Dow pulled back 6, decliners slightly ahead of advancers & NAZ was off all of 2. The MLP index fell back fractionally in the 327s & the REIT index lost 2 to 324. Junk bond funds were mixed & Treasuries rose higher. Oil is down in the 45s & gold also saw selling.
AMJ (Alerian MLP Index tracking fund)
Household spending rose less than forecast in Sep, showing the biggest part of the US economy ended a strong qtr on a weak note. Purchases increased 0.1%, the smallest gain since Jan, after rising 0.4% in Aug, according to the Commerce Dept. The forecast called for a 0.2% advance. The first drop in prices since Jan helped take some of the sting out of a smaller-than-projected advance in incomes. Americans pulled back amid turmoil in financial markets caused by signs that global growth was weakening. It will take a pickup in wage growth to ensure American households remain the linchpin of economic growth heading into the all-important holiday shopping season. Wages were unchanged, the weakest reading in 6 months, after a 0.5% advance the prior month. That meant total incomes rose just 0.1% after a 0.4% increase in Aug. The survey called for incomes to rise 0.2%. A lack of inflation is helping augment weak income gains. The Commerce Dept report showed the price index tied to consumer purchases decreased 0.1% from the prior month, the first drop since Jan. It rose 0.2% from the same time in 2014, compared with a 0.3% in the year ended Aug. This inflation gauge is preferred by Federal Reserve policy makers & hasn’t met the 2% goal since Apr 2012. Stripping out the volatile food & energy categories, the price measure climbed 0.1% from Aug & rose 1.3% in the 12 months ended in Sep.
Consumer confidence rebounded less than expected in Oct as wealthier households worried about volatility in financial markets. The University of Michigan final consumer sentiment index for Oct came in at 90, lower than the preliminary reading of 92.1. The final Sep reading was 87.2. The forecast had expected the final Oct index would edge up to 92.5. The index climbed to 96.1 as recently as Jun, but signs of slower economic growth in the US & turmoil abroad had eroded confidence. The Sep measure was the lowest in 11 months. "The entire October rebound from September was due to gains in confidence among lower income households, while confidence among households with incomes in the top third of the income distribution retreated a bit due to concerns about financial markets," said Richard Curtin, the survey's chief economist. But he added that the overall impact from market gyrations has been small. "Indeed, the average level of the Sentiment Index thus far in 2015 (93.1) is higher than any other year since 2004," he said. US household spending is a driving force in the economy. Consumer spending increased at a 3.2% rate in Q3, only slightly slowdown from the 3.6% advance during the prior qtr. That helped prop up overall growth, though GDP advanced a modest 1.5% during the period.
Exxon Mobil, a Dow stock & Dividend Aristocrat, revenue & profit slid in Q3 as commodity prices tumbled, but results came in above expectations as the largest US oil company cut back on spending. The company reported EPS of 1.01, down from 1.89 a year earlier. Revenue fell 37% to $67.34B. Analysts expected EPS of 89¢ on revenue of $63.75B. Profit in the exploration & production, upstream, business plunged 79% to $1.36B, as its US division swung to a loss of $422M. But XOM was again helped by improved profit in its downstream & chemicals divisions, which are helped by low prices for oil & gas. In Q3, refining & marketing earnings, downstream, essentially doubled to $2.03B on higher margins. Chemical earnings edged up to $1.23B from $1.20B a year earlier, with growth moderated by foreign exchange impacts. XOM cut its capital spending 22% from the prior year to $7.67B. The company has moved to conserve cash in a sign that it doesn't expect a quick rebound in crude prices. It announced it would slash its capital spending this year & reduce its stock buybacks in the near term. XOM plans to spend about $500M on share buybacks in Q4, matching the reduced level it targeted in Q3. Meanwhile, the company continues to grow its production. On an oil-equivalent basis, upstream production grew 2.3% from the prior year. The stock rose 46¢. If you would like to learn more about XOM, click on this link:
lub.ino.com/trend/analysis/stock/XOM?a_aid=CD3289&a_bid=6ae5b6f7
Stocks are not doing much today. It is difficult to make sense when much of the action is based on fund managers adjusting their books. But Oct is shaping up as the best month in 4 years & one of the best in history even though supporting economic data has not been pretty.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLZ15.NYM | ....Crude Oil Dec 15 | ...45.91 |  ...0.15 | (0.3%) |
| GCX15.CMX | ...Gold Nov 15 | .....1,142.80 | ...4.40 | (0.4%) |
Household spending rose less than forecast in Sep, showing the biggest part of the US economy ended a strong qtr on a weak note. Purchases increased 0.1%, the smallest gain since Jan, after rising 0.4% in Aug, according to the Commerce Dept. The forecast called for a 0.2% advance. The first drop in prices since Jan helped take some of the sting out of a smaller-than-projected advance in incomes. Americans pulled back amid turmoil in financial markets caused by signs that global growth was weakening. It will take a pickup in wage growth to ensure American households remain the linchpin of economic growth heading into the all-important holiday shopping season. Wages were unchanged, the weakest reading in 6 months, after a 0.5% advance the prior month. That meant total incomes rose just 0.1% after a 0.4% increase in Aug. The survey called for incomes to rise 0.2%. A lack of inflation is helping augment weak income gains. The Commerce Dept report showed the price index tied to consumer purchases decreased 0.1% from the prior month, the first drop since Jan. It rose 0.2% from the same time in 2014, compared with a 0.3% in the year ended Aug. This inflation gauge is preferred by Federal Reserve policy makers & hasn’t met the 2% goal since Apr 2012. Stripping out the volatile food & energy categories, the price measure climbed 0.1% from Aug & rose 1.3% in the 12 months ended in Sep.
U.S. Consumer Spending Rose Less Than Forecast in September
Consumer confidence rebounded less than expected in Oct as wealthier households worried about volatility in financial markets. The University of Michigan final consumer sentiment index for Oct came in at 90, lower than the preliminary reading of 92.1. The final Sep reading was 87.2. The forecast had expected the final Oct index would edge up to 92.5. The index climbed to 96.1 as recently as Jun, but signs of slower economic growth in the US & turmoil abroad had eroded confidence. The Sep measure was the lowest in 11 months. "The entire October rebound from September was due to gains in confidence among lower income households, while confidence among households with incomes in the top third of the income distribution retreated a bit due to concerns about financial markets," said Richard Curtin, the survey's chief economist. But he added that the overall impact from market gyrations has been small. "Indeed, the average level of the Sentiment Index thus far in 2015 (93.1) is higher than any other year since 2004," he said. US household spending is a driving force in the economy. Consumer spending increased at a 3.2% rate in Q3, only slightly slowdown from the 3.6% advance during the prior qtr. That helped prop up overall growth, though GDP advanced a modest 1.5% during the period.
Consumer Sentiment Unexpectedly Declines
Exxon Mobil, a Dow stock & Dividend Aristocrat, revenue & profit slid in Q3 as commodity prices tumbled, but results came in above expectations as the largest US oil company cut back on spending. The company reported EPS of 1.01, down from 1.89 a year earlier. Revenue fell 37% to $67.34B. Analysts expected EPS of 89¢ on revenue of $63.75B. Profit in the exploration & production, upstream, business plunged 79% to $1.36B, as its US division swung to a loss of $422M. But XOM was again helped by improved profit in its downstream & chemicals divisions, which are helped by low prices for oil & gas. In Q3, refining & marketing earnings, downstream, essentially doubled to $2.03B on higher margins. Chemical earnings edged up to $1.23B from $1.20B a year earlier, with growth moderated by foreign exchange impacts. XOM cut its capital spending 22% from the prior year to $7.67B. The company has moved to conserve cash in a sign that it doesn't expect a quick rebound in crude prices. It announced it would slash its capital spending this year & reduce its stock buybacks in the near term. XOM plans to spend about $500M on share buybacks in Q4, matching the reduced level it targeted in Q3. Meanwhile, the company continues to grow its production. On an oil-equivalent basis, upstream production grew 2.3% from the prior year. The stock rose 46¢. If you would like to learn more about XOM, click on this link:
lub.ino.com/trend/analysis/stock/XOM?a_aid=CD3289&a_bid=6ae5b6f7
Exxon Results Slide Less Than Expected
Exxon Mobil (XOM)
Stocks are not doing much today. It is difficult to make sense when much of the action is based on fund managers adjusting their books. But Oct is shaping up as the best month in 4 years & one of the best in history even though supporting economic data has not been pretty.
Dow Jones Industrials
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