Dow gained 153, advancers over decliners about 3-1 & NAZ advanced 316. The MLP index hovered in the 284s & the REIT index crawled up 1+ to the 358s. Junk bond funds continued higher, along with the stock market, & Treasuries were in demand which reduced yields. Oil crawled a little higher in the 83s & gold was up 8 to 2351, still near record highs (more on both below).
AMJ (Alerian MLP Index tracking fund)
Intel (INTC), a Dow stock, reported first-qtr earnings that beat expectations for EPS, but came up light in sales. It also
gave a weak forecast for the current qtr. For the 2nd qtr, INTC expects EPS of 10¢
on revenue of $13B at the midpoint. That forecast compares to
analysts' expected EPS of 25¢ on $13.5B in
sales. In the first qtr, NTC reported a net loss 9¢ per share, versus a net loss of 66¢ per share, last year. Revenue was $12.7B versus $11.7B a year ago, a 9% year-over-year increase. CEO Pat Gelsinger said to focus on the company's long-term potential. “We are one of two, maybe three, companies in the world that can continue to enable next-generation chip technologies,” he said. Its biggest business remains the chips it makes for PCs & laptops,
which is reported as Client Computing sales. Those chip sales totaled
$7.5B, up 31% from a year earlier. Earlier this month, INTC said that it would release a new AI processor for servers called Gaudi 3,
intended to compete against Nvidia's (NVDA) popular graphics processing units,
although it won't ship until later this year. INTC expects
more than $500M in sales from its Gaudi 3 chips in the 2nd ½ of the year. The stock dropped 3.45 (10%).
While the spring housing market has been plagued with low supply, high prices &d spiking interest rates, would-be homebuyers are focusing on new construction. The reason is that new homes have more incentives & availability than previously owned ones. “There’s more opportunity in new construction,” said Nicole Bachaud, a senior economist at Zillow Group. About 693K new single-family houses were sold in Mar, up 8.3% from a year ago, according to the Census Bureau & the Dept of Housing & Urban
Development. The median sales price was $431K. Meanwhile, sales for previously owned homes dropped by 3.7% from March 2023, the National Association of Realtors found. Many areas in the US face a low inventory of existing homes as the mortgage rate lock-in effect, or the golden handcuff, keeps “existing owners from becoming sellers,” Bachaud explained. With 30-year fixed-rate mortgage rates sitting above 7%,
homeowners who bought at much lower rates in recent years don't like
the prospect of trading in their low rate for a higher one. Meanwhile, buyers are turning to builders, who are
typically more flexible with pricing. Homebuilders offer buyers
incentives like rate buy-downs & price cuts. Homebuilders can even pay
for closing costs, experts say. “This has been helping
incentivize some potential buyers to turn to the new home sales market,”
said Matthew Walsh, assistant director & economist at Moody's
Analytics. While new builds are still sold for slightly more than existing homes, the price gap has significantly narrowed since the fall. “Prices are much closer to parity than during any point in the last three decades,” Walsh said. Over the last 6 months, the median price for a new home is only about
4% higher than the median price of an existing house. That level is
significantly lower than before the pandemic when the median price of a
new home was more than 40% higher than an existing house, Walsh
explained.
New home sales inch higher despite 7% mortgage rates: ‘There’s more opportunity,’
Exxon
Mobil (XOM), a Dow stock & Dividend Aristocrat, reported first-qtr earnings that missed expectations as the
industry came under pressure from eroding refining margins &
collapsing natural gas prices. The nation's largest oil company reported EPS of $2.06, a 28% decrease from $2.79 in the same period a year ago. Revenue beat expectations, coming in at $83.1B, but was lower than a year ago, when the company reported $86.6B. CEO Darren Woods said the results were in line with the company's plan,
attributing the earnings miss to noncash tax & inventory adjustments. “In fact, in some cases they outperformed,” Woods said. “You can see that in our cash flow from operations, which exceeded consensus by about a billion dollars.” The stock fell 3.02.
Exxon stock falls as earnings miss on lower natural gas prices and squeezed refining margins
Gold prices held gains after data showed that US inflation rose in line with expectations, but the safe-haven metal was on track for a weekly fall as some geopolitical risk premiums eased. Spot gold was 0.3% higher at $2339 per ounce. However, prices were poised to mark their worst week since Dec after a major escalation in the Middle East crisis was avoided. US gold futures rose 0.4% to $2351. US personal consumption expenditures (PCE) price index increased 0.3% last month, in line with forecasts, a development that is unlikely to change expectations that the Federal Reserve will hold off cutting interest rates until Sep. Treasury yields slipped after the data was released, making bullion more attractive.
Gold Holds Firm After U.S. Inflation Data
Oil rose this week amid signs of a tightening physical market while traders continue to assess lingering Middle East risks. West Texas Intermediate edged higher to settle just below $84 a barrel, concluding a weekly advance of 2% for the Jun contract. A report earlier this week showed US crude stockpiles dropping to the lowest since Jan, while gauges such as the WTI cash roll & key timespreads are signaling supply constraints. The roll, which reflects supply-demand balances at Cushing, Oklahoma, climbed to the highest in 2 years. Meanwhile, WTI's prompt spread, the gap between its 2 nearest contracts, has strengthened to 72¢ in backwardation, up from 55¢ last week. Crude's gains are being restrained by US economic data showing inflation rose in Mar, reinforcing concerns of persistent price pressures. The data followed weaker US economic growth & traders paring back expectations for the timing of a Fed rate reduction. Crude has advanced this year, supported by supply cuts from OPEC+ & political risks in the Middle East, including heightened tensions between Israel & Iran that helped lift Brent above $90 a barrel earlier this month. Israel is stepping up preparations for a potential all-out war with Hezbollah. WTI for Jun rose 0.3% to settle at $83.85 a barrel & Brent for Jun settlement rose 0.6% to settle at $89.50 a barrel.
Oil Posts Weekly Advance Amid Signs of a Tightening Market
Dow advanced at the opening & then stayed near elevated levels for the rest of the session. Interest rates remain at high levels & that should continue until Sep at the earliest. On the earnings front while some high profile tech companies gave good reports, but many other corps had earnings which were not well received. Next week brings the FOMC which is not expected to be cheery, along with more earnings reports & they tend to be the weaker ones. Dow managed to report a modest advance of 253 this week.
Dow Jones Industrials
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