Thursday, July 31, 2014

Markets sink on international conflicts and sanctions

Dow plunged 187, decliners over advancers 8-1 & NAZ was off 64. The MLP index plunged again 8+ to the 504s & the REIT index lost 2 to 305.  Junk bond funds dropped over 1% (big time for them) & Treasuries were off slightly.  Oil slid below 100 & gold retreated.

AMJ (Alerian MLP Index tracking fund)

CLU14.NYM...Crude Oil Sep 14...99.58 Down ...0.69  (0.7%)

GCQ14.CMX...Gold Aug 14....1,285.60 Down ....9.30  (0.7%)

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Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than 8 years, signaling employers are hanging on to workers as demand improves.  The 4-week average of jobless claims dropped to 297K, the lowest since Apr 2006, from 301K in the prior week.  Claims last week climbed to 302K, in line with the forecast, from a revised 279K in the prior week (that was the lowest since 2000).  While auto plant shutdowns during this time of year make it more difficult to adjust the data for seasonal variations, the declining trend points to a job market that is heating up.  A tightening labor market could lift wages & spur consumer spending.  The number continuing to receive jobless benefits rose 31K to 2.54M & the unemployment rate among those eligible for benefits held at 1.9%.

Jobless Claims in U.S. in Past Month Drop to Eight-Year Low

Exxon Mobil, a Dow stock & Dividend Aristocrat, Q2 oil & natural gas production declined to the lowest level in almost 5 years.  Oil & gas output decreased 5.7% to the equivalent of 3.84M barrels a day, the lowest since Q3- 2009.  XOM had been expected to post output equivalent to 3.96M barrels.  Crude output dropped from wells in Europe & Asia while gas production faltered in every region in which the company does business except Africa & the South Pacific.  The company is allocating $39.8B to capital projects this year, including $Ms for an exploratory well in Russia's Kara Sea, as part of a 29-year agreement signed with Moscow-based OAO Rosneft in 2011.  XOM is going after crude in Russia’s Arctic regions in an effort to extract some of the largest crude reserves & reverse a trend of declining production for the company.  Sanctions threaten to halt that progress after the US & EU said Tues they would restrict the export of technologies for energy production to Russia.  Lower production figures came as the company reported better-than-expected Q2 earnings.  Excluding one-time items, EPS was 19¢ more than the $1.86 estimate.  EPS was $2.05, up from $1.55 a year earlier.  Brent crude futures, a global benchmark, rose 6% from a year earlier to average $109.76 a barrel in Q2 & natural gas futures prices in NY rose 14% to average $4.57 per million British thermal units.  The stock fell 1.94.  If you would like to learn more about XOM, click on this link:

Exxon Falls After Reporting Lowest Output in Five Years

Exxon Mobil (XOM)

Whole Food Market lowered its annual sales forecast amid increased competition from new rivals.  Sales this fiscal year will rise 9.6-9.9%, down from a previous projection for a gain of as much as 11%.  Sales at stores open at least 53 weeks will rise as much as 4.4% after earlier forecasting up to 5.5%.  WFM has been trying to lower its prices to better compete with other natural & organic food sellers.  The retailer lowered the top end of its forecast for EPS this fiscal year to as much as $1.54, excluding certain items, from a previous estimate of as much as $1.56.  Analysts estimate $1.53.  The company is trying to boost sales with a new marketing campaign that will start this fall, Co-CEO Walter Robb said.  It will be the first national ad program for the company, which spends less than 1% of sales on marketing, he said.  EPS rose to 41¢ from 38¢ a year ago & beat the estimate of 39¢.  Revenue increased 10% to $3.3B, trailing the $3.39B estimate.  New stores may be hurting the sales of existing locations, Co-CEO John Mackey said.  “With our accelerated growth over the last few years, we’re seeing a slightly greater impact today” from store cannibalization, he said.  Comparable-store sales rose 3.9% in Q2, compared with a 4.5% gain in the prior qtr.  Analysts estimated 4.8%.  The stock fell 1.87.  If you would like to learn more about WFM, click on this link:

Whole Foods Market (WFM)

Global issues have become center stage.  There are plenty of troubles which brought on selling today.  The threat of higher interest rates coming sooner than some had thought is adding to negative thinking.  Dow is down 400 from its recent record high & more selling looks to be in the cards.

Dow Jones Industrials

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