Tuesday, December 16, 2014

Markets rise as oil prices head lower

Dow gained 67, advancers over decliners 4-3 & NAZ was off 2.  The MLP index rebounded 9+ to 430 after becoming volatile in recent months & the REIT index lost pennies in the 319s.  Junk bond funds were soft & Treasures gained as the yield on the 10 year Treasury approaches 2%.  Oil slid lower in the 55s & gold also pulled back.

AMJ (Alerian MLP Index tracking fund)

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New-home construction in the US exceeded a 1M annualized pace in Nov for a 3rd consecutive month, continuing a slow recovery in the housing market.  While housing starts declined 1.6% to a 1.03M annualized rate, they retreated from a 1.05M pace in Oct that was stronger than previously estimated, according to the Commerce Dept.  The estimate was for a 1.04M rate.  The last time starts exceeded 1M for 3 months straight was in early 2008.  The decrease in starts was focused in the South as other area showed gains, & building permits also decreased last month, a sign housing will remain in a plodding recovery into 2015.  Continued job gains & lower mortgage rates will probably support demand as first-time & younger buyers still struggle to get into the market.  Building permits declined 5.2% in Nov to a 1.04M annualized rate after an Oct pace of 1.09M.  They were projected to fall to 1.07M.  Construction of single-family houses decreased to a 677K.  Work on multifamily homes climbed 6.7% to a 351K rate.  On a year-to-year basis, total housing starts were down 7.5% in Nov from the same month in 2013 before adjusting for seasonal changes.  The housing recovery has progressed in fits & starts this year, with historically low mortgage rates & the strongest job gains since 1999 slowly luring buyers into the market.   As the run-up in home prices decelerates & lending standards become less strict, homeownership may become more attainable for many Americans.

Housing Starts in U.S. Exceed 1 Million Pace for Third Month

3M, a Dow stock & Dividend Aristocrat, boosted the quarterly div 20% as it projected a gain in 2015 profit.  The payout will increase to $1.025 from 85.5¢ & is payable in Mar.  EPS will be $8-$8.30, MMM said, compared with the analyst estimate for adjusted EPS of $8.21.  MMM reiterated its financial objectives thru 2017 which includes annual EPS growth of 9-11%.  “The company is on track to deliver its long-term financial targets, organic growth remains strong and productivity is improving margins in 2014 and 2015,” MMM said.  It also raised the low end of the range for its share buyback in 2013-2017, to $20B from $17B.  Since taking the helm in 2012, CEO Inge Thulin has boosted research & development spending, realigned business units & emphasized intl growth.  MMM has been aggressive in its capital deployment, including buying Sumitomo Electric's 25% stake in a joint venture for $865M.  The stock rose 2.06.  If you would like to learn more about MMM, click on this link::

3M to Raise Quarterly Dividend 20% on Growth in Earnings

3M Company (MMM)

CVS Healthcare plans to buy back as much as $10B of stock & pay out more cash to shareholders as the biggest US seller of prescription drugs benefits from the increasing number of Americans with insurance coverage.  The share buyback will occur over a multi-year period, the company said.  CVS will raise its quarterly div 27%, to 35¢.  “We’ve established a solid track record of delivering on our promises, and our results prove that out,” CFO Dave Denton said.  “Looking ahead, we are targeting solid, long-term enterprise growth & expect to generate a significant amount of cash that will be available to enhance returns.”  CVS, which in Sep became the first national pharmacy chain to stop selling tobacco products, forecast EPS next year of $5.05-$5.19.  Analysts are predicting $5.10.  The stock rose 3.44.  If you would like to learn more about CVS, click on this link::

CVS Health Sets New $10 Billion Share Buyback, Raises Quarterly Dividend

CVS Health (CVS)

The bulls are looking for ways to take stocks higher, but reasons for that are hard to find.  The market is oversold so a rebound from this selling can be expected.  However while oil prices are depressed, it is difficult to see why buyers should reenter the market in force. 

Dow Jones Industrials

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