Friday, November 4, 2016

Markets extend losing streak after jobs report

Dow fell 38, advancers over decliners almost 5-4 & NAZ was off 12.  The MLP index continued weak, losing 2+ to the 286s, & the REIT index rebounded 2+ to the 323s.  Junk bond funds traded lower & Treasuries rose on growing market uncertainties.  Oil is down to the low 44s & gold inched a little higher (more on both below).

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Humana reported a higher-than-expected quarterly profit due to strength in its Medicare Advantage business.  The company, which said in Aug it plans to shrink its individual commercial business to 156 counties next year from 1351, said its individual commercial unit's performance was in line with its expectations.Insurers including.  HUM expects premiums of $1.0-1.25B in 2017 from its Obamacare plans, up from $750M-$1B it had estimated in Aug. The company had estimated premiums of about $3.4B for 2016.  The company said recent market exits from competitors resulted in members being assigned to companies that are continuing to offer Obamacare plans.  EPS was $2.98 in Q3, up from $2.09 a year earlier.  Excluding items, EPS was $3.18, beating estimate of $3.15.  The consolidated benefit ratio, the percentage of premiums spent on claims, improved to 81.5% from 83.9% a year earlier, primarily due to lower utilization for the company's Medicare Advantage business.  Its individual commercial business had no material impact on the benefit ratio for the qtr.  Membership in the insurer's individual Medicare Advantage business rose 3% to 2.83M & membership in its individual commercial business fell 25% to 726K.  Total revenue rose 2.5% to $13.69B, ahead of estimates for $13.41B.  The stock rose 2.15.  If you would like to learn more about HUM, click on this link:

Humana profit beats on strength in Medicare Advantage unit

Humana (HUM)

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The US trade deficit fell to a more than 1½ year low in Sep amid rising exports, but a slump in imports pointed to slowing domestic demand.  The Commerce Dept said the trade gap narrowed 9.9% to $36.4 B, the smallest since Feb 2015.  The Aug trade deficit was revised slightly down to $40.5B.  The forecast was for the trade gap decreasing to $37.8B after a previously reported $40.7B shortfall.  When adjusted for inflation, the deficit fell to $55.0B from $57.4B in Aug.  The data was included in last week's GDP report, which showed trade contributing 0.83 percentage point to GDP growth in Q3.  Exports were boosted by shipments of industrial supplies & materials, & consumer goods.  Exports of soybeans, which helped power the economy in Q3, fell in Sep.  Exports increased 0.6% to $189.2B, the highest level since Jul 2015.  Exports of industrial supplies & materials were the highest since Aug 2015, while those of consumer goods hit their highest level in a year.  Still, exports continue to be constrained by the residual effects of the $ surge between Jun 2014 & Dec 2015.  Exports to the EU increased 6.0%, with goods shipped to the UK soaring 12.4% & exports to China rose 1.8%.  Imports of goods & services dropped 1.3% to $225.6B.  The decline in imports is consistent with a slowdown in consumer spending.  Imports from China fell 2.8%.  The politically sensitive US-China trade deficit dropped 4.1% to $32.5B in Sep.
US trade deficit hits 1-1/2-year low on rising exports

Gold futures settled with a modest gain to tally a weekly climb of more than 2% as uncertainty surrounding the US election continued to boost the yellow metal's appeal as a safe-haven investment.  Dec gold rose $1.20 (less than 0.1%) to settle at $1304 an ounce.  For the week, prices rose 2.2%, marking their 4th straight weekly gain.

Gold Futures Gain 2.2% For The Week, Up a Fourth Week In a Row

Oil futures continued to decline after data revealed that the number of active US rigs drilling for oil rose by 9 to 450 rigs this week.  The total active rig count, which includes oil & natural-gas rigs, climbed by 12 to 569.  Dec crude was down 64¢ (1.4%) to $44.02 a barrel, holding near the level it traded at before the rig data.

Oil Futures Continue To Decline As Baker Hughes Reports Rise In U.S. Oil-rig Count

This was just another dreary day.  As expected, the jobs report failed to inspire confidence.  But it was just good enough to give Janet courage to raise interest rates (maybe).  What the election will bring to market is another major drag on stocks.  The Dow's 18K support level did not hold (not even 17.9K), a bad sign going forward.

Dow Jones Industrials

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