Thursday, March 10, 2016

Markets fluctuate as oil prices retreat again

Dow fell 5, decliners over advancers almost 3-2 & NAZ lost 12.  The MLP index was down 2+ to the 256s & the REIT index gave up 1 to 321.  Junk bond funds crawled higher & Treasuries were weak.  Oil dropped (see below) while & gold climbed higher.

AMJ (Alerian MLP tracking index fund)

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CLJ16.NYM....Crude Oil Apr 16....37.76 Down ...0.53  (1.4%)

Live 24 hours gold chart [Kitco Inc.]

American Express CEO Ken Chenault faced investors with big questions.  Speculation that he might sell the lender to a major bank or announce a leadership change helped nudge the stock up this month before the firm’s annual investor day.  Analysts are focusing on the underlying driver: concern the biggest credit-card issuer by purchases will struggle to maintain growth amid stiffening competition.  AXP has slumped 27% since Chenault took the stage a year ago, the worst performance in the Dow.  3 weeks ago, Chenault announced his most sweeping shakeup yet to reinvigorate earnings, reassigning senior managers & consolidating marketing activities.  Since then, the stock has climbed 11%, more than doubling the gain in the Dow.  Analysts are hoping to hear how the new configuration will accelerate revenue growth & whether executives will stick to a target for an EPS growth rate of 12-15% over the long term.

The stock fell 30¢.  If you would like to learn more about AMX, click on this link:

AmEx CEO Chenault to Face Investors After Stock's 27% Tumble

American Express (AXP)

Oil prices fell as expectations ebbed that major producers would agree on an output freeze.  Prices have climbed in recent weeks on signs that large producing nations, including members of OPEC, would agree to freeze their output at Jan levels. Saudi Arabia, Russia, Qatar & Venezuela previously said they were willing to freeze, & other producers in Latin America, Africa & the Persian Gulf appeared likely to join a meeting as well.  But an article today said that a meeting between OPEC & non-OPEC nations is unlikely to happen because Iran hasn't committed to freeze its production & prices fell.  Iran confirmed its position later in the day.  President Hassan Rouhani's chief of staff said Iran wouldn't curb its output until it reached its pre-sanction market share.  Iran produced roughly 4M barrels a day before sanctions & currently produces less than 3M barrels a day.   Oil prices have surged in recent weeks on expectations of an output deal among major producers & some supply outages in Nigeria & Iraq.  However, analysts have warned that prices could slump again as the global market remains oversupplied.

Oil Down on U.S. Refinery Maintenance, OPEC Doubts

Discount retailer Dollar General's reported a higher-than-expected growth in quarterly sales at established stores as demand increased for items such as candy & snacks, perishables, tobacco & food.  Low gas prices & improving wage growth are supporting a recovery in spending by low-income Americans, its main customer group.  Sales at company stores open at least 13 months rose 2.2% in Q4, helped by increased customer traffic & bigger transaction sizes.  Analysts on average had expected a growth of 1.9%.  "Growth in the non-consumable category was broad-based, with notable strength across seasonal and home, offset by a modest decline in apparel," the company said.  EPS rose about 6% to $1.30 & net sales increased 7% to $5.29B.  Analysts expected EPS of $1.26 on revenue of $5.3B.  DG also said it planned to buy back about $1B in shares in fiscal 2016.  The stock shot up 8.02 (11%).  If you would like to learn more about DG, click on this link:

Dollar General's 4Q Sales Rise 7%

Dollar General (DG)

The Dow slipped back below 17K, a ceiling that is becoming increasingly difficult to crack thru.  Oil has been behind the market rise & further declines for oil will be bearish for stocks.  Unsettled economies in China & Europe are not helping matters for the stock market.

Dow Jones Industrials


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