Thursday, February 18, 2016

Markets fluctuate after 3 days of substantial gains

Dow managed to climb all of 7, advancers were slightly above decliners & NAZ fell 22.  The MLP index slid back 1 to 240 & the REIT index added 1+ to 302. Junk bond funds did little & Treasuries were bid higher.  Oil jumped up to the 33s (see below) & gold crawled higher.

AMJ (Alerian MLP Index tracking fund)

CLH16.NYM...Crude Oil Mar 16...31.48 Up ...0.82 (2.7%)

GCG16.CMX...Gold Feb 16.....1,209.50 Down ...1.60  (0.1%)

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The OECD cut its global growth forecasts, saying the economies of Brazil, Germany & the US are slowing & warning that some emerging markets are at risk of exchange-rate volatility.  Global GDP will should 3.0% in 2016, the same pace as in 2015 & 0.3 percentage point less than predicted in Nov, the Organization for Economic Cooperation & Development said today.

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  OECD Cuts Global Growth Forecast and Warns of Growing Risks

The number of Americans filing for unemployment benefits unexpectedly declined last week to a 3-month low, signaling durability in the labor market.  Initial jobless claims dropped 7K to 262K, the lowest since Nov 21, according to the Labor Dept.

The labor market has exhibited persistent strength despite softer foreign sales, a sign domestic demand is helping the US weather a global slowdown.  More hiring & fewer layoffs that lead to enhanced feelings of job security have the potential to encourage an acceleration in consumer spending.  The forecast called for 275K claims after 269K a week earlier.  The 4-week average decreased to 273K, the lowest since Dec 19, from 281K.  The latest figure compares with an average of 285K during the comparable employment survey period for Jan.  The number continuing to receive jobless benefits rose 30K to 2.27 M & the unemployment rate among people eligible for benefits climbed to 1.7% from 1.6.

Jobless Claims in U.S. Decline to Lowest Level Since November

Crude extended gains after industry data showed US inventories declined, while Iran cautiously supported a proposal by Saudi Arabia & Russia to freeze production at near-record levels.  Oil rose as much as 4.3%.  US crude supplies fell 3.26M barrels last week, according to the American Petroleum Institute.  However, a survey projected Energy Information Administration data today will show stockpiles climbed 3.5M barrels.  While Iran welcomed the output freeze, Oil Minister Bijan Namdar Zanganeh didn't say whether the nation would curb its own output.

Oil is still down about 15% this year after OPEC abandoned output targets in early Dec & US crude inventories swelled.  Zanganeh didn't mention if Iran, the 2nd-biggest OPEC producer before sanctions were intensified in 2012, would deviate from plans to boost exports after the lifting of restrictions last month. 

Oil Extends Gains After Report of U.S. Crude Inventory Decline

The last 3 days have been nothing short of spectacular for the stock market.  All good things have to come to an end.  Optimism about oil has been overdone.  Global  economies are struggling & Dow is down 1K YTD.  Short term traders may be cashing in their profits today & tomorrow.

Dow Jones Industrials


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