Tuesday, December 23, 2014

Markets rise on higher consumer spending

Dow added 64 to close above 18K, advancers over decliners 2-1 while NAZ fell 16.  The MLP index shot up 5+ to the 559s & the REIT index slid back a fraction to the 332s.  Junk bond funds gained & Treasuries retreated.  Oil had a good day jumping up to the 57s & gold lost ground.

AMJ (Alerian MLP Index tracking fund)

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CLG15.NYM....Crude Oil Feb 15....57.04 Up ...1.78 (3.2%)

Live 24 hours gold chart [Kitco Inc.]

Purchases of new homes in the US unexpectedly declined in Nov to a 4-month low, underscoring a lack of momentum this year in residential real estate.  Sales dropped 1.6% to a 438K annualized pace last month following a 445K rate in Oct that was weaker than previously estimated, according to the Commerce Dept.  The estimate called for a 460K pace.  Strict bank lending standards & rising property prices have bridled the industry this year following a pickup in 2013.  Further growth in employment opportunities & persistently low borrowing costs may help provide a spark for the housing market in 2015.  New-home purchases were down 3.7% from Nov 2013 on an unadjusted basis & the median price of a new home increased 1.4% last month from a year ago to $281K.  Purchases decreased in 3 of 4 regions, with a 12% slump in the Northeast & a 6.4% decline in the South.  The supply of homes at the current sales rate increased to 5.8 months from 5.7 months in Oct.  There were 213K new houses on the market at the end of Nov, the most since May 2010 & up from 210K a month earlier.  Sales of new properties, which are tallied when purchase contracts are signed, are considered a more timely measure of the market than sales of previously owned dwellings, which are counted when a sale is final.  Purchases existing homes fell 6.1% to a 4.93M annual rate last month, the weakest since May, from a 5.25M pace in Oct, according to the National Association of Realtors.  Meanwhile prices continued to rise, with the median value increasing 5% from a year earlier to $205K last month.

New-Home Sales in U.S. Unexpectedly Fall to Four-Month Low

Walgreen beat expectations after the company said it filled more prescriptions at its retail pharmacies than ever before.  Fiscal Q1 sales rose 6.7% to $19.6B as it filled a record 222M prescriptions, 4.3 % more than a year ago.  Pharmacy sales accounted for about 2/3 of revenue.  EPS rose to 85¢ from 72¢ a year ago.  Excluding one-time items, EPS was 81¢ beating the 75¢ estimate.  Investors are waiting to see what WAG does next after in Aug it agreed to buy the 55% of European health & beauty chain Alliance Boots that it didn’t already own for $15.3B.  The takeover plan has been accompanied the departure of many of its top executives, with the company’s senior ranks being filled by managers from Alliance Boots.  Departures include CEO Greg Wasson, who will step down after the deal closes.  He will be replaced on an interim basis by Alliance Boots’ Chairman Stefano Pessina, who thru the deal became WAG’s biggest shareholder.  The stock jumped 2.24, a new record.  If you would like to learn more about WAG, click on this link:

Walgreen Prescriptions Hit Record as Earnings Beat Estimates

Walgreen (WAG)

US shoppers spent 2.4% more during the weekend before the Christmas holiday this year, giving a boost to retailers in the final days of 2014.  Purchases during the Super Saturday weekend rose to $42B, up from $41B during the same weekend a year ago, said research firm Customer Growth Partners.  The performance on the Sat before Christmas, one of the busiest shopping days of the year, indicates that this holiday season may fall short of early estimates that it would be the best in 3 years.  While sales picked up in Nov & Dec, the acceleration may not be enough to make up for the slow start, the research firm said.  “This was a strong finish to an otherwise lackluster season,” it added.  “It has taken what has been a sluggish season and made it merely lackluster.”  Separate estimates from the International Council of Shopping Centers (ICSC) showed that retailers could benefit from a last-minute shopping surge despite what the group called a “historically low” 11% of consumers who have yet to start buying holiday gifts.  Sales in the week ended Sat Dec 20 rose 3.1% over the year-ago period, according to the ICSC & Goldman Sachs Weekly Chain Store Sales Index.  “The late shopping surge should continue all the way through Christmas Eve,” ICSC, said.

U.S. Shoppers Boost Late Holiday Spending After Slow Start

Economic news was quite good although the housing sector, a major component of the economy, is subject to fits & starts.  Housing may continue to stumble next year & autos, anothe major industry, will be challenged trying to improve over this years's sales data.  But the bulls are happy to see Dow over 18K.

Dow Jones Industrials

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