Thursday, April 7, 2016

Markets fall on Q1 profit worries

Dow sank 154, decliners over advancers 3-1 & NAZ lost 52.  The MLP index fell 2+  to 260 & the REIT index went up 1 to the 339s.  Junk bond funds were hit with selling.  Oil pulled back in the 37s (see below) & gold gained ground.

AMJ (Alerian MLP Index tracking fund)

stock chart
Crude Oil...37.37...-0.38 (-1.01%)

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Fewer Americans filed for unemployment benefits last week, illustrating a healthy labor market that’s allowing workers to feel more secure in their job.  Jobless claims dropped 9K to 267K, according to the Labor Dept.  The forecast called for 270K.  Weekly applications have been below 300K for longer than a year as steady demand encourages employers to retain those who are qualified & experienced.  Dismissals near the lowest level since 1973 have been accompanied by a steady drumbeat of hiring, propping up consumer spending and the economy.

The 4-week average, a less volatile measure than the weekly claims numbers, increased to 266K last week from 263K.  The number continuing to receive jobless benefits rose 19K to 2.19M & the unemployment rate among people eligible for benefits held at 1.6%.

Fewer Americans Filed for Unemployment Benefits Last Week

US corp profits are expected to drop the most in 6½ years in Q1, led by a wipeout in the embattled energy sector.   Earnings for companies in the S&P 500 Index should fall 9.8% year-over-year, which would be the sharpest decline since Q3-2009 & a 4rth consecutive qtr of contraction.

U.S. Braces for Worst Earnings Season Since 2009 Crisis

Oil slipped amid speculation that an unexpected US crude supply decline won't be followed by additional drops.  Inventories slid 4.94M barrels last week as imports slipped, according to an Energy Information Administration report.  A meeting between OPEC members & Russia is set to take place on Apr 17 to discuss freezing oil production in a bid to stabilize the markets.  Prices have whipsawed since Fri on speculation about whether an accord can be reached in Doha.  Saudi Arabia said it will only agree to a freeze if it's joined by other suppliers including Iran, while Kuwait said a deal can be done without Iran's support.  The Doha meeting is unlikely to have an impact on actual supply without the participation of OPEC members Libya & Iran.  US crude production dropped 14K barrels a day to 9.01M a day, the EIA said.  Refinery utilization rates rose ahead of the summer driving season by 1 percentage point, for a 2nd weekly gain to 91.4% of total capacity. Imports fell to 7.25M barrels a day, the lowest level in 2 months.

Oil Falls Amid Speculation U.S. Supply Decrease Won't Ease Glut

The thought of earnings reports is a major dark cloud hanging over the stock market.  Besides dreary reports from energy companies, other reports should also be disappointing.  Dow is up a meager 100+ YTD.

Dow Jones Industrials


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