Wednesday, July 16, 2014

Dow climbs to a new record high

Dow advanced 54, advancers just ahead of decliners & NAZ added 18.  The MLP index went up 1 to the 517s & the REIT index was down pennies in the 306s (a more than 1 year high).  Junk bond funds rose & Treasuries hardly budged.  Oil advanced from a 2-month low as US crude inventories fell & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

CLQ14.NYM...Crude Oil Aug 14...100.43 Up ...0.47 (0.47%)

GCN14.CMX...Gold Jul 14.........1,296.90 Up ...1.60 (0.1%)

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Industrial production climbed 0.2% in Jun, capping the strongest qtr in almost 4 years & indicating manufacturers are providing a bigger spark for the US economy.  The gain in output at factories, mines & utilities followed a revised 0.5% advance in May, according to the Federal Reserve.  But the forecast called for a 0.3% advance.  Production rose at a 5.5% annualized rate from Apr-Jun, the most since the Q3-2010.  The fastest pace of motor vehicle sales in 8 years & a recent pickup in bookings for business equipment indicate further gains in output.  An improvement in overseas markets would also contribute to busier assembly lines & propel the economy in H2.  Manufacturing, which makes up 75% of total production, grew 0.1% in Jun, less than forecast as automakers cut back & factories slowed output of nondurable goods such as energy & clothing.  The projection called for a 0.3% increase.  In Q2, factory production advanced at a 6.7% annualized rate, the fastest since Q1-2012.  Today’s report also showed that capacity utilization, which measures the amount of a plant that is in use, held at 79.1%.  Utility output fell 0.3% after a 0.4% decline the previous month.  Mining production, which includes oil drilling, increased 0.8%.

Industrial Production in U.S. Climbed 0.2% in June, Fed Says

US wholesale prices rose more than forecast in Jun, reflecting a jump in energy costs that is now abating.  The 0.4% increase in PPI followed a 0.2% drop in May, according to the Labor Dept.  The estimate called for an advance of 0.2%.  Fuel costs climbed 2.1%, the biggest gain in more than a year.  Crude prices have dropped this month as concerns about supply disruptions ease, bolstering Federal Reserve view that recent increases were temporary.  Smaller price increases indicate Fed policy makers can keep interest rates low well into 2015.  Compared with a year earlier, companies paid 1.9% more for goods & services, matching the forecast & down from a 2% year-over-year increase in May.  The core measure climbed 0.2%, matching the estimate.  Those costs fell 0.1% in May.  The core index increased 1.8% in the 12 months ended Jun following a 2% gain for the year ended May.  The cost of services rose 0.3% last month, reflecting broad-based gains & prices for goods climbed 0.5%.  About 90% of the increase was attributed to the jump in fuel costs.  Wholesale food costs declined 0.2% in Jun for a 2nd month as grain costs dropped by the most since 2009 & canned poultry products showed the biggest fall in a decade.

Wholesale Prices in U.S. Increase More Than Forecast on Fuel

Abbott Labs, a Dividend Aristocrat, raised its full-year earnings forecast after sales rose across its 4 major health-care businesses.  The company boosted by 3¢ its adjusted EPS forecast for 2014, to $2.19-$2.29.  Q2 EPS was 30¢, compared to 30¢ a year earlier.  ABT is fine-tuning its businesses 18 months after splitting off its brand-name pharmaceutical unit.  The company just announced it would sell its generic drug business for developed markets to Mylan (MYL).  At the same time, ABT is expanding sales of those drugs in emerging markets, with deals such as the purchase of CFR Pharmaceuticals in Chile.  “We’re ahead of our expectations through the first half of the year and are raising our earnings-per-share guidance range as we continue to shape the company for long-term growth,” said CEO Miles Whitet.  White also said that he expected sales to grow faster during H2.  EPS excluding one-time items was 54¢, beating by 3¢ the estimate.  Revenue increased to $5.55B from $5.45B last year.  All 4 business groups saw sales increase, led by demand for medical optics in the devices unit that surged 12%.  Sales of branded generic drugs sold in emerging markets rose 4%, adult nutrition sales were up 4% & diagnostics increased 5%.  The stock rose 35¢.  If you would like to learn more about ABT, click on this link:

Abbott Raises Forecast After Sales Grow Across the Board

Abbott (ABT)

Stocks are having a good day although market breadth is not  good.  Industrial production data was encouraging which should have brought more broad based buying.  Numerous intl conflicts which no sign of ending soon may be weighing on the markets.

Dow Jones Industrials

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