Markets slide lower on Greek debt worries & oil's decline

After a brief rally late in the day, Dow finished up just 6, decliners over advancers 2-1 & NAZ lost 11.  The MPL index sank with oil, down 6 to the 449s, & the REIT index fell fractionally to 348.  Junk bond funds were mixed & Treasuries dropped.  Oil plunged, erasing much of the recent brief rally, & gold climbed higher.

AMJ (Alerian MLP Index tracking fund)

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CLH15.NYM

....Crude Oil Mar 15

.....48.56

...4.49

(8.5%)

A gauge of growth in the US services sector was stronger than expected in Jan, though it remained near 6-month lows as an index on employment declined sharply.  The Institute for Supply Management services index was 56.7, up slightly from a revised 56.5 in Dec.  Analysts were looking for a reading of 56.3.  The survey's employment index fell to 51.6 from 55.7, while 2 other components, prices & order backlogs, were below the 50 level that separates expansion from contraction for a 2nd straight month.  A 3rd component, imports, entered contraction territory for the first time since Feb 2014.  The rise in the overall index came from a strong rebound in business activity.  That subindex rose from to 61.5, its highest level since Sep, from 58.6 in Dec to 61.5.

Service-Sector Growth Picks Up in January

Greece has not talked with the IMF about changing the debt framework of its bailout program, the IMF said.  "There is an agreed framework for dealing with debt in the current (bailout) program. There has been no discussion with the authorities on a change in this framework," the IMF said.  Greece's finance minister said in a media interview that Athens had started talks with the IMF over a plan to swap its sovereign debt for growth-linked bonds, as Greece's new gov seeks ways to restructure public debt after receiving €240B ($275B) in bailout money since 2010.

IMF: Not in Discussions with Greece About Debt

One year ago, Microsoft, a Dow stock, appointed Satya Nadella as CEO.  Under his watch, revenue has jumped 12% to $93.5B.  That's a mixed record compared to other high-profile tech executives.  The stock is up about 15%, basically in-line with the S&P 500 & NAZ.  But, beyond financial metrics, there's also the broader question of whether Nadella is pursuing a smart business strategy for the company he runs & analysts believe he is.  In the last earnings report, MSFT said that its commercial cloud business boasted triple-digit revenue growth for the 6th straight qtr.  But there are worriesabout the underlying trends for the Windows franchise.  Last year, technical support ended for the Windows XP, motivating companies to upgrade their computers.  That tail wind might not prove as strong this year.  With the stock down 17% from its recent high, the primary challenge is demonstrating strong momentum in its mobile business.  The most recent evidence from research firm IDC shows MSFT controls less than 3% share of the smartphone market.  Also, Windows 10, the new version of its operating system due out later this year, needs to be a big hit.  Windows still accounts for about 25% of revenue.  Companies, consumers & developers need to embrace Windows 10 if Nadella hopes to win investors in the future.  The stock rose 23¢.  If you would like to liearn more about MSFT, click on this link:

club.ino.com/trend/analysis/stock/MSFT?a_aid=CD3289&a_bid=6ae5b6f7

The ups and downs of Satya Nadella's first year

Microsoft (MSFT)

The stock market could not extend its rally.  It tried in late day trading, but faded in the last ½ hour.  Intl news is gloomy on many fronts.  Probably the biggest resaon for selling was when the price of oil plunged 8% to below 49.  The fundamental problem of too much supply remains.  The Jan jobs report comes on Fri & good numbers are expected.  The larger question is how much income will filter to customers who increase spending?

Dow Jones Industrials

Lower markets on Greek debt concerns

Dow fell 21, decliners over advancers 2-1 & NAZ lost 27.  The MLP index dropped 5+ to below 451 & the REIT index lost 1+ to the 348s.  Junk bond funds slid lower &Treasuries sold off again.  Oil pulled back to below 51 after this brief rally & gold went up.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM

...Crude Oil Mar 15

...50.77

...2.28

(4.3%)

GCH15.CMX

...Gold Mar 15

.....1,265.90

...5.90

(0.5%)

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Companies added more than 200K workers to payrolls in Jan for a 5th consecutive month, signaling steady labor market growth.  The 213K increase in employment followed a 253K Dec gain that was larger than initially reported, according to ADP Research Institute.  The projection called for an advance of 223K.  The US labor market is demonstrating that it can keep adding jobs even as slumping energy prices hurt industries exposed to oil.  Goods-producing industries, which include manufacturers & builders, boosted headcounts by 31K.  Hiring in construction increased 18K, while factories added 14K.  Service providers increased staff by 183K.  Companies with 500 or more employees added 40K jobs.  Medium-sized businesses, employing 50-499 workers, increased headcount 95K, while small company payrolls rose 78K.  “Employment posted another solid gain in January, although the pace of growth is slower than in recent months,” Mark Zandi, chief economist at Moody’s Analytics said.  Moody’s produces the figures with ADP.  “All indications are that the job market will continue to improve in 2015.”  The ADP report is based on data from businesses with almost 24M workers on their combined payrolls.

Hiring in U.S. Tops 200,000 for Fifth Straight Month as Recovery Quickens

General Motors reported a 91% jump in its Q4 profit, relying on strong US growth to exceed expectations & cap a tumultuous year for a new CEO wrestling with vehicle recalls & losses in Europe.  The company plans to boost its div starting in Q2.  It will later this month pay about 48K US hourly workers profit-sharing checks of $9K based on its 2014 financial performance, representing one of the biggest such payouts in the history of the auto industry.  EPS excluding some charges was $1.19, handily beating estimates of 83¢.  Revenue for was $39.6B, down from $40.5B a year ago.  GM intends to raise its div in Q2 by 20% to 36¢.  "Our intention to increase the dividend is consistent with our balanced capital allocations strategy and reflects the confidence we have in growing the strength of our business," CEO. Barra.  The stock jumped 1.07.  If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7

GM's profits beats estimates, raises dividend

General Motors (GM)

German Chancellor Angela Merkel indicated that a diplomatic offensive by newly elected Greek Prime Minister Alexis Tsipras to ease bailout-aid requirements is failing to win over converts.  “I don’t think that the positions of the member states within the euro area with regard to Greece differ, at least in terms of substance,” Merkel said.  While Tsipras has retreated from demands for a writedown of Greece’s debt, yielding to virtually unanimous opposition in the 19-member bloc, his pledge to increase spending & roll back austerity threatens to collide with conditions of aid commitments totaling €240B ($275B).  Tsipras & his finance chief, Yanis Varoufakis, fanned out this week across Europe after their Syriza party’s anti-austerity campaign swept them into office.  Their demands for overhauling the terms of Greece’s bailout package have been met with resistance & alarm in the EU.  “We want to re-correct this framework, not to smash this framework,” Tsipras said after meeting with the European Parliament President.  “We believe that with this framework, we would find a common viable solution for our peoples, a common perspective.”  Varoufakis met today with ECB pres Mario Draghi & said he had “very fruitful” talks over the ECB’s support of the Greek banking system.  Merkel said she’s “looking forward” to meeting Tsipras at a meeting of the EU next week.  She said she’s also spoken to Italian Prime Minister Matteo Renzi & French President Francois Hollande regarding the euro area’s position on Greece.

Merkel Says Greek Diplomatic Offensive Is Failing

The short rally was not made to last.  A pullback today is understandable.  Oil retreated & the rise in oil has had a lot to do with the rally.  But there were no fundamental changes in the oil market.  The MidEast has gotten more  frightening after yesterday, not good for the stock market.  Fighting in Ukraine drones on as Russia is trying to figure out how to support its side while it is entering a recession.  The US economy continues to look good & the jobs report on Fri is expected to show 230K jobs were created in Dec.  However even here, consumer data continues uneven.  Over the short term, there should be more profit taking with Dow still in the red YTD.

Dow Jones Industrials