Dow rose 25. advancers over decliners 5-4 & NAZ gained 30. The MLP index lost a fraction to the 301s following recent strength & the REIT index sank 8+ to the 337s. Junk bond funds edged higher & Treasuries sold off, taking the yield on the 10 year Treasury over 1.8%. Oil crawled higher after weakness at the opening & gold drifted lower.
Oil edged lower, off 2016 highs, as the impact of unplanned supply disruptions from
Nigeria & Canada were tempered by rising supplies from elsewhere. Unscheduled supply outages in Nigeria & Canada amounting to
around 2M barrels per day (bpd) have supported oil prices in
recent weeks. But analysts warned that rising supplies from other countries could weigh on prices once supply disruptions ease. Data from Iran shows oil exports from the country are recovering faster than expected. Exports from the OPEC member country are set to surge in May to
2.1M bpd, nearly 60% above their level a year ago, with
European shipments recovering to about ½ of their pre-sanction
levels, according to a source with knowledge of the country's crude
lifting plans. Saudi Arabia's crude oil exports in Mar, however, fell slightly
to 7.541M bpd from 7.553M in Feb.
China's benchmark stock index closed at the lowest level in 2½
months, after comments from Federal Reserve officials
rekindled prospects of a US interest rate rise as early as Jun. The Shanghai Composite Index lost 1.3% to 2807, the lowest since Mar 1. The blue-chip CSI300 index
fell 0.6%, to 3068. Sentiment in China had already been weak in recent months amid
concerns that signs of recovery in its economy may be short-lived &
worries that policymakers are growing more cautious about providing
additional stimulus as bad debts mount. Confidence was further hit by overnight weakness in
NY, after strong US consumer prices & other economic
data added to the case for a rate increase sooner.
Target, A Dividend Aristocrat, fell the most in 7 years after
quarterly sales missed estimates & the chain
delivered a disappointing forecast, adding to evidence that the biggest
retailers are suffering from a slump. Same-store
sales gained 1.2% in Q1. Analysts had
predicted 1.6%. CEO Brian Cornell cited “an increasingly volatile
consumer environment” & colder weather in the Northeast, adding his
voice to the chorus of retailers complaining of sluggish demand. As it
copes with the slowdown, the company expects same-store sales to range
from flat to down as much as 2% in Q2. But
Cornell said it is too early to tell whether the pullback by consumers
will persist through the rest of the year. “We
have seen the impact of climate and a more cautious consumer,” Cornell
added. “We haven’t seen anything from a
structural standpoint that gives us pause.”
Cornell said e-commerce sales were a
“bright spot.” They grew 23%, though that was a
slowdown from the 38% growth last. TGT
also hasn’t seen a material impact from a boycott effort over
bathrooms, he said. Conservative groups targeted the chain after its
announcement last month that it would allow transgender customers to use
the restroom of their choice. The move has drawn protests, but it’s
only affected a “handful of stores,” Cornell said. Meanwhile,
the company has successfully used cost cuts to bolster profit. It
reported EPS of $1.29, beating the estimate of $1.19. “We plan to successfully implement our
long-term strategy, even in the face of a challenging short-term
consumer landscape,” Cornell added. The stock tumbled 6.80 (9%). If you would like to learn more about TGT, click on this link: club.ino.com/trend/analysis/stock/TGT?a_aid=CD3289&a_bid=6ae5b6f7
Retail earnings tell the story that the recovery is not doing as well as it should. Oil is back to 2016 highs & fears about raising interest rates faded. But Dow remains overbought, vulnerable to disappointing news.
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