Tuesday, October 30, 2018

Markets rebound in late day trading

Dow shot up 431 closing near the highs, advancers over decliners 2-1 & NAZ recovered 111.  The MLP index was up fractionally to the 249s & the REIT index added 4 to the 342.  Junk bond funds were mixed & Treasuries slid lower.  Oil retreated, falling to the 66s (more below) & gold fell 2 to 1224.

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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The rock-solid jobs market and strong economy has consumers feeling confident, with the Conference Board reporting that their Consumer Confidence Index climbed to an 18-year high in Oct.  The index came in at 137.9 in Oct, up from 135.3 in Sep.  Consumers' assessment of current business & labor market conditions also improved, rising to 172.8 from 169.4, as did their short-term outlook, which increased to 114.6 from 112.5.  Consumer optimism is important this time of year when businesses hope for a holiday season shopping boost.  As previously reported, consumer spending increased 0.4% in Sep, at an annual rate of 4.0%, according to data from the gov, the fastest in nearly 4 years.  Consumer spending is crucial to the US economy, with more than 2/3 of US economic growth based on consumer spending.  A large portion of a consumers' willingness to open their purse strings comes from their opinion on their employment prospects.  The jobs market is very robust, with the unemployment rate falling to 3.7% in the Sep jobs report, the lowest since 1969.  The latest reading on the jobs market, for Oct, will be released Fri.

Consumer confidence hits 18-year high

Apple (AAPL) revealed new versions of the iPad Pro tablet & Mac computers, offering updates, including facial recognition & faster processing speeds.  During an event in New York, CEO Tim Cook introduced a redesigned iPad Pro without the traditional home button.  The company also detailed changes to the MacBook Air, which last underwent an overhaul in 2011, & the Mac Mini desktop computer.  The company is refreshing some of its older products shortly after launching new Apple Watches & the next generation of iPhone models, including the $1099 iPhone XS Max.  Also, AAPL announced that iOS 12.1, an update to the company's mobile operating system, is available for iPhone & iPad customers.  The stock went up 1.06.
If you would like to learn more about AAPL, click on this  link:

Apple unveils new products at NYC event

Oil prices fell, depressed by concerns that the US-China trade dispute will dent economic growth & by signs of rising global supply despite upcoming sanctions against Iran.  Benchmark Brent crude oil fell $1.05 a barrel to a low of $76.29 before recovering slightly to around $76.44, down 90¢. US light crude was 60¢ lower at $66.44.  Both contracts have recovered some ground over the last week but are around $10 a barrel below 4-year highs reached in the first week of Oct.  Oil has been caught in the global financial market slump this month, with equities under pressure from the trade war between the world's 2 largest economies.  Financial markets found some support from reports that Pres Trump thinks "a great deal" with China is possible on trade.  But for now the dispute between DC & Beijing goes on & looks set to curb global economic growth & fuel demand.  The Intl Energy Agency (IEA) said high oil prices were hurting consumers & could dent fuel demand at a time of slowing global economic activity.  "There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they're directly related to consumer prices. The second one is global economic growth momentum slowing down," IEA chief Fatih Birol told an energy conference in Singapore.  Oil is also under pressure from rising output by the world's biggest producers - Russia, the US & Saudi Arabia - who are helping to replenish global oil inventories after more than a year of stock draws.  Oil production from these 3 producers reached 33M barrels per day (bpd) for the first time in Sep.  That's an increase of 10M bpd since the start of the decade & means these 3 producers alone now meet 1/3 of global crude demand.  The US is set to impose new sanctions on Iranian crude from next week & exports from the Islamic Republic have already begun to fall.  But there appears to be no significant shortage of crude.  Saudi Arabia & Russia have said they will pump enough to meet demand once US sanctions are imposed.

Oil prices fall on rising supply, trade tensions

Pfizer (PFE), a Dow stock, beat Q3 earnings expectations but fell short on revenue & narrowed its full-year forecast.  EPS rose to 69¢, up from 47¢ a year earlier.  Excluding items, EPS was 78¢, more than the 75¢ expected.  Net sales rose 1% to $13.3B, shy of the $13.53B that had expected.  Innovative health revenue increased 4% to $8.47B, boosted by sales of blood thinner Eliquis & breast cancer drug Ibrance outside of the US, among others.  Essential health revenue fell 4% to $4.38B, with generic versions of Viagra entering the market.  For the full year, PFE narrowed its revenue forecast to $53- 53.7B from the previously guided $53-55B.  For adjusted EPS, PFE expects $2.98-3.02 which compares with a previous estimate of $2.95-3.05.  The company attributed the revenue changes to shortages of its Hospira Sterile Injectable Pharmaceuticals product in the US & weakening currency in some emerging markets & the € starting this summer.  Earlier this month, PFE announced CEO Ian Read will retire & Albert Bourla will take over in Jan.  “Albert’s extensive knowledge of our business, firm grasp of the issues, and deep caring for patients will help Pfizer continue to build on the outstanding foundation we have put in place,” Read said.  “I am confident that he is implementing a structure and building a leadership team that will maximize the company’s growth opportunities.”  The company bought back $1.1B of its shares in the qtr, bringing its 2018 total to $9B & expects to repurchase about $12B this year.  Incoming CEO Bourla said that PFE doesn't see the need for any large-scale mergers or acquisitions right now as it focuses on its pipeline.  The stock finished down 35¢.
If you would like to learn more about PFE, click on this  link:

Pfizer posts mixed third-quarter results, narrows full-year forecast, shares drop 

Stocks had wide swings untiil the buyers returned in the last 2 hours.  Then they bid up stocks, taking the Dow up 375.  Going into the last day of trading for Oct, these kind of fluctuations must be expected.  Earnings are coming in on the drab side, especially when compared reports earlier this year, & US-China trade relations are as rocky as they have been for much of this year.  The Dow is still down a very big 1.6K in Oct.

Dow Jones Industrials

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