Wednesday, December 21, 2016

Markets fluctuate in this holiday period

Dow gave back 8, advancers slightly ahead of decliners & NAZ fell 5.  The MLP index went up 2+ to the 309s & the REIT index added 1+ to 341.  Junk bond funds were little changed & Treasuries found a few buyers in this holiday week.  Oil was up slightly (more below) & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

Light Sweet Crude Oil Futures,F

Gold Futures,Feb-2017

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Oil extended its advance as industry data showed US crude stockpiles declined last week.  February futures rose almost 1% after climbing 0.5% on yesterday.  Crude inventories dropped by 4.15M barrels, the American Petroleum Institute was said to report.  That compares with a forecast 2.5M-barrel decrease expected in today's Energy Information Administration report.  Libya reopened 2 of its biggest oil fields & is set to load the first crude cargo in 2 years from its largest export terminal.  Oil has traded near $50 a barrel since OPEC agreed Nov 30 to cut output for the first time in 8 years & non-OPEC producers including Russia will also trim supply. US crude inventories, at the highest seasonal level since the EIA began compiling weekly data in 1982.  Stockpiles have dropped during Dec in 9 of the past 10 years as refineries on the Gulf Coast minimized supply to reduce tax bills.  West Texas Intermediate for Feb delivery rose 10¢ to $53.40 a barrel on the New York Mercantile Exchange.

FedEx reported a higher quarterly net profit, boosted by revenue growth across all business units but results lagged expectations.  CEO Fred Smith said that the company's integration of Dutch rival TNT Express, which it acquired last year, was "proceeding smoothly and according to plan."  But the company was unable to forecast what mark-to-market pension accounting adjustments it would have to make at the end of its fiscal 2017 year ending next May.  The reported EPS for its fiscal Q2 was $2.59, up from $2.44 a year earlier.  Adjusted for one-time items, the company reported EPS of $2.80, shy of the $2.90 expected.  The stock slumped $6.32.  If you would like to learn more about FDX, click on this link:

FedEx Shares Fall on Profit Miss

FedEx (FDX)

US home resales unexpectedly rose in Nov, reaching their highest level in nearly 10 years, likely as buyers rushed into the market to lock in low interest rates in anticipation of further increases in borrowing costs.  The National Association of Realtors said existing home sales increased 0.7% to an annual rate of 5.61M units last month, the highest sales pace since Feb 2007.  The Oct sales pace was revised down to 5.57M units from the previously reported 5.60M units.  The forecast called for sales slipping 1.0% to a 5.50M-unit pace.  Sales were up 15.4% from a year ago.  They rose in the Northeast & South, but fell in the Midwest & West last month.  Mortgage rates have surged in the wake of Trump's victory.  His proposal to increase infrastructure spending & slash taxes is seen as inflationary.  Since the election, the fixed 30-year mortgage rate has increased about 60 basis points to an average 4.16%, the highest level since Oct 2014, according to Freddie Mac.  Mortgage rates could rise further after the Federal Reserve raised its benchmark overnight interest rate last week by 25 basis points & the central bank forecast 3 rate hikes next year.

Existing Home Sales Rise to Near 10-Year High

Not much going on today, a good day to take a nap.  With the absence of exciting news this quiet period should continue for the balance of this week.  The markets will be open on Fri, then closed on Mon for the holiday.  Keep in mind, while the Dow is on the edge of 20K it's also extremely overbought.

Dow Jones Industrials

stock chart

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