Stocks followed yesterday’s rally with a strong opening that held and then faded a bit into the close. The Dow gained 83 points on mixed volume to close at 17,716.
Boeing reported that by mid-year it will lay off 4,000 workers as the company copes with slowing demand and increasing competition from Airbus. The layoffs will come via “volunteer” layoffs and attrition. Boeing’s backlog is currently at 5,795 planes versus 6,787 for Airbus. Boeing forecast fewer deliveries and weak earnings for 2016 amid concerns that demand may slow after a recent splurged by airliners.
George Freidman, head guru at think tank Geopolitical Futures, is predicting economic trouble for Europe later this year thanks in part to Italy. With rising NPLs (nonperforming loans), 20% unemployment, bank failures and businesses running out of reserves, George thinks Italy may cause of a big bowl of sour kraut to be served up in the government halls of Brussels and Berlin since Italy is too big to fail and too big to bail. Pile on the migrant issue and the EU could have plenty to do this year.
WTI crude prices closed flat after an early rally to $40 per barrel faded. The latest stockpile report showed a gain of 2.2 million barrels which, while less than expected, was offset by a big jump in refinery capacity. The thinking is that since refinery capacity was up the stockpile build should have been less but this was not the case and it signals that overall production remains robust and unsupportive of higher prices. WTI closed the day at $38.30 a barrel.
Gold took a breather after yesterday’s rally falling $10.00 an ounce to $1,227. Shares of gold mining companies however were mixed but are holding recent gains as IBD charts indicate institutional buying of gold over the past few weeks.