Tuesday, November 1, 2016

Markets tumble on FOMC concerns and election nervousness

Dow dropped 105 (finishing near the lows), decliners over advancers almost 4-1 & NAZ fell 35.  The MLP index lost 3+ to the 295s & the REIT index sank 7+ to the 328s.  Junk bond funds saw more selling & Treasuries were a little higher.  Oil slid lower in the 46s & gold was up an impressive 18, nearing 1300.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

Oil fell to a one-month low as concerns about rising U.S. crude stockpiles outweighed the impact of a pipeline explosion that sent gasoline surging.  Crude fluctuated after slumping 3.8% yesterday.  Futures climbed as much as 1.1% after the blast & resulting blaze shut the mainlines of Colonial Pipeline, which carries oil products to New York Harbor from the US refining center in Houston.  Prices retreated in early trading as a projected US stockpile gain added to concern that OPEC will struggle to decisively tackle a global crude surplus.

Oil has dropped about 5% since OPEC failed Fri to agree on country quotas as part of implementing it’s output-cut accord & the chance of OPEC reaching a deal at month's end is low due to internal discord.  US crude inventories rose by 2M barrels last week, according to a survey.  Supplies, which have dropped in 7 of the past 8 weekly reports, remain at the highest seasonal level in more than 3 decades.

Oil Falls to One-Month Low, Shrugging Off Fuel Pipeline Blast

General Motors(GM) sales in Oct fell 6.2% from a year ago as its midsize sedans posted huge declines, partly offset by hefty gains for its smaller pickup trucks & large SUVs.  US auto sales in Oct were expected to decline 6-8%, according to analysts who say the fall-off from last year's record high is not being limited by higher consumer discounts.  GM said US industry auto sales will be 17.4M on a seasonally adjusted annualized rate.  Its 2 full-size pickup truck models, Chevrolet Silverado & GMC Sierra, collectively fell 7.6%.  Analysts expect Ford (F) to show a decline of 9-11% from a year ago, due to better discipline on the use of discounts.  Also, the company is stemming production at North American F-150 pickup truck plants & sedan plants because of weak demand.  Sales at Toyota (TM), #3 in the US market, are expected to decline of 2-7%.  Fiat Chrysler Automobiles (FCAU) is seen falling from last Oct 7.5-11%. 

Auto Sales Seen Off Despite Discounts, GM Sales Drop 6%

Pfizer, a Dow stock, topped off a difficult Q3 with news that it's scrapping a closely watched experimental cholesterol drug, partly due to expectations insurers would limit access so much that it wouldn't make much money, a possible bad omen for the pharmaceutical industry.  The biggest US-based drugmaker reported quarterly profit plunged 38% as higher spending & a slew of acquisition-related charges more than offset higher sales.  The mediocre results missed expectations & the company lowered the top end of its 2016 profit forecast.  PFE said it discontinued the pricey bococizumab due to unimpressive results of late-stage testing & limited commercial prospects as payers increasingly squeeze pharmaceutical companies amid public fury over soaring drug prices.  EPS was 21¢, down from 34¢ a year ago.  Excluding $2.4 B worth of charges for acquisitions & restructuring, adjusted EPS came to 61¢, a penny less than expected.  Revenue, which was boosted by last year's $15B acquisition of injected drugmaker Hospira, totaled $13.05B, up 8% (analysts expected $13.06B).  Sales increased 9% to $7.33B for the new medicine segment, while sales increased 7% to $5.71B for its essential health business, which sells older, mostly off-patent drugs.  "We have strengthened both of our businesses through nearly $40B in acquisitions over the past year," CEO Ian Read said.  Its top seller, its Prevnar vaccine against pneumonia & related bacterial infections, dipped 3% to $1.54B, while Lyrica sales were flat at $1.24B.  New breast cancer drug Ibrance more than doubled sales, to $550M.  PFE expects full-year EPS of $2.38-2.43, down from its prior forecast of $2.38-2.48.  It forecast revenue of $52-53B, tweaked from its prior forecast of $51-53B.  The stock was down 64¢.  If you would like to learn more about PFE, click on this link:


Pfizer net plunges 38 pct., misses Street 3Q forecasts

Pfizer (PFE)

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This is a nervous time for traders.  Election jitters are being felt along with concerns of a long overdue interest rate hike.  The Dow is struggling to hang in above the important 18K support level.  The VIX, volatility index, shot up 1+ to the 18s, with one exception, the highest since this leg of the bull market began in Feb.  Uncertainty is riding high..

Dow Jones Industrials

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