Monday, June 2, 2014

Markets fluctuate as ISM corrects manufacturing data

Dow went up 26 to a new record, decliners just ahead of advancers & NAZ dropped 6 (hurt by Apple stock - see below).  The MLP index jumped another 3+ to the 498s (yet another record high) & the REIT index rose pocket change in the 301s.  Junk bond funds were mixed & Treasuries sold off.  Gold was hit with profit taking & gold just can't find no friends in the mid 1200s.

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Apple introduced new health & messaging features for the software powering the iPhone & iPad, laying the groundwork for a busy H2 as the company works to emerge from a stretch of slowing growth.  The new mobile software, called iOS 8, was introduced at the annual developer conference in San Francisco.  The software includes HealthKit, which lets people monitor their health & acts as a data hub for fitness apps.  The company also showed products called ICloud Drive & Maildrop for storing & sending files, & an updated version of its Mac operating system dubbed Yosemite.  As smartphones & tablets with similar shapes & designs proliferate globally, AAPL & the competition are focused on differentiating their products thru software services that run on the devices.  The release of its new tools today shows how AAPL is increasingly positioning its gadgets to be more of a hub for people’s lives, such as tracking fitness activity.  With iPhone & iPad sales no longer the source of growth they once were, CEO Tim Cook has been under pressure to deliver another hit.  The event follows last week’s announcement that AAPL is buying headphones & music-streaming company Beats Electronics $3B, another move to rev up growth.  While the hardware is widely praised for its elegant & simple design, the reception to its suite of services for maps, photo organization & text messaging, among others, has been mixed.  Many of today’s announcements focused on making iPhones, iPads & Macs work more seamlessly together -- be they text messages, constructing documents or making phone calls.  The new Mac software has a feature called Handoff, which makes it easier to work on documents between Macs, iPhones & iPads.  It also includes ways to receive & make calls from the Mac if an iPhone is charging or isn’t available.  Aftrer a good run in the last year, the stock fell back 4+ today.  If you would like to learn more about AAPL, click on this link:

Apple Unveils New Mobile Software, Storage Tools

Apple (AAPL)

Oh well, the Institute for Supply Management said its May manufacturing index improved to 55.4 from 54.9 a month earlier, the group said in a 2nd correction to the data.  The group’s survey Chairman Bradley Holcomb said earlier that incorrect seasonal adjustments were applied to the May figures.  Holcomb had initially said the corrected reading was 56.0.  The group first reported the gauge fell to 53.2 from 54.9 in Apr.  I guess the idea is manufacturing improved in May, as the other index said.

ISM May Factory Index at 55.4, Group Says in Second Correction

China's manufacturing grew at the fastest pace in 5 months, in a sign gov measures to counter an economic slowdown are gaining traction.  The Purchasing Managers' Index rose to 50.8 in May, the National Bureau of Statistics & China Federation of Logistics & Purchasing said, which compares with the 50.7 estimate. The Apr reading was 50.4, with numbers above 50 indicating expansion.  The Communist Party has stepped up the pace of stimulus measures, including faster spending from gov budgets increased railway investment, to help meet an official growth target of about 7.5% this year.  The cabinet said last week it would cut reserve requirements for some lenders, as authorities contend with a property-market slump.  A separate manufacturing PMI from HSBC Holdings & Markit Economics rose to a 5-month high of 49.7 in May, based on a preliminary reading released May 22 (the final number is due tomorrow).  The gov PMI is based on survey responses from purchasing executives at 3K companies, while the HSBC-Markit report comes from more than 420 enterprises.  Most sub-indices in the official PMI rose in May.  Output increased to a 4-month high & the measure of new orders was at the highest since Nov.  But the employment gauge fell to 48.2 from 48.3, continuing to signal contraction.  China’s stimulus showed signs of helping companies other than the biggest ones, with a PMI for medium-sized enterprises rising to 51.4 from 50.3.  That compared with 50.9 for large companies, up from 50.8 in Apr, & a 48.8 reading for small enterprises that was unchanged from the previous month.  Growth in industrial production & retail sales from a year earlier unexpectedly decelerated in Apr.  A cooling property market threatens to limit any rebound, with a 22% drop in new building construction in the first 4 months of 2014 & a May drop in home prices from Apr (the first in almost 2 years).

China Manufacturing Gauge Rises to Five-Month High

The AAPL conference did nothing to help the stock, NAZ or even the overall markets.  That does not suggest this is a bull market even though Dow & the S&P 500 are at record highs.  Another way to look at the numbers is Dow is struggling to hold a meager 1% gain YTD in a year which was supposed to bring more capital gains.  What gains there are come from yield stocks being bid up.  MLPs, REITs, junk bond funds, munis & even Treasuries have major gains this year.  That does not suggest robust economic growth.

Dow Jones Industrials

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