Friday, June 13, 2014

Markets rise cautiously on Intel earnings

Dow went up 38, advancers over decliners almost 3-2 & NAZ rose 19.  The MLP index lost 2 to the 498s (down 7 from its recent record high) & the REIT index was fractionally lower to the 297s.  Junk bond funds climbed higher & Treasuries pulled back.  Oil & gold are resting after recent gains.

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CLN14.NYM....Crude Oil Jul 14....106.63 Up ...0.10 (0.1%)

GCM14.CMX...Gold Jun 14........1,274.10 Up ...0.50 (0.0%)

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Consumer confidence in the US unexpectedly fell in Jun to a 3-month low, adding to signs of a more restrained rebound in Q2.  The Thomson Reuters/University of Michigan preliminary index of sentiment decreased to 81.2 from 81.9 in May.  The projection called for a Jun reading of 83.  Elevated fuel prices & limited wage gains are weighing on Americans’ moods & squeezing their pocketbooks even as employers add workers and cut back on layoffs.  Figures yesterday showed retail sales cooled in May following an impressive 3-month run, tempering the outlook for household spending.  The index averaged 89 in the 5 years before Dec 2007, when the last recession began, & 64.2 during the 18-month contraction.  The Michigan sentiment survey’s measure of expectations 6 months from now decreased to 72.2, also a 3-month low, from 73.7 the prior month.  The current conditions index, which takes stock of Americans’ view of their personal finances, rose to 95.4 from 94.5 in May.  Americans expect an inflation rate of 3% over the next year, compared with 3.3% in the prior month.  Over the next 5 years, they expect a 2.9% rate of inflation, compared with 2.8% in May.

Consumer Sentiment in U.S. Decreases to a Three-Month Low

US wholesale prices unexpectedly fell in May, suggesting demand isn’t robust enough to push inflation closer to the Federal Reserve (FED) target.  The 0.2% decrease in the PPI compared with the estimate for a 0.1% gain.  Over the past 12 months, costs climbed 2%, according to the Labor Dept.  The May dip, the first in 3 months, suggests pricing power hasn’t yet materialized as the global economy is slow to accelerate.  Muted costs are a problem for Federal Reserve policy makers, who have said they want inflation to increase closer to their 2% goal, a sign they will keep interest rate low well into 2015.  The May PPI decrease followed a 0.6% gain the prior month.  The advance from the same month a year before was smaller than the 2.1% rise in the year to Apr.  Wholesale food expenses decreased 0.2% as the cost of pork slumped 5.1%.  Energy costs decreased 0.2% last month after a 0.1% Apr gain.  The core measure, which strips out volatile food & fuel, decreased 0.1% after rising 0.5% in the prior month & versus a projection of a 0.1% rise.  The cost of services decreased 0.2% in May, reflecting a drop in margins at retailers & wholesalers.  Prices for goods also fell 0.2% last month.  Producer prices for finished products related to consumer spending decreased 0.2% after rising 0.7% the month before.  The selling prices received by businesses for goods & services going toward consumption represent 68% of PPI, providing insight into longer-term changes in consumer prices.

Wholesale Prices in U.S. Unexpectedly Decreased in May

Intel, a Dow stock, CEO Brian Krzanich is getting help from corps when they upgrade their office machinery.   The company raised its Q2 revenue forecast yesterday after the markets closed.  INTC also said annual sales will increase for the first time since 2011, buoyed by improving business demand for PCs.  The higher forecast provides another hint of optimism in the PC industry, where INTC gets most of its revenue, after 2 straight years of declining global shipments.  Sales in Q2 will be $13.7B, plus or minus $300M, compared with an earlier projection of about $13B, plus or minus $500M, INTC said.  The company also said it now projects some growth in sales for the year, compared with a previous forecast for revenue to be little changed.  Gross margin will be about 64%, 1 percentage point higher than the prior prediction.  INTC cited higher PC unit volume for the increase in profitability.  Analysts had estimated sales would rise 2% to $13B, from $12.8B a year earlier.  Revenue for 2014 was predicted to be $53.1B.  Earlier this month, market-research firm IDC estimated worldwide PC shipments will decline 6% this year, & said the drop may persist through at least 2018 as consumers increasingly opt for smartphones & tablets instead of desktops & laptops.  The researcher also said one bright spot for 2014 has been corp demand, driven by replacements of computers using Windows XP.  The stock jumped 1.86 (6%).  If you would like to learn more about INTC,
Click here for a FREE analysis of INTC and be sure to notice the intermediate time frame
 Intel Boosts Revenue Forecast as Business Demand Picks Up

Intel (INTC)

After selling in the last few days, stock markets are resting.  Volume is sluggish as usual during summer kind off trading.  But disasters around the world are getting more attention.  The biggest for the moment is Iraq which is difficult to understand even for experts.  It looks like Iran (an enemy of Iraq) is helping Iraq fight off the bad guys who are even worse.  For the moment this is the most important conflict because this region supplies so much oil to the rest of the world.  Oil prices are near their highs since the heady days in late 2008.  These have become troubling times for the stock market.

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