Dow climbed 187 (going over 34K again), advancers over decliners 2-1 & NAZ climbed 135. The MLP index added 1+ to the 172s & the REIT index gained 1+ to the 426s. Junk bond funds were bid higher & Treasuries declined. Oil went over 62 & gold fell 8 to 1774.
AMJ (Alerian MLP index tracking fund)
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American Express (AXP), a Dow stock, saw its Q1 profits rise sharply, but the
company also saw a significant drop in revenue as fewer customers used their credit cards & those with balances paid down debt. EPS was
$2.74, compared with 41¢ last year. This qtr's results
included a one-time $675M benefit from its loan-loss reserves. Like other financial companies, AXP set aside funds to cover potentially bad loans in the pandemic, but as the economy has improved, those funds are coming out of those rainy day funds & returned to shareholders. Excluding those one-time results, EPS was $1.74, which beat the $1.61 forecast. The bottom line took a hit in the pandemic, with fewer Americans traveling, dining out, entertaining or shopping.
Spending on corp & individual charge & credit cards has
dropped. Those who kept a revolving balance have paid off their
debts. Revenues were down 12% from a year earlier.
Cardmember spending was down 6% from a year earlier,
although it has recovered since the early weeks of the recession. AXP
earns a fee for every transaction that runs on its network. Cardmember loans, those keeping a balance, fell by 10%. Before the
recession, AXP had pivoted its business model to allow more of its
customers to carry balances & therefore allow the company to earn
significant interest income. But it was a shift away from the company's
traditional business model that revolved around its iconic green, gold & platinum charge cards, which had to be paid off each month. "We view 2021 as a transition year, where we are focused on making
investments to rebuild growth momentum in our core business," CEO Stephen Squieri said. The stock lost 2.44.
If you would like to learn more about AXP, click on this link:
club.ino.com/trend/analysis/stock/AXP?a_aid=CD3289&a_bid=6ae5b6f7
AmEx sees drop in revenue as pandemic slows travel, dining
Intel's (INTC), a Dow stock,.CEO said a global chip-supply shortage could stretch 2 more years as the US semiconductor giant posted weaker qtrly earnings. Pat Gelsinger said the supply constraints that have affected some
sectors of the global economy for months will continue until more
capacity comes online to meet chip demand for everything from autos to electronics. "This
will take a while until people can put more capacity in the ground," he added. "It’s just the way it is when you’re building new
factories." The
CEO, who is fast-tracking efforts to re-energize the company, said the
outlook projecting sales of $77B this year, $500M higher
than previously expected, is a "supply constrained guide" for the year. Q1 sales fell 1% to $19.7B. Excluding the pending sale of its memory business & other items, revenue was $18.6B & net income was $5.7B. The forecast called for sales of
$18.6M, including sales from the memory business & net income
of $4.3B. Gelsinger this month laid out an ambitious strategy for INTC to
become a major contract chip maker in addition to making semiconductors
to satisfy its in-house requirements. The plan includes a $20B
spending commitment to build 2 new semiconductor plants in Arizona. "This is a pivotal year for Intel," he said. The stock dropped 3.95.
If you would like to learn more about INTC, click on this link:
club.ino.com/trend/analysis/stock/INTC?a_aid=CD3289&a_bid=6ae5b6f7
Intel sees prolonged chip-supply constraints
The flash reading of the IHS Market US composite purchasing managers index rose to a record high 62.2 in Apr from 59.7 in Mar. Its “flash” services purchasing managers index rose to a record 63.1 from 60.4 in Mar. The forecast expected a 61 reading. The firm's “flash” manufacturing purchasing managers index rose to a record 60.6 in Apr from 59.1 in the previous month. The forecast called for a reading of 60.5. Any reading above 50 indicates improving conditions. The flash estimate is typically based on approximately 85%–90% of total survey responses each month. Manufacturing output jumped despite despite unprecedented supply chain disruptions. New order growth accelerated including from overseas. Input prices were higher & many firms are seeking to pass on greater costs to clients. The service sector growth was driven by strong client demand & the reopening of more businesses amid easing of COVID restrictions. The US economy is experiencing boom-like conditions. The Atlanta Fed's GDPNow estimate for real GDP growth in Q1 is 8.3% & economists think Q2 growth could be even better – exceeding 10% gain.
U.S. composite PMI hits record high as economy fires on all cylinders
There was a little selling at the opening on lingering worries about higher capital gains taxes. But optimist economic data & forecasts brought back stock buyers.
Dow Jones Industrials
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