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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.
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: club.ino.com/trend/analysis/stock/COP?a_aid=CD3289&a_bid=6ae5b6f7
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.
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: club.ino.com/trend/analysis/stock/KSS?a_aid=CD3289&a_bid=6ae5b6f7
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.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.6299279650867545)
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