Thursday, February 4, 2016

Markets pare gains after oil resumes its slide

Dow rose 79 (below its AM highs), advancers over decliners 3-2 & NAZ finished up 5.  The MLP index went up 3+ to the 247s & the REIT index crawled fractionally higher to the 312s.  Junk bond funds were mixed to lower & Treasuries had a modest gain.  Oil saw selling in the PM & slid into the 31s while gold continued climbing higher.

AMJ (Alerian MLP Index tracking fund)

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CLH16.NYM....Crude Oil Mar 16....31.78 Down ...0.50  (1.6%)

Live 24 hours gold chart [Kitco Inc.]

ConocoPhillips cut its div & capital spending after reporting a widened Q4 loss.  The quarterly div was reduced to 25¢ a share from 74¢ previously.  It lowered capital expenditures guidance to $6.4B from $7.7B & operating costs guidance to $7B from $7.7B.  The stock tumbled 3.31.  If you would like to learn more about COP, click on this link:

ConocoPhillips Cuts Quarterly Dividend and Capital Spending

ConocoPhillips (COP)

Oil retreated as the highest US crude supplies in more than 80 years outweighed a weakening $.  Crude stockpiles climbed 7.79M barrels to 502.7M last week, the highest since the 1930s, according to weekly & monthly data from the Energy Information Administration.  Futures had climbed as much as 4% earlier, but declined on signs of a slowing US economy.  Oil is down 13% YTD as the market focuses on an expected boost in Iranian exports after the removal of sanctions & brimming US crude stockpiles.  Venezuela said 6 OPEC members & 2 non-members would attend an extraordinary meeting if one is called.  However it's doubtful that any output cuts will result from the effort.  Signs of a slowing US economy have hurt the dollar by derailing wagers that the Federal Reserve would continue raising interest rates while other central banks increased stimulus.  Currency traders are catching up to the bond market, where 10-year yields sank to the lowest in a year & futures sent the strongest signal yet that traders expect the Federal Reserve to stand pat on rates in 2016.

Crude Falls as Global Oil Supply Glut Outweighs Dollar Weakness

Department store chain Kohl's cut its full-year earnings forecast due to weak sales in the holiday qtr.  KSS expects 2015 EPS to be $3.95-$4.00, excluding losses from debt repayment.  It had earlier expected EPS to be at the low end of $4.40-$4.60.  The company said sales were lower than it had anticipated in Q4 & were "very volatile," due to a slow start in Nov & weak demand for winter products in Jan.  KSS is scheduled to report Q4 results on Feb 25.  The stock plunged 9.61 (19%).  If you would like to learn more about KSS, click on this link:

Kohl's Cuts Profit Forecast

Kohl's (KSS)

Dow slid back into the red for Feb & down more than 1K YTD.  Good thoughts behind recent buying are giving way to a stark dose of reality.  The oil market is in deep trouble with too much supply & not enough demand.  Production cuts are not in the cards.  The substantial div cut by COP is a vivid reminder about how ugly the energy market is.  More div cuts from the biggest companies are possible.  KSS guidance sent a discouraging signal that retail sales were less than exciting.  GDP only had limited growth in Q4 & Q1 could easily have a similar result.  Dow is still on defense.

Dow Jones Industrials


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