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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.
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.
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
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
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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