Markets pause after reaching new highs yesterday

Dow dropped 125, decliners barely ahead of advancers & NAZ was up 30.  The MLP index was steady in the 259s & the REIT index was steady in the 374s.  Junk bond funds slid lower & Treasuries had more selling, raising yields.  Oil rose 1+ to the 75s (more below) & gold fell 6 to 2045.

AMJ (Alerian MLP Index tracking fund)

Disney (DIS), a Dow stock, theme parks & continued cost-cutting efforts, as it announced an investment in Fortnite-maker Epic Games.  Even before the report was given, CEO Bob Iger announced  that the company would take a $1.5B stake in Epic & work with the company to create a "huge Disney universe."  "This marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion," Iger said.  The announcement signals another attempt at interactive entertainment, which in 2016 shut down its Disney Interactive Studios, publisher of the toys-come-to-life game series "Infinity," & announced it would instead license its characters to outside game companies.  The board of directors also authorized a $3B share repurchase program for the current fiscal year & declared a div of 45¢.  That represents a 50% increase from the div paid in Jan.  The board also authorized a $3B share repurchase program for the current fiscal year.  The company posted EPS of $1.22, excluding certain items, ahead of the forecast for 99¢ for Oct thru Dec.  Quarterly revenue was comparable to a year ago, at $23.5B, but short of projections of $23.6B.  "Just one year ago, we outlined an ambitious plan to return the Walt Disney Company to a period of sustained growth and shareholder value creation," Iger said.  "Our strong performance this past quarter demonstrates we have turned the corner and entered a new era of growth for our company."  The stock jumped 11.75 (12%).

Disney tops earnings forecast

Crude oil futures prices rose for the 4th day in a row after the US killed a militant commander in Iraq & Israel rejected a ceasefire proposal by Hamas.  The West Texas Intermediate futures contract added $1.64 (2.2%) to $75.50 a barrel & the Brent contract for April gained $1.7 (2.1%) to trade at $80.91 a barrel.  US crude and the global benchmark are up 2.2% & 2.8% respectively for the week as the Middle East teeters between another round of violent escalation & a possible truce in the Gaza war.  Secretary of State Antony Blinken is on a diplomatic tour of the region this week in an effort to secure an extended humanitarian pause in Gaza in exchange for the release of hostages by Hamas.  Blinken met Israel Prime Minister Benjamin Netanyahu to discuss a counterproposal by Hamas that demands a permanent end to the fighting.  Netanyahu rejected the Hamas' proposal, vowing to press on to the southern city of Rafah on the border with Egypt & achieve “total victory” in Gaza.  A Hamas delegation is in Egypt to continue ceasefire talks.  The US, meanwhile, killed a senior leader of the militant group Kata'ib Hezbollah in a drone strike in Baghdad in response to attacks on American troops, according to Central Command.  Prices also found support this week after the Energy Dept forecast that domestic crude production would grow slower than originally expected this year, easing worries among traders that the global market is oversupplied.

Oil rises for a fourth day after Israel rejects Hamas ceasefire proposal

Under Armour (UAA) said that its holiday-qtr sales slowed, but its earnings beat estimates as the athletic apparel retailer worked to rein in costs.  Soft demand in North America & a slowdown in wholesale orders led revenue to drop 6% during the period, but the company posted big gains in its gross margin.  UAA now anticipates full-year sales will decline slightly more than it previously expected.  Even so, it raised its expectations for full-year gross margin & earnings just weeks away from the end of its fiscal year.  EPS for the 3-month period that ended Dec 31 was 26¢, compared with  27¢ a year earlier.  Excluding one-time items related to the sale of its MyFitnessPal platform, tax impacts & litigation reserves, UAA's adjusted EPS was 19¢.  For the full fiscal year, which is expected to conclude at the end of Mar, UAA is projecting sales to fall 3-4%, compared with its previous expectation of down 2-4%.  Analysts had expected sales to drop 2.8%.  The retailer is expecting to bring in EPS of 57-59¢, up from a previous estimate for 47-51¢.  It anticipates it will post adjusted EPS of 50-52¢.  Analysts had expected EPS of 49¢.  “Despite a mixed retail environment during the holiday season, our third quarter revenue results were in line with our expectations; we were able to deliver better than anticipated profitability and remain on track to achieve our full-year outlook,” CEO Stephanie Linnartz said. “As we close out fiscal 2024 and our strengthened leadership team begins to come up to speed in the quarters ahead – we are working to reset Under Armour toward a path of improved revenue growth and enhanced value creation in the future.”  The stock was flat.

Under Armour shares jump after it raises profit expectations amid sliding sales

Investors are questioning whether gains can be sustained, given the concentrated group of a limited number of stocks driving them.  Bets on a Mar interest rate cut have been scaled back thanks to a drumbeat of comments this week by Fed officials.  The stock market needs to take a rest.

Dow Jones Industrials