Thursday, October 6, 2016

Markets waver ahead of September jobs report

Dow slid back 12, decliners over advancers 5-4 & NAZ fell 9.  The MLP index was off 2+ to the 308s & the REIT index went up a fraction in the 336s.  Junk bond funds were a little lower & Treasuries were weak.  Oil  jumped up (see below) & gold slumped to the mid 1200s.

AMJ (Alerian MLP Index tracking fund)

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Light Sweet Crude Oil Futures,N

Live 24 hours gold chart [Kitco Inc.]

Wal-Mart, a Dow stock & Dividend Aristocrat, tempered its profit forecast for the next 2 fiscal years & said it would slow new store openings as it spends heavily on a long-term plan to transform itself into an e-commerce company.  The company expects online sales, which now account for about 3% of its total, to show a 20-30% increase in H2 & rise even faster in the next few years.  "This company over time will look like an e-commerce company," CEO Doug McMillon said.  New e-commerce chief Marc Lore said the company was relying on its logistics & supply chain network to win in online sales.  WMT expects flat earnings for the year ending Jan 31, 2018, down from a previous forecast of profit growth & estimated capital expenditures at about $11B, similar to this year.  CFO Brett Biggs said only about 20% of capital spending would go to store openings.  Now the company plans to increase revenue from existing stores & its online business instead of new locations, which generated the bulk of growth in the past 4 years, he added.  The company will moderate the roll-out of its Neighborhood Market grocery stores, he said.  WMT has accelerated investments in e-commerce & digital efforts from about $300M in 2013 to $1.1B this year for a total of about $3B, excluding acquisitions.  The company also spent more than $3B to buy e-commerce startup  The company expects fiscal 2019 EPS growth at the low end of its previous forecast of 5-10%.  The stock dropped 2.31.  If you would like to learn more about WMT, click on this link:

Wal-Mart Touts E-Commerce Over Stores, Tempers Profit View

Wal-Mart (WMT)

Ingersoll-Rand will increase its quarterly dividend 25% to 40¢ per share. The stock is up more than 22% YTD & nearly 27% in the last 12 months.  The stock went up 1.22 today.  If you would like to learn more about IR, click on this link:

Ingersoll-Rand Raises Quarterly Shareholder Dividend 25% To 40 Cents a Share

Ingersoll-Rand (IR)

stock chart

Oil rose more than 1% to 4-month highs, spurred by another informal OPEC meeting on output cuts & plunging US crude inventories, with some saying the market has overshot itself with a 15% gain in 7 sessions.  Saudi, Iranian & Iraqi energy ministers will be among key OPEC representatives to meet non-OPEC member Russia on the sidelines of an energy conference next week in Istanbul, sources said.  Oil has gained more than $6 a barrel since OPEC announced at informal talks on Sep 28 that it hopes to reduce output to 32.5-33M barrels per day.  That would remove about 700K bpd from a global glut estimated at 1.0-1.5M bpd.  On top of OPEC's pledged output cuts, prices were supported by the surprise drop in US crude stocks for a 5th week in a row, bringing the total drawdown since the beginning of Sep to 26M barrels.  West Texas Intermediate (WTI) crude  rose 60¢ to $50.43, having broken above $50 for the first time since Jun 24.

The stock market is jittery ahead of the big jobs report tomorrow which will be followed by the start of earnings season next week.  In addition, stories relating the presidential race are running wild.  The chart below shows Dow has hardly budged for 3 months.

Dow Jones Industrials


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