Tuesday, April 26, 2016

Lower markets on earnings reports

Dow dropped 30, advancers over decliners almost 2-1 & NAZ gave up 17.  The MLP index  fell 2+ to the 293s & the REIT index added 7+ to the 338s.  Junk bond funds were mixed & Treasuries slid lower in price.  Oil went up as did gold.

AMJ (Alerian MLP Index tracking fund)


Crude Oil
43.36
0.72 (1.69%)









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Orders for US durable goods climbed less than forecast in Mar as demand for capital equipment remained weak, a sign that a diminished growth outlook is impeding investment.  Bookings for items meant to last at least 3 years rose 0.8% after a revised 3.1% slump a month earlier, according to the Commerce Dept.  The forecast called for a 1.9% advance.  Orders for business equipment were little changed last month, also weaker than projected.  Businesses continue to grapple with soft global sales & middling consumer spending, which make it difficult to justify expanding plans for capital outlays.  Bookings for non-defense capital goods excluding aircraft, a proxy for business investment, were projected to advance 0.6%.  Feb orders for those goods were revised down to a 2.7% decrease from a previously reported 2.5% decline.

Shipments of non-military capital goods excluding aircraft, used to calculate GDP, increased 0.3% after declining 1.8% the month before.  Companies placed fewer orders for fabricated metals, computers & electrical equipment such as appliances.  The increase in orders for all durable goods was propelled by a rebound in bookings for military aircraft, a volatile category.  Orders for commercial aircraft declined 5.7% after sliding 26.6% a month earlier.  Excluding transportation equipment demand, bookings for durable goods decreased 0.2% in Mar after dropping 1.3% a month earlier.  They were projected to rise 0.5%.  Orders for military capital goods surged 48.4% last month, the most since Apr 2014.  Durable goods inventories were little changed after a 0.3% decline, a sign companies are keeping stockpiles in line with tepid demand.

Orders for U.S. Durable Goods Rose Less Than Forecast in March


Procter & Gamble, a Dow stock & Dividend Aristocrat, posted fiscal Q3 profit that topped estimates as cost cuts helped cushion the blow of tepid sales.  EPS fell to 86¢, excluding some items & analysts projected 82¢.  Revenue slipped 6.9% to $15.8B, matching estimates.

With the strong $ hurting sales abroad & rivals chipping away at its market share domestically, PG has focused on trimming expenses.  CEO David Taylor has called for an additional $10B in cost reductions in the next 5 years, building on his predecessor’s push to slim down the consumer-products maker.  PG held or gained share in about ½ of its US business, an improvement from previous qtrs & a year earlier,  The company maintained its forecast that sales would be little changed or rise by a low single-digit percentage, excluding the effects of acquisitions, divestitures & currency fluctuations. Constant-currency core earnings will rise at a mid-single-digit percentage rate, P&G said.  The company had previously forecast profit by that measure would grow at a mid-to-high-single-digit rate.  EPS rose 97¢.  The stock fell 92¢.  If you would like to learn more about PG, click on this link:
club.ino.com/trend/analysis/stock/PG?a_aid=CD3289&a_bid=6ae5b6f7

P&G Profit Tops Estimates as Cuts Costs Cushion Soft Sales

Procter & Gamble (PG)



Eli Lilly raised its profit & sales forecasts for the year after receiving a tax benefit in Q1.  EPS excluding some items will be $3.50-$3.60, up from a previous forecast of $3.45-$3.55.  Sales in 2016 will be $20.6-$21.1B, compared with an earlier prediction of $20.2-$20.7B.

Q1 EPS declined as the company took a $203.9M charge related to the impact of the Venezuelan financial crisis.  EPS excluding some items was 83¢, compared with the 85¢ prediction.  Sales of the insulin Humalog were $606M, shy of the $730M estimate, & erectile dysfunction drug Cialis topped the $546M estimate with sales of $577M. 
  • Sales rose 4.7% from a year before to $4.87B, ahead of the estimate of $4.85B.
  • EPS 41¢, versus 50¢ a year earlier.
LLY has raised development spending on key therapies to revive sales growth after losing patent protection on 2 of its biggest drugs in 2011 & 2013, & said in Jan that it expects to increase spending on research.  The company has brought to market new diabetes treatments & is pushing ahead with projects in cancer & Alzheimer's disease.  The stock lost 1.01.  If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3289&a_bid=6ae5b6f7

Eli Lilly Raises 2016 Profit Forecast

Eli Lilly (LLY)



Earnings are coming in inconclusive, taking stocks lower.  The markets remain vastly overbought, some selling has to be anticipated.  Meanwhile Janet & her friends on the FOMC are meeting & will announce their decision tomorrow.

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