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.

AMJ (Alerian MLP Index tracking fund)

CLJ16.NYMCrude Oil Apr 1639.14 Up 0.68 (1.8%)

GCH16.CMXGold Mar 161,266.40 Up 37.10 (3.0%)

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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.

Jobless Claims in U.S. Climbed Less Than Forecast Last Week

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:

Caterpillar Sees First-Quarter Sales, Profit Below Estimates

Caterpillar (CAT)

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:

FedEx Jumps Most in Six Years After Raising Floor of Forecast

FedEx (FDX)

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.

Dow Jones Industrials


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