Thursday, January 5, 2017

Markets slip lower on a negative outlook for holiday retail sales

Dow lost 42 (above the midday lows), decliners over advancers 5-4 & NAZ went up 10.  The MLP index added 2+ to the 322s & the REIT index was up 1+ to the 346s.  Junk bond funds crawled higher & Treasuries finally rallied, taking the yield on the 10 year rally below 2.4%.  Oil was higher but still in the 53s & gold rose again (more on both below).

AMJ (Alerian MLP Index tracking fund)

3 Stocks You Should Own Right Now - Click Here!

Live 24 hours gold chart [Kitco Inc.]

Disappointing holiday-season sales at Macy's (M) & Kohl's (KSS) underscored the uphill task facing department stores to win back shoppers, who are increasingly turning to online retailers & spending less on apparel.  Both reported lower-than-expected sales for Nov & Dec & cut their full-year profit forecasts.  Macy's is considered a bellwether for department stores.  However, it is expected to relinquish its position as the largest US apparel retailer as soon as this year as it struggles to compete on prices & the convenience offered by online shopping.  Amazon (AMZN) said last week it had its "best ever" holiday season, shipping more than 1B items worldwide.  Expectations were high that department stores would get a good boost from a strong holiday shopping season.  The National Retail Federation had forecast that 2016 holiday period sales would rise 3.6% to $656B.  A jump in spending in the last days of Dec was expected to make up for a slow start to the shopping season.

                  Change       Close
Macy's       -$4.98       $30.86
Kohl's        -$9.87        $42.01
Amazon     $23.27      $780.45

Dismal holiday sales at Macy's and Kohl's cast gloom over sector

Gold futures rallied to finish at the highest level since late-Nov, finding support from a weaker $ & uncertainty surrounding the pace of the Federal Reserve interest-rate increases.  Feb gold tacked on $16 (1.4%) to settle at $1181.  That was the highest finish since Nov 29.

Gold Futures Settle At a 5-week High

Oil futures pared earlier gains after the  US Enegry Information Administration reported that domestic crude supplies fell much more than expected, but stocks of gasoline & distillates spiked higher.  Crude stockpiles declined by 7.1M barrels last week.  The American Petroleum Institute yesterday reported a fall of 7.4M barrels, though analysts forecast a decline of 1.7M barrels.  Gasoline supplies, however, rose 8.3M barrels while distillate stockpiles jumped up by 10.1M barrels, according to the EIA.  Feb crude traded up 7¢ to $53.33 a barrel, down from $53.90 before the data.

EIA Reports Big Decline In U.S. Oil Supplies, Along With Jump In Product Stocks

In the last 4 weeks, the Dow has stalled around 19.8K.  The 20K ceiling looks much further away.  Traditional retailers took a beating today.  While they are established, uncertainty about their future has risen with the outlook that holiday sales, critical for profitability, looking gloomy.  Optimism about a more robust economy is one thing.  However gold, a contrary investment to stocks, is up about 5% since mid Dec.  Euphoria driving the Trump rally may be over.

Dow Jones Industrials


No comments: