Thursday, October 23, 2014

Higher markets on bets of global growth

Dow surged 216, advancers over decliners better than 3-1 & NAZ rose 69.  The MLP index shot up 6+ to the 511s & the REIT index gained 2+ to the 312s (near its yearly highs).  Junk bond funds were mixed to higher & Treasures sold off.  Oil rose while gold went lower.

AMJ (Alerian MLP Index tracking fund)

CLZ14.NYM....Crude Oil Dec 14....82.01 Up ...1.49 (1.9%)

Live 24 hours gold chart [Kitco Inc.]

Figures from the Labor Dept showed fewer workers filed claims for jobless benefits over the past month than at any time since May 2000.  Confidence will probably keep climbing as consumers feel more secure in their jobs & gasoline prices retreat to the lowest level in 3 years.  Bigger wage increases would help keep sentiment improving & lay the groundwork for gains in spending that will boost growth even as economies in Europe & emerging nations cool.

Jobless Claims in U.S. at 14-Year Low Over Past Month

Caterpillar, a Dow stock, climbed after topping profit estimates for Q3 & raising its full-year earnings forecast.  Q3 EPS rose to $1.63 from $1.45 a year earlier.  Excluding one-time items, EPS was $1.72, surpassing the $1.35 estimate.  Caterpillar said EPS excluding one-time items for this year are expected to be $6.50, 30¢ more than previously projected.   The company had higher sales of construction machinery in North America, & of equipment for the oil & gas industry.  That outweighed another decline in mining equipment, in which the company is the largest player.  Coal & metals producers have continued to cut spending in the face of lower commodity prices.  Sales climbed 0.9% to $13.5B, more than the $13.2B estimate.  The company said 2015 sales will be “flat to slightly up” as growth-oriented monetary policies in developed countries “should support continued modest economic improvement” & it sees potential for higher investment in infrastructure in countries such as the US, India & Turkey.  The improvement in office & commercial construction in North America, & the gradual pickup in residential activity, are boosting demand for excavators & bulldozers.  The picture for mining is far less rosy.  The combined capital spending of its  top 10 customers is estimated to shrink by 18% in the next 2 years.  CEO Doug Oberhelman expanded in mining since taking the helm in 2010 by spending more than $9B on acquisitions, only to see customers aggressively reduce capital spending after a plunge in prices for coal & iron ore.  CAT said there remain risks to the global economy such as potential conflicts & social unrest in the former Soviet Union, Africa & the MIddle East.  “We’re hopeful that economic growth will improve in 2015, but are mindful of the uncertainties and risks,” Oberhelman said.  The stock jumped 4.70.  If you would like to learn more about CAT, click on this link:

Caterpillar Gains After Raising Forecast for 2014 Profit

Caterpillar (CAT)

3M, a Dow stock & Dividend Aristocrat, rose after Q3 profit beat estimates.  Operating margins were 23.4%, up 1.4 percentage points from a year earlier, as sales improved across all industries.  EPS was $1.98, exceeding the $1.96 estimate.  Since taking over in 2012, CEO Inge Thulin has emphasized intl growth that now accounts for about 2/3 of sales.  He also has expanded the research & development budget & realigned units to focus on fast-growing markets such as health care, air & water filtration.  Sales rose across its 5 business segments & were led by a 4.7% gain in its Health Care unit, which makes drug delivery systems & dental braces.  The US & the Asia Pacific region lead geographic growth.  “Organic growth was positive across all geographic areas,” Thulin said.  Total revenue increased 2.8% to $8.1B, below estimates of $8.2B.  The company narrowed its forecast for 2014 EPS to $7.40-$7.50, from $7.30-$7.55.  MMM has been aggressive in putting capital to work. In December, the div was raised 35% & the company unveiled a plan to spend as much as $10B on acquisitions through 2017 & buy back $22B of stock.  The stock jumped 6.10.  If you would like to learn more about MMM, click on this link:

3M Rises Most in Almost Three Years as Profit Increases

3M Company (MMM)

Stocks had a good day.  Earnings were generally favorable & there are hopes for global growth.  Oil is rising again, one small signal of higher demand for this fuel.  But Dow is still down almost 400 in what has been an unusually wild month.  Longer term, 17K has been a very tough ceiling for the Dow to crack thru.  There was a little selling into the close, but was to be expected.

Dow Jones Industrials

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