Dow dropped 105 (finishing near the lows), decliners over advancers almost 4-1 & NAZ fell 35. The MLP index lost 3+ to the 295s & the REIT index sank 7+ to the 328s. Junk bond funds saw more selling & Treasuries were a little higher. Oil slid lower in the 46s & gold was up an impressive 18, nearing 1300.
Oil fell to a one-month low as concerns about rising U.S. crude stockpiles outweighed the impact of a pipeline explosion that sent gasoline surging. Crude fluctuated after slumping 3.8% yesterday. Futures climbed as much as 1.1% after the blast & resulting blaze shut the mainlines of Colonial Pipeline, which carries oil products to New York Harbor from the US refining center in Houston. Prices retreated in early trading as a projected US stockpile gain added to concern that OPEC will struggle to decisively tackle a global crude surplus.
Oil has dropped about 5% since OPEC failed Fri to agree on country quotas as part of implementing it’s output-cut accord & the chance of OPEC reaching a deal at month's end is low due to internal discord. US crude inventories rose by 2M barrels last week, according to a survey. Supplies, which have dropped in 7 of the past 8 weekly reports, remain at the highest seasonal level in more than 3 decades.
General Motors(GM) sales in Oct fell 6.2% from a year ago as its midsize sedans posted huge declines, partly offset by hefty gains for its smaller pickup trucks & large SUVs. US auto sales in Oct were expected to decline 6-8%, according to analysts who say the fall-off from last year's record high is not being limited by higher consumer discounts. GM said US industry auto sales will be 17.4M on a seasonally adjusted annualized rate. Its 2 full-size pickup truck models, Chevrolet Silverado & GMC Sierra, collectively fell 7.6%. Analysts expect Ford (F) to show a decline of 9-11% from a year ago, due to better discipline on the use of discounts. Also, the company is stemming production at North American F-150 pickup truck plants & sedan plants because of weak demand. Sales at Toyota (TM), #3 in the US market, are expected to decline of 2-7%. Fiat Chrysler Automobiles (FCAU) is seen falling from last Oct 7.5-11%.
Pfizer, a Dow stock, topped off a difficult Q3 with news that it's scrapping a closely watched experimental cholesterol drug, partly due to expectations insurers would limit access so much that it wouldn't make much money, a possible bad omen for the pharmaceutical industry. The biggest US-based drugmaker reported quarterly profit plunged 38% as higher spending & a slew of acquisition-related charges more than offset higher sales. The mediocre results missed expectations & the company lowered the top end of its 2016 profit forecast. PFE said it discontinued the pricey bococizumab due to unimpressive results of late-stage testing & limited commercial prospects as payers increasingly squeeze pharmaceutical companies amid public fury over soaring drug prices. EPS was 21¢, down from 34¢ a year ago. Excluding $2.4 B worth of charges for acquisitions & restructuring, adjusted EPS came to 61¢, a penny less than expected. Revenue, which was boosted by last year's $15B acquisition of injected drugmaker Hospira, totaled $13.05B, up 8% (analysts expected $13.06B). Sales increased 9% to $7.33B for the new medicine segment, while sales increased 7% to $5.71B for its essential health business, which sells older, mostly off-patent drugs. "We have strengthened both of our businesses through nearly $40B in acquisitions over the past year," CEO Ian Read said. Its top seller, its Prevnar vaccine against pneumonia & related bacterial infections, dipped 3% to $1.54B, while Lyrica sales were flat at $1.24B. New breast cancer drug Ibrance more than doubled sales, to $550M. PFE expects full-year EPS of $2.38-2.43, down from its prior forecast of $2.38-2.48. It forecast revenue of $52-53B, tweaked from its prior forecast of $51-53B. The stock was down 64¢. If you would like to learn more about PFE, click on this link:
This is a nervous time for traders. Election jitters are being felt along with concerns of a long overdue interest rate hike. The Dow is struggling to hang in above the important 18K support level. The VIX, volatility index, shot up 1+ to the 18s, with one exception, the highest since this leg of the bull market began in Feb. Uncertainty is riding high..
Dow dropped 48, decliners over advancers 2-1 & NAZ lost 16. The MLP index was fractionally lower to the 298s & the REIT index fell 2+ to the 333s. Junk bond funds eased lower & Treasuries retreated. Oil was pennies lower after yesterday's plunge & gold had a big rise to the 1290s.
America's factories barely expanded last month as faster production
cushioned a slowdown in orders that signals a plodding manufacturing
sector. The Institute for Supply Management’s index rose to 51.9 in Oct
from 51.5 the previous month. The forecast called
for 51.7 (a reading above 50 signals expansion). A Q3 moderation in consumer demand, weak global markets & limited investment by US businesses have kept orders subdued.
While companies have made some progress in trimming bloated inventories,
manufacturing has gained little traction after shrinking 2 months
earlier. The ISM index has averaged 51 so far this year, little changed from
51.3 in 2015, when manufacturing was its weakest in the current
expansion. The ISM new orders gauge fell to 52 from 55.1 the prior month, while a measure of production rose to 54.6 from 52.8. The index of export orders was little changed at 52.5 after 52. The measure of orders waiting to be filled declined from 49.5 to 45.5, matching the lowest since Jan & indicating production may slow in coming months. A gauge of factory employment rebounded to 52.9, the first expansion in 4 months & the highest reading since Jun 2015. The measure of factory inventories decreased to 47.5, the lowest
since May, from 49.5, while the index for customer stockpiles dropped to
49.5 from 53.
China's official factory gauge rose to the highest since Jul 2014,
led by new orders, suggesting the economy’s stabilization continued into Q4 as robust consumption underpins demand. Manufacturing
purchasing managers index rose to 51.2 in Oct, the National Bureau
of Statistics said, from 50.4 in the prior two months. PMI beat all forecasts (the estimate was 50.3). Non-manufacturing PMI rose to 54 from 53.7 in Sep. Separate PMI reading from Caixin Media & Markit Economics rose to 51.2, also beating estimates & climbing to a 2-year high. Numbers higher than 50 indicate improving conditions. With the economy stabilizing this year & factory-gate prices rising for the first time since 2012, policy makers are acting to curb
risks from soaring home prices, elevated corp debt & shadow
banking products. Fresh signs of strength may also keep the central bank
on hold after keeping the main rate at a record low for a year. Still,
manufacturers are being squeezed between rising wage & material costs & anemic global demand.
US crude production is set to decline this year as OPEC struggles to put a dent in global
oversupply, according to the the US Energy Information
Administration. Output in the US will fall 800K barrels a day
this year, the EIA said, the first drop since 2008. OPEC's attempts to carry out an agreement on
limiting production are still “very much up in the air,” the EIA said. “The
U.S. has always felt markets would do a better job at re-balancing
supply and demand than organizational activities,” it added. US crude
production averaged 8.5M barrels a day in mid Oct, compared
with 9.2M a day at the end of last year, according to EIA data. Shale
drillers have shown remarkable “tenacity” in holding up output in the
face of falling prices, the EIA said. Crude at $50-60 a barrel
would probably spur an increase in their production.
This is the first day in the new month & macro economic data is coming out. The outlook is for the usual assortment of so-so numbers, as seen today. Tomorrow, the FOMC will announce results of their meeting & Fri is time for the Oct jobs report. Seemingly, any rate hike will be postponed to next month (if not later).
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