Markets ended the week with a thud as the Dow dropped 211 to close at 16,204. Trading volume for the Dow was way off while NASDAQ volume was up. For the week the Dow lost about 1.7% but still sits just above a strong support level.
The US created 151,000 new jobs in January while the unemployment rate dropped to 4.9% for its best reading in 8 years. The gurus had forecast new job gains of 180k so the number missed estimates. Average wages were up 0.5% indicating a tightening labor market. The labor force participation rate held flat at 62.7%.
Tech stocks fell today after LinkedIn reported earnings that failed to inspire. Tableau Software also reported numbers that exceeded estimates but the company guided lower causing the analyst to flee like rats jumping off a ship.
Paccar, the Renton based maker of Kenworth and Peterbuilt trucks and the 3rd largest truck maker in the world, reported earnings that were better than expected. Revenue was down 15% thanks to currency issues and net profits were down 12% but even with these results 2015 proved a record year for both revenue and profits. Going forward the company is projecting truck sales in the US and Canada will decline 10% to 20% while European truck sales will continue to gain after bouncing up 23% last year. CEO Ron “Open-road” Armstrong said the company expects to maintain current margins and is well positioned to thrive in a global economy that is experiencing a strong dollar and emerging market uncertainty.
A manager who runs a four star energy mutual fund stated that he believes oil prices will be low for the next 8 to 10 years! I was floored when I heard it but the guy is basing his forecast on oil price data adjusted for inflation going back to the late1,800’s when John D. Rockefeller first built a refinery in Cleveland, Ohio. He thinks that we are close to a price floor in the low $20’s but that slow demand growth will not overtake current supply levels for some time and that painful “adjustments” to the new price reality will occur in emerging markets and the US energy sector. The “BRICs” are now becoming crushed rock. WTI crude closed down 2.2% to $31 a barrel while gold continues to rise gaining $15 to $1,173 an ounce.