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Market Update

Stock Streak at Risk after Mixed Earnings, Report of Oil Abundance

Print
October 13, 2015

U.S. stocks indicated a sloppy open Tuesday, which could halt the Dow Jones Industrial Average’s ($DJI) longest win streak for 2015. This market may be due for some slippage. Earnings news is spanning several sectors, including financials this week, and is so far delivering results all over the board. But the mood spoiler began in China, where weak trade data was seen by Street analysts as further proof the world’s second largest economy is slumping.

Commodities, oil in particular, remain a stock driver as well. Oil prices fell some 5% on Monday and are lower early Tuesday after the Organization of Petroleum Exporting Countries reported its September output hit its highest in over three years, at an average of 31.57 million barrels a day. That’s up about 109,000 barrels a day from the previous month and higher than the group’s target of 30 million barrels a day. Separately, the International Energy Agency cut its forecast for oil demand growth for next year by about 200,000 barrels a day compared with its previous outlook issued in September, a Wall Street Journal article says. U.S.-traded crude futures were changing hands near $47.07 a barrel. London-traded Brent stands near $50.35 a barrel.

Dow-Win-Streak

FIGURE 1: BLUE STREAK.

The Dow Jones Industrial Average ($DJI), charted on the new-look thinkorswim® platform, stretched its win streak to seven sessions on Monday. Early action does indicate a break for buyers. The blue-chip Dow logged its longest streak of 2015 with yesterday’s advance. The broader S&P 500 (SPX) closed up 0.1%; it’s gained in nine of the last 10 sessions. Data source: Dow Jones Indices; Standard & Poor’s. For illustrative purposes only. Past performance does not guarantee future results.

China: Trade Slump. China's trade slump extended into September, a development seen as more evidence that the world's second largest economy is stalling, according to industry analysis. Dollar-denominated imports plunged 20.4% year over year last month, while exports slipped 3.7%, translating into a trade surplus of $60.34 billion. China's official GDP data is due on October 19.

J&J Beats with EPS, Raises Outlook. A busy earnings week got under way. Shares of Johnson & Johnson (JNJ) were higher early Tuesday after the consumer and drug conglomerate reported adjusted Q3 earnings per share of $1.49. That topped the analyst consensus estimate for $1.45 in a Thomson Reuters survey. The company reported sales of $17.1 billion, below the Thomson Reuters survey figure for $17.48 billion and a 7.4% decrease from the year-earlier period. The company said international sales decreased 13.7% and it had a negative currency impact of 15.8%. But shares could be getting a lift from forward-looking commentary. The company raised its adjusted earnings guidance for the fiscal year 2015 to $6.15 to $6.20 a share. The guidance was previously $6.10 to $6.20. The company also announced a repurchase of up to $10 billion of Johnson & Johnson's common stock.

Macro Brews Get Bigger. Anheuser-Busch InBev (BUD)  and SABMiller (SBMRY) finally clinked glasses as the world's two largest brewers will combine and now own nine of the world’s top-selling beers, according to TheStreet.com. Anheuser-Busch has agreed to purchase SABMiller for 68 billion pounds ($104 billion) or 44 pounds a share, pending approvals. SABMiller had previously rejected an offer for 42 pounds a share. Bud would pay a $3 billion reverse break fee to SABMiller should the transaction fail to clear regulatory hurdles or shareholders don't approve.

Good trading,

JJ

@TDAJJKinahan

economic-release-calendar

FIGURE 2: ECONOMIC AGENDA.

This week’s U.S. economic report calendar. Source: Briefing.com.

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