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Thursday, March 17, 2016
Markets rise as oil tops $40
Dow went up 64, advancers over decliners almost 3-1 & NAZ gave up 4. The MLP index gained 2+ to the 272s & the REIT index added 2 to the 333s. Junk bond funds inched higher & Treasuries rallied. Oil jumped over 40 while & gold soared.
Fewer Americans than forecast filed applications for unemployment
benefits last week, illustrating the Fed's view of a
stronger labor market. Initial jobless claims climbed 7K to
265K, according to the Labor Dept. Companies are
not only hiring more workers but also retaining the ones they already
have to handle demand.
Claims,
which remain close to the 4-decade low of 255K reached in
mid-Jul, have been below 300K for 54 weeks. That’s the longest
stretch since 1973 & consistent with a healthy labor market,
economists say. The forecast called
for 268K claims. The 4-week moving average of claims, a less volatile measure than the
weekly figures, rose to 268K from 267K. The latest figure compares
with an average of 273K during the comparable employment survey
period for Feb. The economy added 242K workers last month, while
the unemployment rate held at an 8-year low of 4.9%. The
number continuing to receive jobless benefits rose 8K
to 2.24M & the unemployment rate among
people eligible for benefits held at 1.6%. Initial jobless claims reflect
weekly layoffs, & a sustained low level of applications has typically
coincided with faster job gains. Layoffs can also reflect company- or
industry-specific causes, such as cost-cutting or business
restructuring.
Caterpillar, a Dow stock, said Q1 sales & profit will trail estimates as miners
cut $B from their investment budgets to weather a commodity rout. Sales
will be $9.3-$9.4B & adjusted EPS
will be 65-70¢. That's below the $10.2B & 95¢, respectively, estimates. Machinery makers have been hit by a slowing economy in
China, the biggest consumer of industrial metals, & resulting cuts in
production by the largest mine operators. With commodity prices
slumping in January to the lowest in almost 7 years, miners from
Australia to Brazil have cut costs to try to remain profitable.
CAT has responded by
reducing its own operating expenses.
The pared-down outlook comes after CAT reported better-than-estimated Q4 EPA, as cutbacks helped mute
the effects of the commodities meltdown. The stock rose 41¢. If you would like to learn more about CAT, click on this link: club.ino.com/trend/analysis/stock/CAT?a_aid=CD3289&a_bid=6ae5b6f7
FedEx shot up after raising the bottom of the range for its full-year earnings forecast. EPS
for the year ending in May now is seen as $10.70-$10.90, compared with the previous forecast of $10.40-$10.90. The company cited a $1.7B cost-reduction
program that was nearly complete & said moderate US economic growth was fueling demand for shipments. Analysts were anticipating $10.55. The company also reported fiscal Q3 results
that beat estimates of $2.34.
“Our
positive financial momentum should continue into our upcoming fiscal
2017, where we expect solid growth in earnings and cash flow,” CFO Alan
Graf said. Adjusted EPS rose to $2.51 & sales of
$12.7B also topped the estimate of $12.4B. A program to reduce expenses at the FedEx Express unit, the
largest portion of the company, enabled operating income for that
business to jump 51%. Holiday shipments that exceeded the company’s expectations for both volume & size boosted costs in its FedEx Ground segment. The stock surged 14.22 (10%). If you would like to learn more about FDX, click on this link: club.ino.com/trend/analysis/stock/FDX?a_aid=CD3289&a_bid=6ae5b6f7
Buyers continue to buy stocks, although tech stocks are being left behind today. Oil going over 40, a key resistance level, is helping to bring out stock buyers. The idea of a possible agreement to limit oil production next month is behind higher prices. However that remains a long way off & nobody knows what will be agreed to. Treasuries & gold are especially strong, negative bets on the stock market. The bulls remain in charge of the stock market.
0.68 (1.8%)
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