 in the last 10 weeks).  The MLP index fell 3+ to the 484s & the REIT index dropped 2 to the 296s.  Junk bond funds pulled back & Treasuries rose.  Oil lost ground after going over 102 & gold slipped below 1300.

AMJ (Alerian Index tracking fund)

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CLM14.NYM...Crude Oil Jun 14...101.91 Down ...0.46  (0.5%)

GCK14.CMX...Gold May 14.....1,296.60 Down ...9.10  (0.7%)

3 Stocks You Should Own Right Now - Click Here!

Confidence among US homebuilders dropped in May to the lowest level in a year, showing the residential real estate market may be slow to recover after an unusually harsh winter.  The National Association of Home Builders/Wells Fargo builder sentiment gauge fell to 45, the weakest since May 2013, from a revised 46 in Apr (lower than initially reported).  Readings less than 50 mean fewer respondents report good market conditions.  The forecast called for 49.  Still-tight credit conditions, limited availability of lots & falling affordability as home prices rise are probably preventing the residential real-estate market from gaining momentum as temperatures warm.  Hiring gains may contribute to a pickup in housing demand & help offset some of the headwinds.  “Builder sentiment is becoming more in line with the market reality of a continuing but modest recovery,” NAHB Chairman Kevin Kelly said.  “However, builders expressed some optimism that sales will pick up in the coming months.”  The measure of current single-family home sales declined to 48 in May, the first pessimistic reading in a year, from 50.  The gauge of prospective buyer traffic climbed to 33, a 4-month high, while the index of the 6-month sales outlook increased to 57 from 56 in the prior month.  Builder confidence dropped in the South & in the West, where it fell to its lowest level in a year.  Sentiment was unchanged in the Northeast & the Midwest.

Confidence Among U.S. Homebuilders Falls to Lowest in a Year

Industrial production in the US unexpectedly declined in Apr, held back by a plunge in utilities as temperatures warmed & a broad-based decrease in manufacturing.  Output at factories, mines & utilities decreased 0.6% after a 0.9% gain the prior month (larger than previously reported), according to the Federal Reserve.  The forecast called for an unchanged reading.  Manufacturing, which makes up 75% of total production, decreased 0.4%.  The disappointing result in Apr may signal a pause after the biggest back-to-back monthly gains in manufacturing since 2010, as factories rebounded from an unusually harsh winter.  Today’s report also showed that capacity utilization, which measures the amount of a plant that is in use, fell to 78.6% from 79.3% the prior month.

Industrial Production in the U.S. Unexpectedly Fell in April

Wal-Mart, a Dow stock & Dividend Aristocrat, forecast Q2 profit that missed estimates as the company copes with slow sales in the US, especially at Sam’s Club warehouse stores.  EPS will be $1.15-$1.25 the company said while analysts had projected $1.28.  Sales & profit in the fiscal Q1 also missed estimates.  CEO Doug McMillon has been working to revive US growth after lower food-stamp payments & struggles to keep shelves fully stocked contributed to a decline.  The turnaround was hampered in Q1 by slow traffic at Sam’s Club locations, as well as harsh winter weather.  The Q2 forecast reflects higher US health-care costs & increased spending on the Sam’s Club membership program,  CFO Charles Holley said.  The company also expects its tax rate to be at the high end of a range of 32-34%.  Q1 EPS fell to $1.11 from  $1.14, a year earlier.  Excluding some items, EPS was $1.10, below the $1.15 estimate.  The severe winter weather decreased EPS by 3¢, the company said.  “Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected,” McMillon said.  Total revenue increased 0.8% to $115B, under the.$116.3B projection.  Sales at US stores open at least 12 months excluding fuel fell 0.2%.  Analysts had expected the sales to be unchanged.  Sam’s Club same-store sales fell 0.5%.  The stock fell 1.50.  If you would like to learn more about WMT,
Click here for a FREE analysis of WMT and be sure to notice the intermediate time frame

Wal-Mart Forecast Misses Estimates as Sales Slump Lingers

Wal-Mart (WMT)

Glum economic news caused buyers to pull back.  There was little pretty news today.  WMT results are chilling.  That company is so large, it reflects prpblems at the macro level.  Among the many negatives were higher costs related to Obamacare coverage.  That will be impacting many companies.  Dow is back in the red YTD & there is little to be encouraged about going forward.

Dow Jones Industrials

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