Thursday, October 27, 2016

Stocks drift lower led by a decline in bonds

Dow went down 29, decliners over advancers 5-2 & NAZ dropped 34.  The MLP index retreated 3+ to the 305s & the REIT index plunged 8+ to 330.  REIT have risen sharply since Feb, but the index is down more than 10% since early Sep on rate hike worries.  Junk bond funds were sold & Treasuries saw more selling.  Oil gained (see below) & gold was a little higher.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Oil edged higher, lifted by a reported drop in US crude inventories stored at the Cushing, Oklahoma, delivery hub, & as commitments from Gulf OPEC members assuaged lingering doubts in the market about cooperation from other producers.  Energy ministers from Saudi Arabia & Gulf allies told their Russian counterpart this week they are willing to reduce their peak oil output by up to 4%.  US crude gained 64¢ to $49.82.  OPEC agreed last month to restrain output to boost prices, which have been slumping at less than ½ their mid-2014 levels due to a persistent supply glut.  Iraq on Sun called for an exemption, adding to the list of members seeking special treatment.  The expectation was that Libya, Nigeria & Iran should be exempt as their output had been hit by wars & sanctions, OPEC sources said.  OPEC has been seeking cooperation from external producers, though non-member Russia said it would not cut output, but rather freeze it.  OPEC members are expected to have a technical meeting tomorrow & another with officials from non-member countries on Sat.  Yesterday, the Energy Dept said domestic crude stocks fell 553K barrels last week, the 7th such decline in the last 8 weeks, adding to hopes that a long-awaited market rebalancing is taking place.
Apple, a Dow stock, announced a long-awaited updates to its Mac computers, aiming to spark consumer interest in a product line that often seems overshadowed by newer gadgets.  As widely speculated, it will add a new touch-sensitive panel to the MacBook Pro, its top-of-the-line laptop.  The touch panel will enable new keyboard functions.  The Pro will also come with a fingerprint sensor, similar to one in the iPhone, to unlock the device.  The Pro models will also sport a larger trackpad & thinner keyboard, borrowing from the design of an ultra-slim model simply called MacBook.  At an event, AAPL said it wants to unify television viewing on its streaming TV device with a new app simply called "TV."   The stock fell 1.08.  If you would like to learn more about AAPL, click on this link:

Apple Refreshes Mac Lineup With New Keyboard Touch Functions

Apple (AAPL)

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UPS Q3 profit inched slightly higher on growing revenue in the US & a more profitable intl delivery business.  The company is heading into the key holiday season, when it plans to add about 95K seasonal workers to handle the crush of orders filled by online shoppers.  Earnings were $1.27B, up 1% from a year earlier.  Revenue rose 4.9% to $14.93B, but costs rose at a 5.2% clip & put a lid on profit.  Results slightly beat expectations.  EPS was $1.44, a penny better than the forecast.  UPS stuck with its earlier forecast of full-year earnings of $5.70-5.90.  CFO Richard Peretz said the company was "performing according to our expectations" & has taken steps to benefit from record amounts of delivery work during the peak holiday season.  Revenue in the US delivery business rose nearly 5% as UPS continued to benefit from the growth in online shopping.  Revenue per package, however, grew only 1% & operating profit was about flat.  Operating profit was smaller but grew 14% in the intl business, as an increase in packages offset lower revenue per piece.  The stock pulled back 53¢.  If you would like to learn more about UPS, click on this link:

UPS 3Q profit up 1 percent as US revenue increases

United Parcel Service (UPS)

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Stocks & oil are not doing a lot, just wavering.  But bonds are being hit with a lot of selling.  The yield on the 10 year Treasury has risen to 1.85% since early Jul.  This is the highest since early Jun & was over 2% at the start of 2016.  Stocks are having a difficult time advancing because earnings "can't get no respect."  Now selling in bonds is another dark cloud hanging over the stock market.

Dow Jones Industrials

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