Thursday, October 30, 2014

Volatile markets after Fed ends bond buying program

Dow jumped 120, taking it back into the black for Oct, but advancers barely ahead of decliners & NAZ slid back 13.  The MLP index fell 2+ to the 507s & the REIT index lost pennies in the 311s.  Junk bond funds drifted lower & Treasuries went higher.  Oil fell after the Federal Reserve ended its asset-purchase program & US crude production surged to the highest level since the 1980s.  Gold fell back, bringing it close to 1200.

AMJ (Alerian MLP Index tracking fund)

CLZ14.NYM...Crude Oil Dec 14...81.36 Down .....0.84  (1.0%)

GCX14.CMX...Gold Nov 14....1,204.50 Down ...19.80  (1.6%)

3 Stocks You Should Own Right Now - Click Here!

The US economy expanded more than forecast in Q3, capping its strongest 6 months in more than a decade, as gains in gov spending & a shrinking trade deficit made up for a slowdown in household purchases.  GDP grew at a 3.5% annualized rate after a 4.6% gain in Q2, according to the Commerce Dept.  It marked the strongest back-to-back readings since the last 6 months of 2003.  The forecast called for a 3% advance.  Growing oil production is limiting imports & contributing to a pickup in manufacturing, allowing the economy to overcome slowing growth in overseas markets from Europe to China.  At the same time, job gains & cheaper gasoline are giving American consumers the confidence & the means to spend, brightening the outlook for the holiday-shopping season & helping explain why the Federal Reserve ended its bond-buying program yesterday.  The Q2 4.6% jump reflected a rebound from a 2.1% slump in Q1 that partly reflected a harsh winter.  Consumer spending, which accounts for almost 70% of the economy, climbed at a 1.8% pace last qtr after growing at a 2.5% rate in Q2..

U.S. Economy Up 3.5% in 3rd Quarter, Capping Best 6 Months in Over a Decade

Fewer Americans filed applications for unemployment benefits over the past month than at any time in more than 14 years, a sign the strengthening economy is buoying the labor market.  The 4 week average of jobless claims fell to 281K, the lowest since May 2000, from 281K in the prior week according to the Labor Dept.  Compared with the prior week, applications for benefits rose by 3K to 287K.  Rising demand is prompting employers to hold the line on dismissals, laying the ground for faster hiring & wage growth.  Better employment prospects are lifting consumers’ moods, making it more likely that households will increase spending.  The number of continuing to receive jobless benefits rose 29K to 2.38M & the unemployment rate among people eligible for benefits held at 1.8%.  Both pieces of data are reported with a one-week lag.  Initial jobless claims reflect weekly layoffs & typically wane before job growth can accelerate.

Fewest Americans in 14 Years Filed for Unemployment Benefits in Last Month

MasterCard Q3 profit beat estimates as customer spending climbed.  EPS increased 87¢ from 73¢ a year earlier.  The estimate was 78¢.  CEO Ajay Naga has signed new credit-card deals with US retailers & bought smaller firms abroad.  MA also has increased prices for some processing services & partnered with technology companies, including Apple (AAPL), as more transactions are made online & by mobile phone.  “We are making it safer and simpler for people to pay and get paid,” Banga said.  “We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment.”  Revenue increased 13% to $2.5B from a year earlier as customer spending abroad climbed 15%.  Expenses rose 12% to $1.08B as the company spent more on acquisitions.  The company is scheduled to increase its fees for some US banks in Jan.  The stock went up 4.98.  If you would like to learn more about MA, click on this link:
MasterCard Profit Beats Analysts’ Estimates as Customer Spending Increases

Mastercard (MA)

Traders have a lot to digest & aren't certain how to treat the data.  GDP data was encouraging, but that also indicates that interest rate hikes by the Fed are getting closer.  While the 6 month GDP data looks good, YTD data represents a mediocre growth rate.  Sluggish economic growth overseas is haunting what seems like improving data in the US.  While Dow is back into the black for the month, the wild gyrations make for a month many would like to forget.

Dow Jones Industrials

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