Dow rose 185, advancers slightly over decliners & NAZ gained 85. The MLP index slid lower in the 198s & the REIT index added 1+ to the 465s. Junk bond funds hardly budged & Treasuries were sold, taking the yield on the 10 year Treasury up 4 basis points to 1.62%. Oil went higher in the 82s & gold was up 7 to 1773.
AMJ (Alerian MLP index tracking fund)
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US industrial production fell 1.3% in Sep, much more than expected, the worst drop since Feb. The Federal Reserve reported that nearly ½ (0.6%) of the overall decline in total industrial production was attributable to Hurricane Ida. It was the worst showing since Feb's 3.1% decline, when severe winter storms hammered much of the country, disrupting a wide swath of manufacturing activities from autos to chemical plants. Industrial production covers manufacturing, utilities & mining. The gov said manufacturing output fell 0.7%, dragged down by a 7.2% decline in motor vehicles & parts as shortages of semiconductors continued to thwart the industry. Outside of the auto industry, factory output declined 0.3%. Utilities output dropped 3.6% while mining production, which includes crude oil extraction, fell 2.3%. The Fed also revised Aug's reading down from a 0.4% gain to a 0.1% decline. Even with the bigger-than-expected decline & Aug's downward revision, total industrial production rose at an annual rate of 4.3% in Q3, the 5h consecutive qtr with a gain of 4% or more.
Industrial production drops sharply amid ongoing product, labor shortages
Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, reported quarterly earnings & revenue that topped expectations, but higher costs weighed on profits. PG also raised its forecast for commodity & freight costs
for the remainder of the fiscal year, warning it believes inflation is
still increasing. Fiscal Q1 EPS was
$1.61, down from $1.63 a year
earlier. The forecast expected EPS of $1.59. Net sales rose 5% to $20.3B, topping expectations of $19.9B. Organic revenue, which
strips out the impact of acquisitions, divestitures & foreign
currency, increased by 4% in the qtr. CFO Andre Schulten said that the company
would raise prices on certain products within the beauty, oral care &
grooming categories to deal with inflation. However, the company
isn't intentionally prioritizing premium products because of supply
chain constraints. “As
this pricing reaches store shelves we’ll be closely monitoring
consumption trends,” Schulten said. “While it’s still early in the pricing cycle, we haven’t seen notable
changes in consumer behavior.” it now expects after-tax commodity costs of $2.1B & freight
expenses of $200M to weigh on its fiscal 2022 results. Last
qtr, the company forecast that commodity & freight costs would hit
its earnings by $1.9B. “We base our forecast on spot rates, so we don’t expect any easing on commodity cost forecasts,” Schulten added. Despite higher costs, PG reiterated its prior forecast for
full-year earnings & revenue. PG expects for fiscal year sales
to grow 2-4% from the prior year & core EPS to
increase by 3-6%. PG stock was off 2.22.
If you would like to learn more about PG, click on this link:
club.ino.com/trend/analysis/stock/JNJ?a_aid=CD3289&a_bid=6ae5b6f7
P&G earnings top estimates as price hikes help offset some costs. Warns more inflation ahead
Homebuilding slowed in Sep as the ongoing materials shortage continued to drive up construction costs. Housing starts fell 1.6% last month to a seasonally adjusted annualized rate of 1.55M, the Commerce Dept said. The forecast called for 1.62M starts. Permits for future construction plunged 7.7% to 1.59M, missing the 1.68M that was anticipated. Supply chain disruptions that have occurred in the wake of the pandemic have left builders scrambling to find materials. The shortages have resulted in higher costs, causing many builders to delay projects. Despite the shortages, the National Association of Home Builders said yesterday that builder confidence unexpectedly rose 4 points in Oct to a 3-month high of 80. Any reading above 80 signals strong demand. "Policymakers must focus on fixing the broken supply chain," said NAHB chief economist Robert Dietz. "This will spur more construction and help ease upward pressure on home prices."
Homebuilding slows as materials shortages linger
Earnings reports are bringing out buyers, but the news is less than impressive. And the advance decline ratio above is drab. More very favorable reports will be needed to take stocks higher as the economic recovery shows signs of sputtering. Treasuries are being sold on expectations of higher interest rates related to inflation fears.
Dow Jones Industrials
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