Wednesday, February 4, 2015

Markets slide lower on Greek debt worries & oil's decline

After a brief rally late in the day, Dow finished up just 6, decliners over advancers 2-1 & NAZ lost 11.  The MPL index sank with oil, down 6 to the 449s, & the REIT index fell fractionally to 348.  Junk bond funds were mixed & Treasuries dropped.  Oil plunged, erasing much of the recent brief rally, & gold climbed higher.

AMJ (Alerian MLP Index tracking fund)

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CLH15.NYM....Crude Oil Mar 15.....48.56 Down ...4.49  (8.5%)

Live 24 hours gold chart [Kitco Inc.]

A gauge of growth in the US services sector was stronger than expected in Jan, though it remained near 6-month lows as an index on employment declined sharply.  The Institute for Supply Management services index was 56.7, up slightly from a revised 56.5 in Dec.  Analysts were looking for a reading of 56.3.  The survey's employment index fell to 51.6 from 55.7, while 2 other components, prices & order backlogs, were below the 50 level that separates expansion from contraction for a 2nd straight month.  A 3rd component, imports, entered contraction territory for the first time since Feb 2014.  The rise in the overall index came from a strong rebound in business activity.  That subindex rose from to 61.5, its highest level since Sep, from 58.6 in Dec to 61.5.

Service-Sector Growth Picks Up in January

Greece has not talked with the IMF about changing the debt framework of its bailout program, the IMF said.  "There is an agreed framework for dealing with debt in the current (bailout) program. There has been no discussion with the authorities on a change in this framework," the IMF said.  Greece's finance minister said in a media interview that Athens had started talks with the IMF over a plan to swap its sovereign debt for growth-linked bonds, as Greece's new gov seeks ways to restructure public debt after receiving €240B ($275B) in bailout money since 2010.

IMF: Not in Discussions with Greece About Debt

One year ago, Microsoft, a Dow stock, appointed Satya Nadella as CEO.  Under his watch, revenue has jumped 12% to $93.5B.  That's a mixed record compared to other high-profile tech executives.  The stock is up about 15%, basically in-line with the S&P 500 & NAZ.  But, beyond financial metrics, there's also the broader question of whether Nadella is pursuing a smart business strategy for the company he runs & analysts believe he is.  In the last earnings report, MSFT said that its commercial cloud business boasted triple-digit revenue growth for the 6th straight qtr.  But there are worriesabout the underlying trends for the Windows franchise.  Last year, technical support ended for the Windows XP, motivating companies to upgrade their computers.  That tail wind might not prove as strong this year.  With the stock down 17% from its recent high, the primary challenge is demonstrating strong momentum in its mobile business.  The most recent evidence from research firm IDC shows MSFT controls less than 3% share of the smartphone market.  Also, Windows 10, the new version of its operating system due out later this year, needs to be a big hit.  Windows still accounts for about 25% of revenue.  Companies, consumers & developers need to embrace Windows 10 if Nadella hopes to win investors in the future.  The stock rose 23¢.  If you would like to liearn more about MSFT, click on this link:

The ups and downs of Satya Nadella's first year

Microsoft (MSFT)

The stock market could not extend its rally.  It tried in late day trading, but faded in the last ½ hour.  Intl news is gloomy on many fronts.  Probably the biggest resaon for selling was when the price of oil plunged 8% to below 49.  The fundamental problem of too much supply remains.  The Jan jobs report comes on Fri & good numbers are expected.  The larger question is how much income will filter to customers who increase spending?

Dow Jones Industrials

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