Friday, October 28, 2016

Markets drift lower on earnings and consumer confidence

Dow gave back 8, decliners over advancers 4-3 & NAZ was off 25.  The MLP index lost 3+ to the 302s & the REIT index rose 1+ to the 331s.  Junk bond funds were a little lower & Treasuries fell, taking the yield on the 10 year Treasury up to 1.85%.  Oil slid lower (more below) & gold climbed higher.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Exxon Mobil Corp, a Dow stock & Dividend Aristocrat, reported a 38% drop in quarterly profit that still beat expectations as cost cuts partly offset declining crude oil prices.  EPS was 63¢, down from $1.01 a year earlier.  Analysts forecast EPS of 58¢.  Earnings fell in all divisions, including the refining arm, which has generally bolstered profits when oil prices are low.  Production fell about 3% to 3.8M barrels of oil equivalent per day.  The refineries processed about 2% less crude oil during the qtr than it did a year earlier.  The stock fell 2.19.  If you would like to learn more about XOM, click on this link:

Exxon Mobil profit drops 38 percent but beats estimates

Exxon Mobil (XOM)

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Chevron, another Dow stock & Dividend Aristocrat, quarterly profit plunged 35% from a year earlier & revenue slid more than expected amid low oil prices, though the company returned to the black after 3 straight qtrs of losses.  Still, earnings came in above estimates.  CEO John Watson said Q3, though down from a year ago, improved from the first 2 qtrs of the year.  The company has cut capital spending & operating & administrative expenses by more than $10B from the first 9 months of 2015 "as a result of a series of deliberate actions we have taken," he said.   During the qtr, the average sales price per barrel of crude oil & natural gas liquids was $37, down from $42 a year ago.   Pressured by the prolonged swoon in oil prices cutting into profitability, the company has looked to cut costs.  CVX has said it would cut about 8K jobs, up to 12% of its workforce, & slash $B from its capital-spending budget to deal with market conditions.   In all Q3 EPS was 68¢, down from $$1.09 a year earlier.  Revenue slipped 12% to $30.14 B.  Analysts had projected EPS of 37¢ on $30.33B in revenue.   Profit in downstream, or refining, operations dropped 52% to $1.07B.  Upstream operations, which include exploration & drilling, meanwhile, in the US, saw a narrower loss at $212M, compared with $603M a year ago, due to lower operating & depreciation expenses, & lower tax items, partially offset by lower crude oil.  Watson said the company has progressed toward lowering the cash break-even in the upstream business.   The company also raised its quarterly div by a penny to $1.08 a share, its 29th consecutive increase.  The stock jumped up 3.94.  If you would like to learn more about CVX, click on this link:

Chevron Returns to Profit, but Revenue Slides

Chevron (CVX)

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MasterCard reported a better-than-expected quarterly profit, driven by higher spending by customers on its network.  EPS jumped to $1.08 & analysts had expected 98¢.  Revenue rose 13.8% to $2.88B.  Worldwide purchase volume rose 9% to $882B, on a local currency basis.  Cross-border volumes, the value of transactions made by card holders outside the card-issuer's country, jumped 12%.  The stock shot up 3.08.  If you would like to learn more about MA, click on this link:

MasterCard 3Q Profit Beats on Higher Purchase Volume

Mastercard (MA)

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Oil futures remained lower after data from Baker Hughes revealed that the number of active US rigs drilling for oil fell by 2 to 441 this week.  That marks the first weekly decline since Jun.  The total active US rig count, which includes oil & natural-gas rigs, climbed by 4 to 557.  December crude fell 54¢ (1.1%) to $49.17.

Oil Futures Remain Lower As Baker Hughes Reports Small Decline In U.S. Oil-rig Count

Lackluster consumer confidence & uneven earnings kept the Dow near break-even all day.  The Dow had been going sideways;staying close to its starting value, prior to earnings season a couple of weeks ago & continued that performance.  Uncertainties relating to the presidential election are a significant negative that has been a drag for the Dow.  That attitude will not change next week.

Dow Jones Industrials

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