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
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:

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:

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.

Dow Jones Industrials

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