Tuesday, August 2, 2016

Dow declines for 7 straight sessions

Dow lost 90, decliners over advancers more than 3-1 & NAZ was off 46.  The MLP index sank 9+ to the 307s & the REIT index dropped 5+ to the 371s.  Junk bond funds pulled back & Treasuries were sold.  Oil is back below 40 & gold rose to a 2 year high (see below).

AMJ (Alerian MLP Index tracking fund)

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Crude Oil Sep 16

Live 24 hours gold chart [Kitco Inc.]

Gold futures closed sharply higher, with the yellow metal finishing at its highest level in more than 2 years.  Flagging appetite for assets perceived as risky, including crude-oil & stocks, helped draw bids for haven assets, like precious metals.  Dec gold closed up $13 (1%) at $1372.  Gold booked its best finish for a most-active contract since Mar 2014.

Gold Settles At Highest Level In 2 Years

Pfizer's, a Dow stock, biggest product, the vaccine Prevnar, fell short of sales estimates in Q2, though the company posted earnings that beat estimates thanks to strong sales of 2 of its newest drugs.  EPS excluding some items was 64¢.  Analysts predicted 62¢.  Revenue rose 11% to $13.15B, beating projections of $13B.  Sales of Ibrance, the new breast cancer treatment, more than tripled to $514M, compared with a $498M projection.  Sales may reach $4.81B by 2018.  Another new drug, the rheumatoid arthritis pill Xeljanz, brought in $217M & projections are for $199M.  Those products helped cushion a decline in sales of Prevnar, Pfizer’s vaccines for pneumococcal diseases.  The shots sold $1.26B, compared with estimates of $1.58B, after sales in the US leveled off following what PFE said was pent-up demand.  Investors have been closely watching whether or not Pfizer will decide to split into 2 separate companies, one focused on research-driven treatments & the other on older medicines that have lost patent protection or are close to doing so.  In the meantime, it’s relying on its newer medicines to offset expiring patents on drugs such as the pain pill Celebrex.  Highlights from Q2- The innovative division reported a 7.2% increase in quarterly sales to $7.11B, while the established arm delivered a 16% increase to $6.04.  Pain medicine Lyrica sales were $1.05B, versus estimates of $1.16B.   The stock fell 92¢.  If you would like to learn more about PFE, click on this link:

Pfizer Beats Estimates Even as Biggest Product Falls Short

Pfizer (PFE)

Global tablet shipments continue to decline, dropping 12.3% year over year to 38.7M in Q2.  Android-based tablets nabbed 65%, according to IDC, while Apple iOS (26%) & Microsoft (MSFT) Windows (9%) drag behind.  Both companies are Dow stocks.  "The next 12 to 18 months will be very interesting as Google launches the next version of Android with better multitasking support and as they begin to bring together their two operating systems," IDC said.  It's been bad news for tablets since late 2014, when IDC lowered its forecast for the year, blaming falling laptop prices, increased interest in wearables & smartphonesa, & existing tablet owners keeping their devices longer than usual.  "The market has spoken as consumers and enterprises seek more productive form factors and operating systems—it's the reason we're seeing continued growth in detachables," IDC said.  Earlier this year, IDC suggested 2-in-1 devices are the one bright spot in the market.  Tablets shipments were down 10.1% at the time, but if you consider 2-in-1s part of the tablet market, the devices "reached an all-time high" of 8.1M units.  Still, "slates continue to represent the vast majority of the segment," said IDC.

Tablet Shipments Still on the Decline

Avon stock jumped after the cosmetics company beat expectations for earnings, with reported growth in nine out of 10 markets.  EPS was 7¢ for Q2, versus 2¢ expected.  Total revenue fell from $1.56B to $1.43B, in line with consensus expectations.  A stronger $ took a toll on the bottom line, with foreign currency adding a 10¢ impact.  "Our performance improvements were broad-based with 9 of our top 10 markets growing in local currency," CEO Sherilyn McCoy said.  "While we recognize that it's still early on our transformation and much effort and work lies ahead, I remain confident. Avon is on a path to sustainable, profitable growth."  The North American business is run independently from Avon Products, but is "in good hands", McCoy said.  AVP announced a sale of a 80.1% stake in its US & Canada division to Cerberus Capital last Dec.  The compay kept the remaining 19.9%, & will have 2 directors on the board.  The stock shot up 60¢ (14%).  If you would like to learn more about AVP, click on this link:

Avon Products climbs higher after profits beat Street expectations

Avon Products (AVP)

stock chart

While times may look tough, they are not all that bad.  Dow is slipping & sliding, but is only down about 300 from its highs.  Gold keeps rising on growing demand from investors seeking safety.  Dow is beginning the month on a negative tone.  This could be the start of a bad time for a stock market that remains vastly overbought.

Dow Jones Industrials


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