Quiet week brought quiet trading. The Dow did little during the week ending just a few points below its start on Tues. Today Dow was just under water with advancers slightly ahead of decliners but NAZ was up 14 helped by the good earnings report from Dell (DELL), up 1.25. Economic news continued on the gloomy side with mixed earnings reports. The best part of the earnings reports comes from overseas & domestic business is soft at best.
Today oil was up a 73¢ to 127.35 in a week where large price swings have become common. The Treasury bond yield is back up over 4%, a level not seen since the end of last year. Some of the money from selling Treasuries has been used to buy junk bond funds to get their higher yields (a good 650 basis points above today's Treasury yield). The MLP index pull back from 300 to the 292 area where it settled. It rallied from the 265 a couple of months, nice move up, but still in the low end of trading range for the last 10 months. REITs, another group with high yields, were sluggish during the week. They still offer nice yields for the brave.
Friday, May 30, 2008
Ho-Hum day
There is little change in what's turning out to be a ho-hum day. The only spec of life is NAZ, up 9, largely propelled by the good earnings news last night from Dell (DELL). The Commerce Dept reported consumer spending edged up 0.2% last month & that was due to inflation. Personal incomes also rose 0.2%, due to tax rebate checks sent out. Both numbers were half the prior month's numbers but in line with expectations. Consumer confidence fell to a 28 year low of 59.8 down from 62.6 in the prior month. Consumers are depressed with inflation expectations of 5.2% for next year & 3.4% for the next 5 years. Oil rebounded to 127 & gas reached another record, above 3.96.
Dell is having a great day after reporting earnings last night is up 1.73. Tiffany (TIF), up 1.62, reported 19% increase in Q1 profits from higher overseas business. Despite higher domestic business, same store sales were only even in the US & they are projecting modest growth in the US for the rest of the year. Today should be a quiet semi-vacation day for the markets.
Dell is having a great day after reporting earnings last night is up 1.73. Tiffany (TIF), up 1.62, reported 19% increase in Q1 profits from higher overseas business. Despite higher domestic business, same store sales were only even in the US & they are projecting modest growth in the US for the rest of the year. Today should be a quiet semi-vacation day for the markets.
Thursday, May 29, 2008
Lower oil sends stocks higher
Oil prices tumbled, closing at 126.74, down 4.29 as the Energy Dept said yesterday's reported drop in supplies was due to temporary factors (i.e. unloading tankers along the Gulf Coast). This is the kind of news the markets needed. Stocks were up for the 3rd straight day, Dow rose 52, advancers ahead of decliners 3-2 & NAZ was up 21. However, stocks sold off in the PM, losing about ½ their earlier gains & volume continues to dribble at 1.2B. Higher GDP growth, revised earlier in the day, also helped. Financials, after recent weakness making them greatly oversold, were strong.
After the close, Dell (DELL) reported excellent earnings. Sales topped $16B & earnings of 38¢ beat forecasts by 4¢. The stock was little changed during the day & in after hours trading. There was another interesting story about the FED making bank loans available as part of it's effort to provide aid during the ongoing credit crisis. Master Card (MA) gave an optimistic forecast for their business for 2008. Some good news, but the economy is still hurting.
After the close, Dell (DELL) reported excellent earnings. Sales topped $16B & earnings of 38¢ beat forecasts by 4¢. The stock was little changed during the day & in after hours trading. There was another interesting story about the FED making bank loans available as part of it's effort to provide aid during the ongoing credit crisis. Master Card (MA) gave an optimistic forecast for their business for 2008. Some good news, but the economy is still hurting.
Stocks advance
Stocks up a little on generally tough news. Dow is up 30, advancers ahead of decliners 3-2 & NAZ is up 15. The revised figures for Q1 GDP showed growth at an annual rate of 0.9% vs the original estimate of 0.6%. That's better but not quite as good as some were hoping for. The economy is limping along, not in a recession. Oil was up to over 132 on a government report that inventory supplies fell sharply, inventories were down 8.8MM barrels vs an expected increase. Gas prices hit another record, $3.95 (check the prices using the button in my right column). There have been 22 straight days of record prices.
Sears Holding (SHLD), reported a 56MM loss in Q1, down 2.76. The loss per share was 43¢ vs a 1.43 profit last year. Same store sales for Sears & K-Mart stores were each down sharply. Sears expects sales & margins to be under pressure for the rest of the year. Costo (COST) reported a 32% increase in profits for their Q3 (the last quarter). Earnings were 67¢, beating estimates by 2¢. Discount retailers & warehouses, like WalMart, have been doing better in the slow growth economy.
Sears Holding (SHLD), reported a 56MM loss in Q1, down 2.76. The loss per share was 43¢ vs a 1.43 profit last year. Same store sales for Sears & K-Mart stores were each down sharply. Sears expects sales & margins to be under pressure for the rest of the year. Costo (COST) reported a 32% increase in profits for their Q3 (the last quarter). Earnings were 67¢, beating estimates by 2¢. Discount retailers & warehouses, like WalMart, have been doing better in the slow growth economy.
Wednesday, May 28, 2008
Markets higher
Markets were higher, but not with a lot of strength & conviction. Dow was up 45, advancers ahead of decliners by 25% but NAZ was up just 5. Volume continues at just 1.2B. The durable goods report helped stocks, but oil continues high. Oil rebounded to 131 on more worries about Nigeria supplies. Oil rebounded from a 3 dollar loss earlier in the day to close up 2.18 at 131.03. Markets are mostly trading on financials & oils, the drama continues with no end in sight.
Regional banks got a lot of attention, on the negative side. Regions (RF), Fifth Third (FITB), Key (KEY), etc. took big hits on gloomy forecasts. The entire banking sector was affected although buying late in the day trimmed losses. American International Group (AIG,), in the Dow, was down to an 11 year low on worries about their credit worthiness.
Bloomberg TV reported about an Alabama county which may have to declare bankruptcy. The idea is JP Morgan bankers (among others) convinced them to issue very sophisticated debt to finance the sewer system. It looks like they didn't know what they were doing & are now in so far over their heads they may have to go under. Meanwhile banks & friends received very nice fees. Given the problems with sub-prime loans, this kind of story may play out elsewhere. For the market's sake, I hope not.
Regional banks got a lot of attention, on the negative side. Regions (RF), Fifth Third (FITB), Key (KEY), etc. took big hits on gloomy forecasts. The entire banking sector was affected although buying late in the day trimmed losses. American International Group (AIG,), in the Dow, was down to an 11 year low on worries about their credit worthiness.
Bloomberg TV reported about an Alabama county which may have to declare bankruptcy. The idea is JP Morgan bankers (among others) convinced them to issue very sophisticated debt to finance the sewer system. It looks like they didn't know what they were doing & are now in so far over their heads they may have to go under. Meanwhile banks & friends received very nice fees. Given the problems with sub-prime loans, this kind of story may play out elsewhere. For the market's sake, I hope not.
Markets little changed
Markets were little changed after orders for durable goods were reported. Dow & NAZ were down slightly & decliners were a little ahead of advancers. Orders for durable goods fell only 0.5%, one-third estimates. The decline was from autos & aircraft orders. However excluding transportations, orders rose 2½%, the largest gain in 9 months helped by a 28% gain in electrical equipment & appliance orders. Oil continued it's decline pulling back below 127. Banks sold off, check Bank of America (BAC) in the right column.
Coca Cola (KO), a Dow stock & member of the S&P500 Dividend Aristocrat list, gave an optimistic forecast about business, down 16¢. Masco (MAS), another member of the S&P500 elite list is in danger of being removed from the list. They will have to increase the div by at least 1 penny in H2 to remain. But they may not be able to because of their guidance for lower earnings for 2008, not able to cover the present div. The weak housing market is hurting their business badly, i.e. kitchens, bathroom, paints, etc.
Coca Cola (KO), a Dow stock & member of the S&P500 Dividend Aristocrat list, gave an optimistic forecast about business, down 16¢. Masco (MAS), another member of the S&P500 elite list is in danger of being removed from the list. They will have to increase the div by at least 1 penny in H2 to remain. But they may not be able to because of their guidance for lower earnings for 2008, not able to cover the present div. The weak housing market is hurting their business badly, i.e. kitchens, bathroom, paints, etc.
Tuesday, May 27, 2008
Lower oil sends stocks higher
Stocks rose on low volume. Dow was up 68, advancers 3-2 over decliners & NAZ had a very good day, up 36. While economic news remains pretty dreary, lower oil prices may have brought out the buyers, again on lowwww volume. On a holiday shortened week, a lot of action is not expected. Today's rally was broadly based. Financials (like banks), REIT's, tech & even junk bond funds did well. However, energy related stocks pulled back including the MLPs. In just 3 days the MLP index has pulled back 9 (3%) in sympathy with energy stocks even though they have different fundamentals. Oil dropped 3.85 to the low 128s, bringing a sigh of relief to many investors. If there was any reason behind the decline, it's of talk about American consumers limiting car driving over the holiday weekend. Retail gas prices continue to rise, but they are a lagging indicator.
For those with a sweet tooth, Hershey (HSY) rose 3.42 on buyout rumors (although it's tough to find a printed story). Rumors are fun especially when they taste good! The rest of the week should be fairly quiet (assuming no bombshells).
For those with a sweet tooth, Hershey (HSY) rose 3.42 on buyout rumors (although it's tough to find a printed story). Rumors are fun especially when they taste good! The rest of the week should be fairly quiet (assuming no bombshells).
Home sales surprise sends stocks higher
Home sales surprise sent stocks higher. Dow is up 41, advancers ahead of decliners almost 3-2 & NAZ is up 21. Not too great, but the bulls will take it. The Commerce Dept reported home sales rose 3.3% in Apr, a pleasant surprise helping lift stocks. However, home sales remain their 17 year lows. Prices for homes dropped 14% in Q1, the highest rate in 20 years. Fannie Mae (FNM) & Freddie Mac (FRE) were each down more than 1% on the news. Oil slipped back to under 130 from concerns that higher priced gas will reduce demand for gas in the US. According to AAA (check their button under More Good Blogs on the right), gas at the pump was 3.94 yesterday.
May consumer confidence fell to a 16 year low of 57.2 in Apr. This represents the 5th straight month of declines. Let's see if the gloomy economic news brings out the bears.
May consumer confidence fell to a 16 year low of 57.2 in Apr. This represents the 5th straight month of declines. Let's see if the gloomy economic news brings out the bears.
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