Marathon Oil Q4 Loss Narrower Than Street View

Rising bond yields trigger Wall Street sell-off

New York (CNN Business)Stocks jumped at Monday’s opening bell as US Treasury yields are pulling back and taking a breather from their recent ascent.

The Dow (INDU) opened 1.1%, or some 350 points, higher, while the broader S&P 500 (SPX) climbed 1.4%. The Nasdaq Composite (COMP) opened up 1.6%.
The recent jump in US government bond yields weighed on the stock market last week. Investors concerned that inflation could spike as the economy reopens fully, forcing the Federal Reserve to raise interest rates sooner than expected, pushed bond yields higher.

    And higher interest rates would make it more expensive for companies to borrow, and are thus bad for stocks. This dynamic played out all of last week even though Fed Chairman Jerome Powell reiterated that the central bank wasn’t concerned about a prolonged jump in inflation.
    “While still very low from a historical perspective, yields have marched steadily higher over the last two months due to the prospects of an economic boom,” wrote investment strategists at Edward Jones.

    The 10-year US Treasury bond yielded 1.43% around the time of the New York open, down 0.02%. Bond yields and prices move opposite to one another.

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    U.S. Construction Spending Jumps Much More Than Expected In January

    A report released by the Commerce Department on Monday showed U.S. construction spending increased by much more than anticipated in the month of January.

    The Commerce Department said construction spending spiked by 1.7 percent to an annual rate of $1.522 trillion in January after jumping by 1.1 percent to a revised rate of $1.497 trillion in December. Economists had expected construction spending to climb by 0.8 percent.

    The bigger than expected increase in construction spending came as spending private construction surged up by 1.7 percent to an annual rate of $1.160 trillion.

    Spending on residential construction soared by 2.5 percent to a rate of $713.0 billion, while spending on non-residential construction rose by 0.4 percent to a rate of $447.0 billion.

    The report also showed spending on public construction jumped by 1.7 percent to an annual rate of $361.5 billion, partly reflecting a 5.8 percent spike in spending on highway construction.

    Compared to the same month a year ago, total construction spending in January was up by 1.0 percent.

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    U.S. Manufacturing Index Rises More Than Expected In February

    U.S. manufacturing activity grew at an accelerated rate in the month of February, according to a report released by the Institute for Supply Management on Monday.

    The ISM said its manufacturing PMI rose to 60.8 in February from 58.7 in January, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 58.8.

    “Manufacturing performed well for the ninth straight month, with demand, consumption and inputs registering strong growth compared to January,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

    He added, “Labor-market difficulties at panelists’ companies and their suppliers continued to restrict manufacturing-economy expansion and will remain the primary headwind to production growth until employment levels and factory operations can return to normal across the entire supply chain.”

    The bigger than expected increase by the headline index came as the new orders index jumped to 64.8 in February from 61.1 in January.

    The production index also climbed to 63.2 in February from 60.7 in January, while the employment index rose to 54.4 from 52.6.

    The report said the prices index also surged up to 86.0 in February from 82.1 in January, which Fiore said indicates “continued supplier pricing power and scarcity of supply chain goods.”

    On Wednesday, the ISM is scheduled to release a separate report on activity in the service sector in the month of February. The services PMI is expected to come in unchanged at 58.7.

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    Marathon Oil Q4 Loss Narrower Than Street View

    Marathon Oil Corp. (MRO) Monday reported a fourth-quarter loss that was narrower than Wall Street analysts’ estimates, helped by lower expenses. However, revenues fell short of expectations.

    Houston, Texas-based Marathon Oil reported fourth-quarter loss of $338 million or $0.43 per share, wider than last year’s loss of $20 million or $0.03 per share.

    Adjusted net loss for the quarter was $98 million or $0.12 per share. Analysts polled by Thomson Reuters estimated a loss of $0.20 per share.

    Fourth-quarter revenues dropped to $830 million from $1.22 billion last year. Analysts had a consensus revenue estimate of $838.05 million for the quarter.

    Chairman, President, and CEO Lee Tillman said, “We reduced our cash costs by more than 20%, protected our investment grade balance sheet, reduced our gross debt, meaningfully improved our GHG emissions intensity, and ultimately generated about $280 million of free cash flow.”

    Total costs and expenses for the quarter dropped to $1.08 billion from $1.14 billion last year, with general and administrative costs down 23%. Cost saving measures included salary reductions for the board and certain corporate officers, as well as employee and contractor workforce reductions.

    U.S. production averaged 280,000 net barrels of oil equivalent per day (boed) for fourth quarter.

    Marathon Oil also announced a $1.0 billion capital expenditure budget for 2021.

    MRO closed Monday’s trading at $10.20, up $0.75 or 7.94%, on the Nasdaq. The stock further gained $0.20 or 1.91% in the after-hours trade.