Friday, May 1, 2015

Higher markets on mixed economic data

Dow shot up 113, advancers over decliners 4-3 & NAZ gained 33.  The MLP index was up pennies in the 452s & the REIT index added 3 to the 322s.  Junk bond funds were mixed & Treasuries declined.  Oil was hit with profit taking & gold also pulled back.

AMJ (Alerian MLP Index tracking fund)

CLM15.NYM...Crude Oil Jun 15...59.06 Down ....0.57 (1.0%)

GCK15.CMX...Gold May 15....1,175.10 Down ...7.30  (0.6%)

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Manufacturing in Apr held at the weakest pace in almost 2 years, prompting factories to pull back on hiring as they await stronger demand in the US & abroad.  The Institute for Supply Management’s index was unchanged at 51.5, the lowest since May 2013.  Readings above 50 signal expansion, & the Apr figure was less than the projection of 52.  The lack of improvement reflects the lingering effects of a stronger dollar & low oil prices on capital spending & exports that caused the economy to nearly stall in Q1.  While the ISM’s report showed factory employment was the weakest since 2009, readings on orders & production advanced as goods began to move following labor-related delays at West Coast ports.  Manufacturing around the world remains tepid.  Growth at UK factories dropped to a 7-month low & China’s official Purchasing Managers’ Index was little changed at 50.1 last month.  The ISM’s measure of US factory employment decreased to 48.3, the weakest since Sep 2009, from the prior month’s 50 reading.  The new orders gauge climbed to a 4-month high of 53.5 from 51.8, & a measure of production rose to 56 from 53.8.  The index for orders waiting to be filled held at 49.5.  The measure of export demand rose to 51.5 from 47.5 in Mar.  The report also showed the index of prices paid increased to 40.5 from 39.

Manufacturing in U.S. Holds at Weakest Pace of Growth Since 2013

Automakers reported rising US vehicle sales in Apr, though some large companies missed estimates.  Low fuel prices continue to drive demand for pickups & sport utility vehicles.  General Motors (GM) deliveries rose 5.9%, exceeding projections for a 5.3% gain. Fiat Chrysler Automobiles (FCAU), Ford (F) & Nissan reported gains that were less than predicted.  FCAU said its US sales rose 5.8%, compared with estimates for a 7.6% increase.  Nissan improved by 5.7% & Ford’s light-vehicle sales rose 5.4%.  With gasoline prices down by about a 1/3 from a year ago, sales of large & luxury sport utility vehicles soared 31% in Q1, while family sedan sales fell 3%, according to researcher Autodata.  That trend continued last month.  FCAU's US unit posted deliveries of 189K vehicles last month.  The Apr annualized selling rate, adjusted for seasonal trends, is projected to rise to 16.7M from 16.1M a year ago.  The top 6 automakers are all projected to show gains compared with a year earlier.  American consumers have become convinced lower fuel prices are here to stay & they are reverting to the vehicle equivalent of comfort food: roomy SUVs & pickups.  The focus on fuel economy has waned.

GM U.S. Sales Top Estimates as Ford, Fiat Chrysler, Nissan Miss

US consumer sentiment in Apr rose versus the prior month to its highest level since Jan, but was slightly below expectations for a final reading.  The University of Michigan's final Apr reading on the overall index on consumer sentiment came in at 95.9, unchanged from the preliminary Apr reading.  The final reading in Mar was 93.0.  Analysts were looking for a final Apr reading of 96.0.  The survey's final reading of the subindex on current conditions rose to 107 from 105.0 in Mar, while a read on final consumer expectations rose to 88.8 from 85.3.  The forecast was for a reading of 108.3 for the conditions index & 88.1 for expectations.

Consumer Sentiment Rises in April

Stocks are starting the new month with buying but the market breadth is weak.  REITs are bouncing back (bargain hunting) after selling in Apr.  The Greek debt mess lingers on, the MidEast remains chaotic & US economic data is unimpressive & inconsistent.  Once again, Dow is struggling to crack thru 18K again where it has been for months.

Dow Jones Industrials

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