Monday, April 25, 2016

Markets drop on earnings worries

Dow sank 126, decliners over advancers 5-2 & NAZ was off 19.  The MLP index rose 2+ to the 298s & the REIT index added 4+ to the 334s.  Junk bond funds slid lower & Treasuries were also weaker.  Oil pulled back (see below) while gold gained.

AMJ (Alerian MLP Index tracking fund)

CL.NYM....Light Sweet Crude Oil Futures,M...42.74 Up ...0.11 (0.3%)

GC.CMX...Gold Apr 16..............................1,233.50 Up ...4.80 (0.4%)

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China stocks fell, as growing concerns over risks in debt & commodities markets on the mainland curbed investor appetites.  Both the blue-chip CSI300 index & the Shanghai Composite Index fell 0.4%, reaching 3162 & 2946, respectively.  Investors are getting increasingly nervous about China's debt market, which has witnessed a slew of defaults this year.  Risks are also building in China's commodities market, where feverish trading in products such as rebar, a reinforcing steel bar used in concrete, led regulators to crack down on speculation.

China Shares Fall on Rising Concerns Over Risks

Oil prices slipped as traders took profits after 3 weeks of gains & as a jump in the $ late last week was priced into fuel markets. The price drops were a result of cashing in after 3 weeks of rising prices.  Market data shows that the number of open positions betting on rising WTI prices rose to levels last seen in Jun 2015 last week, while bets taken out in expectation of falling prices fell close to 2016 lows.  Traders also said oil fell on a jump in the $ Fri on expectations that Japan will further extend its aggressive monetary easing thru negative interest rates.  A stronger $, in which oil is traded, makes fuel imports for countries using other currencies more expensive, potentially hitting demand.

Oil Falls as Traders Cash in After Three Weeks of Gains

New US single-family home sales unexpectedly fell in Mar, but the decline was concentrated in the West region, suggesting that the housing market continued to strengthen.  The Commerce Dept said new home sales decreased 1.5% to a seasonally adjusted annual rate of 511K units. The Feb sales pace was revised up to 519K units from the previously reported 512K units.  Sales rose in the Midwest & South, but tumbled in & West & were unchanged in the Northeast.  The forecast was for new home sales, which account for about 8.7% of the housing market, rising to a 520K unit-rate last month.  New home sales are volatile month-to-month.  The decline in sales over the past 3 months likely does not signal a slowdown in the housing market, given a strong labor market & historically low mortgage rates.

US new home sales fall amid weakness in the West

Stocks are beginning the week in a sluggish way.  More earnings reports are coming & expectations are not high.  But Dow is still within about 400 of setting a new record.  Not bad all considered.

Dow Jones Industrials


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