Markets rise on home sales data

Stocks began the day higher & picked up steam during the day.  Dow finished up 113, advancers over decliners 2-1 (could have been better) & NAZ added 20.  The Financial Index went up 2 to 207, its first big day in 2 weeks.  The MLP index rose 1+ to the 394s & the REIT index was up a fraction to the 259s, a new yearly high.  Junk bond funds were mixed but Treasuries edged higher.  Gold was up a fraction, helped by sentiment from the rising stock markets & gold gained $16 but continues in sideways trading.

JPMorgan Chase Capital XVI (AMJ)

Click below for the latest market update:

 

Treasury yields:

U.S. 3-month	0.086%
U.S. 2-year	0.258%
U.S. 10-year	1.959%

CLM12.NYM

...Crude Oil Jun 12

...104.66

... 0.54

(0.5%)

Photo:   Bloomberg

Manufacturing contributed less to US economic growth last year than in 2010, indicating a pickup in the expansion depends more on bigger gains in the services industry.  Factory production accounted for 0.5 percentage point of the 1.7% increase in GDP in 2011, according to the Commerce Dept.  A year earlier, manufacturing added 1.2 percentage points to economic growth of 3%.  Makers of durable goods, such as automobiles, were still one of the biggest contributors to the expansion last year, adding 0.49 percentage point after 0.96 percentage point in 2010.  Durable-goods manufacturing increased 7.9% in 2011 after a 17% jump the previous year.  15 of 22 industry groups added to growth, including professional, scientific & information services.  GDP rose at a 2.5% annual rate in Q1 after advancing at a 3% rate in Q4, according to the latest forecast.  Factories may give way to service industries as a pillar of the expansion as a slowdown in global growth curbs exports.  Service industries outperformed factories during Q1, according to data from the Institute for Supply Management.  Its manufacturing index averaged 53.3 in Q1-Q3, compared with 56.7 for the non-manufacturing gauge.  Readings above 50 signal expansion.  Economic data can be boring, but is also helpful in understanding what's driving the economy.

Manufacturing Contributed Less to U.S. Growth Last Year

• 

Photo:    Yahoo

Exxon Mobil, a Dow stock & Dividend Aristocrat, struggled just about everywhere in Q1.  It produced less oil & natural gas.  Profits dropped at its chemical plants & US refineries.  And its total net income fell 11%, the first decline in quarterly earnings since late 2009.  The  largest energy company in the world had EPS of $2, short of expectations & below $2.14 last year.  Revenue rose 8.8% to $124B, but that also fell short of forecasts.  Oil production slipped 7.7% & natural gas production fell 3.4%.  The declines resulted from aging fields & contracts with foreign govs that limited the amount of oil & gas the company could sell.  There are concerns about its natural gas fields in the US, where prices have dropped to 10-year lows.  The company has kept its natural gas rigs pumping while other big producers have shut down many of theirs.  XOM sold natural gas for $2.74 per 1000 cubic feet in the US, down 31% from a year earlier.  Elsewhere, profits fell for its chemicals & US refinery operations.  But yesterday it boosted the div to a record $2.28. Today the stock pulled back 78¢.

Exxon First-Quarter Profit Drops as Output, Gas Decline

Exxon Mobil Corporation (XOM)

Photo:   Bloomberg

PepsiCo, a Dividend Aristocrat, Q1 net income fell slightly from a year ago, as it raised prices to make up for rising commodity costs.  EPS was 71¢, similar to 71¢ last year (the smaller number of average outstanding shares lifted the latest per-share results).  Not including one-time items, the company had EPS of 69¢, which topped  expectations for 66¢.  PEP is struggling to balance higher commodity costs without scaring off budget-conscious consumers with too many price increases but the company says it was able to raise prices in Q1 on the strength of its brands.  Changes to pricing & packaging of its snacks & drinks boosted revenue 5%, helping to offset a $300M increase in costs for ingredients.  With the new pricing measures in place, CEO Nooyi said PEP can focus on plans to rejuvenate its business in the year ahead, including increased advertising dollars for the flagship brands & the implementation of a cost-cutting program.  There were restructuring charges of $33M in Q1 & the company anticipates additional charges of about $392M for the rest of the year.  Revenue increased to $12.4B, from $11.9B last year (the forecast was for $12.35B).  The increase was driven primarily by gains in emerging markets, while revenue from the beverage unit in the Americas dipped by 2%.  The stock fell 30¢.

PepsiCo First-Quarter Profit Tops Estimates as Latin American Sales Gain

Pepsico, Inc. (PEP)

Dow is up almost 300 in 3 days, hard to believe.  While earnings news has good, it was not all that good.  Gas at the pump has backed off to $3.83, about 10¢ below its recent high, but still at troublesome levels.  We don't hear a lot about Europe, but that debt mess has not gone away.  The markets are feeling good although the breadth was mediocre today.  Dow is just 60 below its yearly highs (really multi yearly highs) & the S&P 500 is only a couple of pennies below the magic 1400 level.  Markets are overbought short term which could produce profit taking tomorrow.

Dow Industrials

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Markets muddle along waiting for a Greek bailout

Stocks hardly budged although decliners outnumbered advancers 3-2 as eyes continue to watch Greece.  Bank stocks fell.

S&P 500 Financials Sector Index

Value	197.93
Change	-0.82    (-0.4%)

The MLP index was up a fraction & the REIT index fell 2½ from its yearly highs.  Junk bond funds were little changed.but Treasuries saw selling, taking the 10 year yield well over 2%.  Oil & gold rallied on increased nervousness over the Greek debt mess.

Alerian MLP Index

Value	397.35
Change	0.22    (0.1%)

Treasury yields:

U.S. 3-month	0.076%
U.S. 2-year	0.250%
U.S. 10-year	2.028%

CLH12.NYM

...Crude Oil Mar 12

...99.71

.... 1.00

(1.0%)

GCG12.CMX

...Gold Feb 12

.....1,747.40

... 18.10

(1.1%)

Get the latest daily market update below:

• 

Photo:   Yahoo

Greek leaders clinched a long-stalled deal on reforms & austerity measures needed to secure a bailout & avoid a messy default.  The EU & IMF have been exasperated by a lack of agreement on sacrifices they demanded in return for a €130B ($172B) bailout.  Greek Finance Minister Venizelos set off for Brussels without a complete deal after all-night talks.  One sensitive issue, pension cuts, was left unresolved.  Officials say the full package must be agreed with Greece & approved by the EU, IMF & European Central Bank by Wed so paperwork can be completed in time to avoid a chaotic default.  The clock is ticking but don't expect much from this Scotch-Tape approach to solve  fundamental economic problems of spending too much.

Draghi Softens Outlook on Risks as ECB Refuses to Show Its Hand on Greece

Photo:   Bloomberg

First- time claims for unemployment insurance unexpectedly declined last week. Applications for jobless benefits decreased 15K to 358K according to the Labor Dept.  The forecast had been for 370K.  The 4-week moving average declined to 366K, the lowest since Apr 2008.  But the number continuing to collect benefits rose 64K to 3.52M.  Those who’ve used up traditional benefits & are now collecting emergency & extended payments increased by 18K to 3.5M.  The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 2.8%.  27 states & territories reported a decrease in claims, while 26 had an increase.  Initial jobless claims reflect weekly firings & tend to fall as job growth accelerates.  Better news (shown in the graph) but the unemployment continues in high territory along with the underemployed figure.

First-Time Jobless Claims in U.S. Unexpectedly Fell Last Week to 358,000

US Initial Jobless Claims

Value	358.00
Change	-9.0   (-2.5%)

• 

Photo:   Yahoo

Speaking of unemployment claims, PepsiCo, a Dividend Aristocrat, plans to cut 8.7K jobs (3%) of its workforce, to offset higher costs for ingredients & increased spending on advertising & marketing in North America.  Restructuring should save $1.5B by 2014, on top of $1.5B in cost cutting it previously announced.  The layoffs were announced as it reported better-than-expected Q4 profit, but forecast a decline in adjusted 2012 earnings.  PEP said "tough decisions" needed to be made because it expects 2012 will be the 2nd year in a row that it will encounter higher-than-average costs for commodities.  CEO Nooyi said although it's cutting 3% of its 800K worldwide work force, the reduction is spread out over 30 countries & the company typically adds 10-15K jobs in one year.  At the same time, PEP will increase advertising & marketing behind its brands by $500-$600M in 2012, with a particular focus on North America.  Additionally, it plans to increase divs & share buybacks to return cash to shareholders.  The stock dropped 2.82 (4%).

PepsiCo to Cut 8,700 Jobs, Boost Marketing

Pepsico, Inc. (PEP)

The story hasn't changed much this week, stocks aren't sure where to go with the uncertainty over the Greek bailout.  Gold is in a rally mode, a bet on more unhappiness coming out of Europe.  There are so many unknowns, it's unusually difficult to imagine what stocks will do.  The high yield sectors aren't getting a lot of attention, but their securities are at multi year highs.  Yields still matter!

Dow Industrials

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Mixed markets as Euro falls to a 15 month low

Dow was down 2, advancers ahead of decliners 3-2 but NAZ gained 21.  The Financial Index rose 2+ to the 181s, a 2 month high.

The MLP index rose another 1+ to the 396s, setting another record, & the REIT index was up 2+ to the 232s.  Junk bond  funds were mixed as were Treasuries with the yield on the 10 year Treasury just under 2%.  Oil declined for the first time in 3 days, giving up a gain in the last 40 minutes of trading.   Gold rose, capping the longest rally in 10 weeks, after UK Defense Secretary said the country may take military action if Iran carries out its threat to block the Strait of Hormuz.

ALERIAN MLP



DJ REIT INDEXDJR

Today's 50 Top Trending Stocks below:

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.259%
U.S. 10-year	1.993%

CLG12.NYM

...Crude Oil Feb 12

...101.72

... 1.50

(1.5%)

Photo:   Bloomberg

Worries about Europe's banking sector pushed the € to a 15-month low against the dollar, under $1.28.  Bad news from Europe overshadowed positive US jobs data.  European bank stocks fell on worries that banks will have trouble trying to raise new capital.  Spain's finance minister said that the country's banks need to raise an additional $65B.  Weaker demand at a bond auction in France was also disappointing.  The € fell to lowest point since Sep 2010 & the $ strengthened against most other currencies.  The value of the € is a good measure of how bad things are in European financial markets.

Euro Drops on Crisis Concern; Dollar Gains as U.S. Job Market Strengthens


Target, a Dividend Aristocrat,  lowered its earnings expectations following a disappointing Dec, on weaker sales of electronics.  Strong grocery & beauty product sales offset weakness in electronics, movies, books & music.  In addition, sales & traffic were stronger in the week before Christmas thanks to last-minute shopping.  Total revenue for the last 5 weeks of 2011 rose 2.6% to $10.1B.  The company expects Q4 EPS of $1.35-$1.43, below prior guidance of $1.34-$1.53.  Analysts were expecting $1.48 per.  The Gap (GPS) & JC Penney (JCP) also disappointed.   TGT slid 1.49.

Target cuts outlook after Dec. misses expectations AP

Target Corporation (TGT)

In an effort to boost its bottom line, PepsiCo, another Dividend Aristocrat is contemplating laying off about 4K workers & putting a stop to its 401(k) match.  By eliminating its relatively generous 401(k) match, the company would save $75M immediately.  If PEP let go 4K workers, it would amount to just over 1% of its total payroll.  While not material to the millions still out of work, this is another signal that the economic recovery is less than robust.  PEP fell 52¢.

PepsiCo Said to Plan Job Cuts to Boost Profits

Pepsico, Inc. (PEP)

There is a lot of nervousness ahead of the jobs report tomorrow before the open.  The markets will be looking for the economy to add 150K jobs in Dec.  The jobless claims data was good, but the ADP report on new jobs, while favorable, may have been influenced by seasonable factors.  Dec retail sales figures were good but stocks generally sold off because of heavy discounting needed for those gains.  Dow is still up in the first 3 days, but the last 2 have not been encouraging.  Meanwhile, MLPs continue their wining ways.

Dow Industrials

Get your favorite symbols' Trend Analysis TODAY!  

Click Here