Stocks are set to rally this morning, but history offers a warning to investors. That and more is what’s in market news Thursday
The Dow industrials (^DJI) lost 21 points Wednesday, and the S&P 500 (^GPSC) was virtually flat, but the Nasdaq (^IXIC) gained nearly 10 points.
All three major averages posted solid gains for all of July. For the Dow, it was the seventh increase in eight months. So what can we expect from August? Well, since 1987, it’s been the worst month of the year for the market.
In earnings news, Exxon Mobil’s (XOM) quarterly earnings appear to have badly missed Wall Street expectations.
Procter & Gamble’s (PG) net fell by nearly half from a year ago, but still edged past expectations.
Animated filmmaker DreamWorks Animation (DWA), biotech company Affymetrix (AFFX), and the online review company Yelp (YELP) are all set to rally on better-than-expected earnings news.
But Whole Foods Market (WFM) and Marriott International (MAR) both issue disappointing results.
Ford (F), General Motors (GM), Toyota (TM) and other carmakers report sales for last month. Industry watcher Edmunds.com forecasts a double-digit gain from a year ago.
The dispute between J.C. Penney and Macy’s (M) over the rights to sell Martha Stewart (MSO) branded products could come to an end today. The two department stores are set to deliver closing arguments in their long-running case, and the judge could issue an immediate ruling.
The International Trade Commission is expected to rule today on Apple’s (AAPL) patent-infringement case against Korean rival Samsung. The companies have filed suit and countersuit against each other, with both sides claiming some victories in court.
And Starbucks (SBUX) has enlisted Google (GOOG) to make the Internet connection at its coffee shops up to 10 times faster than it is now.
HOUSTON — Halliburton says it lost $18 million in the first quarter on litigation-related charges related to the 2010 Gulf of Mexico oil spill. But it made money if the unusual items are excluded, and beat Wall Street expectations.
The oil services company’s loss attributable to common shareholders amounted to 2 cents a share. That compares with net income of $627 million, or 68 cents a share, a year earlier.
Excluding one-time items, however, Halliburton Co. (HAL) posted adjusted earnings of 67 cents a share. That beat the 57 cents that analysts expected.
Revenue rose slightly to $6.97 billion. Analysts expected $6.88 billion.
The Houston company, which provides a variety of services for the petroleum industry, is benefiting from a boom in U.S. oil production, which is at the highest level in more than two decades. At the same time, its natural gas business has slowed.
ANCHORAGE, Alaska — ConocoPhillips Alaska says it will delay its 2014 plans for exploratory drilling in the Arctic Ocean off Alaska’s northwest coast.
In a press release, the company, a unit of ConocoPhillips Co. (COP), announced that it will put its Chukchi (chuk-CHEE’) Sea drilling plans on hold “because of uncertainties of evolving federal regulatory requirements and operational permitting standards.”
It says it wouldn’t be prudent at this time to devote the financial resources needed to preserve the option to drill.
ConocoPhillips Alaska President Trond-Erik Johansen says the company is confident in its ability to safely drill but that more time is needed to ensure that all regulatory stakeholders are aligned.
An environmental group opposed to drilling hailed the decision.
Chris Krenz of Oceana says specific Arctic standards must be put in place before drilling is allowed.
The Dow Industrials edged slightly lower last week, while the S&P 500 lost one percent and the Nasdaq dropped two.
Two Arkansas residents have filed a lawsuit against ExxonMobil (XOM). They’re seeking $5 million in damages, claiming a pipeline spill has caused a permanent drop in their property values.
General Electric (GE) is expanding its oilfield services business, agreeing to buy Lufkin Industries for $3.3 billion. Lufkin makes equipment used in oil and gas production.
Anheuser-Busch (BUD) says the Justice Department has accepted the company’s revised concessions, and will no longer block the company’s effort to acquire Mexican beer maker Modelo. The deal is valued at more than $20 billion. As part of the accord with antitrust regulators, Anhueser-Busch will sell more of Modelo’s assets to Constellation Brands.
UPS (UPS) plans to appeal a ruling by European regulators, who are blocking the company’s planned acquisition of Dutch rival TNT Express. That deal is valued at $6.7 billion.
You’ve probably never heard of CPI Corp. (CPI), but you’ve no doubt seen its work. For years the company provided the portraits sold at Sears (SHLD), Wal-Mart (WMT) and Babbies ‘R’ Us. But CPI abruptly closed it business on Friday. It had been a mainstay at Sears since 1959.
Earnings season begins after the market closes this afternoon. As usual, Alcoa (AA) will be the first major company to report. Analysts expect both sales and earnings to edge lower compared to a year ago because of slumping aluminum prices. Overall, Thomson Reuters expects corporate earnings to increase by only 1.5 percent for the quarter, while other analysts say that may be too optimistic.
And J.C. Penney (JCP) and Macy’s (M) are back in court today in their fight over the right to sell Martha Stewart‘s line of home goods. The court battle was suspended for a month to allow for mediation, but that has not produced a settlement.
The rise was slightly more than the build of 2.2 million barrels expected in a Reuters survey of analysts and put U.S. commercial inventories at 388.62 million barrels, the most since 1990 and close to the record 391.9 million barrels reached in 1982, the year the EIA started tracking inventories.
“The report is somewhat bearish given the build in crude oil inventories and modest decline in gasoline inventories, which are the focus of the market,” said John Kilduff, partner at Again Capital LLC in New York.
“The rise in the refinery utilization to above 86 percent also signals further easing of the concerns over refined product inventories,” Kilduff said.
U.S. RBOB gasoline futures fell 3 percent, more than 9 cents, after or dropping 6 cents on Tuesday, as the EIA said gasoline stocks fell 572,000 barrels, less than expected and much less than the drop of 5 million barrels reported late on Tuesday by the American Petroleum Institute.
Brent crude was down $2.72 at $107.97 a barrel at 12:52 p.m. EDT, having fallen as low as $107.78.
U.S. crude was down $2.19 at $95 a barrel, having fallen to $94.89, just above the 50-day moving average at $94.64. Brent’s premium to U.S. crude fell back below $13 a barrel on Wednesday, after it reached $14.66 on Tuesday.
The spread between the two contracts had been widened because of expectations that crude stocks at the Cushing, Okla., hub, delivery point for the U.S. crude contract, would be increasing after Exxon Mobil Corp. (XOM) shut its Pegasus pipeline on Friday.
The pipeline moves crude oil from Illinois to the refinery-rich Texas Gulf Coast and a prolonged shut down would curb efforts to relieve the glut of crude oil in the Midwest.
Crude stocks at Cushing fell 287,000 barrels in the week to last Friday, the EIA report said.
With the North American heating fuel season waning and crude futures sliding, U.S. heating oil futures, the benchmark distillate contract, also fell and pushed below the 50-day and 100-day moving averages, technical levels monitored by chart watching analysts and traders.
Total distillate stocks fell 2.27 million barrels last week, the EIA said, more than expected, but the inventory drop and data showing demand over the previous four weeks was up 5.5 percent from the year-ago period didn’t prevent heating oil’s price slide.
In the wake of yesterday’s OPEC oil market report, we have the latest monthly report from the International Energy Agency (IEA) today. While the two differ somewhat in specifics, the general story is the same. Global demand for crude will not grow as quickly as either OPEC or the IEA had originally forecast, and prices will be lower.
The IEA today lowered its forecast global demand growth to 820,000 barrels a day, or a total of 90.6 million barrels a day. Yesterday OPEC forecast demand growth of 800,000 barrels a day for a total of 89.7 million barrels a day.
According to the IEA, OPEC production rose by 150,000 barrels a day in February to 30.49 million barrels a day, due mainly to an increase in Iraqi production. Demand for OPEC crude fell by 100,000 barrels a day, due largely to refinery maintenance in the United States and Europe.
Non-OPEC production fell by 60,000 barrels a day in February to 54.1 million barrels a day, which is still 600,000 barrels a day higher than average 2012 production. The IEA forecasts non-OPEC supply to grow by 1.1 million barrels a day in 2013 to a total of 54.5 million barrels a day.
Whether demand will catch up with supply in 2013 is the big question. Given the weakness in the global economy, betting that crude demand will grow and prices will rise is no better than an even-money proposition.
For a better read than the forecasts from the IEA or OPEC, it is worth paying attention to the price of gasoline at New York Harbor and to compare that to the price of Brent and to the differential between Brent and West Texas Intermediate. Then look at the futures prices and the open interest on the futures market. In the early part of this year, commodities traders and refiners were selling gasoline futures and buying crude futures following the closing of the Hess Corp. (NYSE: HES) refinery. Once the gasoline stores were determined to be sufficiently supplied, crude buying slowed and prices fell.
Filed under: 24/7 Wall St. Wire, Economy, Oil & Gas, Research Tagged: HES