Friday, January 2, 2015

Markets fluctuate on weak US manufacturing data

Dow went up 19, decliners over advancers 4-3 & NAZ fell 15.  The MLP index rose 3+ to the 463s & the REIT index added 2+ to 330.  Junk bond funds were mixed to lower & Treasuries advanced.  Oil dropped to the 52s for a new 5 year low while gold managed a small gain.

AMJ (Alerian MLP Index tracking fund)

CLG15.NYM...Crude Oil Feb 15...52.92 Down ....0.35  (0.7%)

GCF15.CMX...Gold Jan 15......1,171.90 Down ...12.00 (1.0%)

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US manufacturing cooled in Dec, settling into a more sustainable pace of growth as the year drew to a close.  The Institute for Supply Management factory index dropped to a 6-month low of 55.5 from 58.7 in Nov.  The reading in Oct matched a 3-year high.  Figures greater than 50 indicate growth & the forecast called for a reading of 57.5.  A slowdown in orders growth indicates companies are beginning to scale back capital spending plans as overseas markets slow & lower oil prices hit American oil producers.  At the same time, US factory floors will probably stay busy early this year as employment gains & cheap gasoline boost consumer spending.  The purchasing managers’ index averaged 55.8 in 2014, the best year since 2010.  The ISM group’s new orders gauge declined to 57.3 in Dec from 66, & a measure of production dropped to 58.8 from 64.4.  An index of export demand fell to 52 from 55, the biggest one-month decline in 2014.  The factory employment measure increased to 56.8 from 55.5 the prior month.  The index for orders waiting to be filled decreased to 52.5 from 55.

Manufacturing in U.S. Grew Less Than Forecast in December

The Markit Economics final index of US manufacturing decreased to an 11-month low of 53.9 in Dec from 54.8 a month earlier.  Figures above 50 for the purchasing managers’ measure indicate expansion.  The forecast was 54 & the preliminary reading for Dec was 53.7.  The gauge of employment declined to 53 from 55.1 the prior month.  But orders increased at a faster pace.  “The manufacturing sector saw growth of activity lose further momentum at the end of 2014, but that didn’t stop factories from enjoying their best year since the recession,” ChrisWilliams, chief economist at Markit, said.  “Companies are citing greater uncertainty about the outlook, especially in export markets, leading to some scaling back of expansion plans.”   “December saw growth of new orders lift slightly higher, suggesting the environment may already be starting to improve amid lower oil prices,”  Williamson said.  “Even if global demand remains subdued, a buoyant domestic market should therefore help sustain factory growth in coming months.”

Markit Index of Manufacturing in U.S. Fell to 53.9 in December

Oil production in OPEC slipped less than 1% in Dec, the first month after the group refused to cut output as crude prices tumbled.  Daily output fell 122K, or 0.4%, to 30.2M, led by declines in Saudi Arabia, Libya & the UAE.  Brent & West Texas Intermediate futures dropped to the lowest levels since May 2009, capping the worst year since 2008.  OPEC left its production quotas unchanged in Nov, prompting speculation that the group will let crude slide low enough to slow US production that’s climbed to the highest level in 3 decades.  Asian demand for Saudi crude is weak.  Libyan output fell 130K barrels a day to 450K in Dec, the lowest level since Jul.  The country pumped 1.6M in Jan 2011.  The North African country is now pumping less than 300K barrels a day after Islamist militants shifted attacks to energy facilities including Es Sider, the country’s largest oil export terminal.  The UAE trimmed production 100K barrels a day to 2.7M last month. 

OPEC December Crude Output Slips as Global Prices Tumble

Stocks aren't doing very much with little excitement in the markets.  But the early data on Dec manufacturing was not encouraging & if oil continues to hit new lows, it will be tough for stocks to rise.  Mon, the full force of traders will be back & that should give a better indication of  where they want to take the markets in Jan.

Dow Jones Indutrials

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