Dow jumped 423, advancers over decliners a relatively modest 3-2 & NAZ gained 85. The MLP index edged up to the 196s & the REIT index rose 2+ to 460. Junk bond funds crawled higher & Treasuries were being sold again, bringing higher yields. Oil was off pennies in the 87s & gold tumbled 35 to 1794.
AMJ (Alerian MLP index tracking fund)
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The US economy accelerated more than expected in the final 3 months of the year, helping the nation record its best year for growth in nearly 4 decades before the highly contagious omicron variant of the coronavirus dampened consumer spending & further strained the global supply chain. GDP, the broadest measure of goods & services produced across the economy, grew by 6.9% on an annualized basis in Q4, the Commerce Dept said in its first reading, marking the strongest quarterly growth in a year. The forecast for the report was expected to show the economy had expanded by 5.5%. But the headline figure often obscures the whole picture because the Commerce Dept calculates the GDP on a qtr-over-qtr basis as if that level of growth were sustained for a full year; in times of huge swings up or down, it can exaggerate both the decline in growth & the subsequent rebound. Looking at the quarterly data, the nation's GDP grew about 1.7% from the 3rd to the 4th qtr, compared with an increase of just 0.6% between the 2nd & 3rd qtrs, marking a substantial uptick as businesses reopened & Americans spent down their savings following the delta variant surge this summer & fall. The strong end-of-year growth boosted GDP to 5.7% in all of 2021, compared to the previous year. It was the strongest one-year growth since 1984, when the economy expanded by 7.2% following a previous recession. Still, the economy is expected to slow this year as it confronts the hottest inflation in nearly 4 decades & stubbornly high COVID-19 caseloads. The dramatic rise in consumer prices over the past 12 months – in Dec, inflation hit a fresh 40-year high – has forced the Federal Reserve to dramatically shift its policy stance, including rapidly slowing its bond purchases, ending the buying program earlier than expected & setting the table for a Mar interest rate hike.
US economy surged in the fourth quarter before omicron impact
McDonald's (MCD), a Dow Stock & Dividend Aristocrat, said
inflationary pressures will stick around in 2022 after profits & sales fell short of estimates. In the US, the Golden Arches burger chain reported that same-store
sales – restaurants open at least a year – rose 7.5% from Oct to
Dec. For the full year, same-store sales notched 13.8%, which
marked "the highest U.S. annual comparable sales ever reported," Still,
adjusted EPS of $2.23 were 11¢ short of expectations, while revenue rose 13% to $6B for the last 3
months of the year, which was also just shy of expectations,
with sales crimped by coronavirus restrictions in Australia & China. For the full year, revenue increased 21% to $23.2B. MCD raised hourly pay for 36K US employees at its
company-owned restaurants last year. Franchisees own 93% of the
40K restaurants worldwide, but several thousand stores are owned by
MCD. The stock rose 39¢.
If you would like to learn more about MCD click on this link:
club.ino.com/trend/analysis/stock/MCDa_aid=CD3289&a_bid=6ae5b6f
Inflation hits McDonald's on food costs, labor
Intel
(INTC), a Dow stock, earnings fell last qtr as the company ramped up spending on new facilities & products, part of CEO Pat Gelsinger's efforts to revive the semiconductor giant's fortunes. The chip company posted $20.5B in Q4 sales,
up 3% from the year-earlier period. The company generated net income of
$4.6B, down 21% year-over-year. The forecast expected sales of
$19.2B & net income of $3.2. INTC expects sales of roughly $18.3B for the current qtr versus an estimate of $18.1B. The
US semiconductor giant is in a period of transition after falling
behind rivals in chip making, & competitors have taken market share
from it in some semiconductor categories. Gelsinger, who took over
as CEO in Feb 2021, has been trying to reverse the decline & said
in Dec that his turnaround plans could take 5-plus years. He said that the chip shortage is starting to let
up in some areas but still has the potential to last into 2024. "It's still challenging," he added. "You're just going to see incremental improvements quarter by quarter." INTC over the past year has expanded its chip-making capabilities,
both domestically & abroad. Most recently, the company announced a $20B investment for new chip-making factories in Ohio, explaining
that the semiconductor industry is expected to double from $500B
in combined annual sales to $1T by the end of the decade. "We just have a lot of catching up to do in building out the capital footprint," Gelsinger said. The stock dropped 2.85.
If you would like to learn more about INTC click on this link:
club.ino.com/trend/analysis/stock/INICa_aid=CD3289&a_bid=6ae5b6f
Intel earnings drop, revenue edges higher
The GDP report brought out buyers although the advance decline ratio was not impressive. There is a lot for investors to digest. One obvious problem is that strong data can encourage the Fed to be more aggressive in raising interest.rates which have already risen in 2022.
Dow Jones Industrials
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