Friday, April 24, 2015

Markets fluctuate while techs surge

Dow added 21, decliners just ahead of advancers & NAZ climbed 36.  The MLP index went up 2 to 448 & the REIT index climbed a fraction to 332.  Junk bond funds hardly budged & Treasuries advanced.  Oil was hit with profit taking & gold was weak.

AMJ (Alerian MLP Index tracking fund)

CLM15.NYM....Crude Oil Jun 15....57.06 Down ...0.68  (1.2%)

Live 24 hours gold chart [Kitco Inc.]

Purchases of big-ticket manufactured goods picked up last month due to higher demand for airplanes & cars, but underlying data suggest companies continue to curtail investment.  Orders for durable goods, products such as refrigerators & cars designed to last at least 3 years, rose a seasonally adjusted 4% in Mar from a month earlier, according to the Commerce Dept.  The Feb decline of 1.4% was unrevised.  Overall orders were expected to climb 0.6%.  Last month's pickup reflected a surge in demand for autos & both defense & civilian aircraft, volatile categories that can obscure underlying strength in the economy.  Excluding transportation goods, orders dropped 0.2%, the 6th consecutive monthly decline.  Durable-goods estimates are rough & often revised.  Broader trends show weak demand.  So far this year, orders are up 0.1% compared to the same period in 2014.  Details within the report suggested businesses are reining in investment plans.  Orders for nondefense capital goods excluding aircraft, a proxy for company spending on equipment & software, fell 0.5% in Mar.  Such orders have declined 7 consecutive months.  The figures likely reflect cautious spending by companies in the face of numerous obstacles.  Depressed oil prices have caused energy firms to lay off workers & scale back investment starting late last year.  The strengthened dollar has made US products more expensive globally, hurting exports.  And some believe unusually cold weather, coupled with disruptions linked to a West Coast port strike, slowed the economy in Q1.  Many economists estimate that US GDP grew at a tepid annual rate of around 1% in Q1.  This report offered some hints of higher demand from consumers, with orders for computer products up 11% & autos up 5.4% from a month earlier.

Durable Orders Rise On Autos Demand

American Airlines Group Inc (AAL) reported Q1 profit above expectations & pleased investors with capacity cuts to match weakening intl demand.  EPS rose to $1.73 per diluted share excluding special items, compared with an estimate of $1.71.  With foreign travelers' spending power hurt by the strong dollar & in some cases lower oil prices, the company slashed more than 1K seats it had planned to add to intl routes by postponing the delivery of 4 aircraft to 2017 from 2016, with another delivery delayed until 2018.  It expects that will cut 2016 capacity by 0.6% & still forecasts 2015 capacity up about 2% compared with 2014, driven more by domestic than intl growth.  Pres Scott Kirby expects passenger revenue per available seat mile, a unit that measures a plane's carrying capacity, will fall 4-6% in Q2, with the largest impact in the Pacific & Latin America.  Cheap fuel has lowered airlines' expenses, although it has hurt demand from customers in oil-rich nations.  For the 2nd qtr, unhedged AAL forecast it will pay $1.84-$1.89 per gallon of jet fuel.  The stock rose 1.25.  If you would like to learn more about AAL, click on this link:

American Airlines 1Q Profit Tops Expectations 

American Airlines (AAL)

PepsiCo, a Dividend Aristocrat, will replace its current Diet Pepsi offerings in the US with those free of aspartame, an artificial sweetener that has come under scrutiny from health-conscious consumers.  Diet Pepsi, Caffeine-Free Diet Pepsi & Wild Cherry Diet Pepsi sweetened with a blend of sucralose & acesulfame potassium will begin replacing current offerings in Aug.  US sales of carbonated soft drinks have been declining for nearly a decade, with consumers shifting away from diet soda because of perceived health concerns about artificial sweeteners, specifically aspartame.  "Diet cola drinkers in the U.S. told us they wanted aspartame-free Diet Pepsi and we're delivering," Seth Kaufman, senior VP of the Pepsi & flavors portfolio within the company's North America beverages business.  Sales in PEP beverage business have been hurt by a long-term decline in soft drink sales in the US.  Aspartame, which is about 200 times sweeter than sugar, is widely used to sweeten diet sodas.  PEP reported a 3.2% fall in Q1 net revenue to $12.2B.  The stock fell 56¢.  If you would like to learn more about PEP, click on this link:

PepsiCo to Launch Aspartame-Free Diet Pepsi

Pepsico (PEP)

It may have taken 15 years, but tech stocks are back in demand, taking NAZ to record highs again.  Of course, that brings back memories of the crash with a whopper 80% decline that followed the record back in 2000.   One major difference is that many of the companies that propelled NAZ higher are long gone & new ones that didn't exist are responsible for this rise.  Meanwhile, the Greek situation is getting very serious & its euro partners are unforgiving about its past fiscal sins.  Dow is close to its record highs but the Greek debt mess along with GDP data next week will be felt in the markets next week.

Dow Jones Industrials

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