Crude oil prices
Crude oil prices rose ~32% in the first quarter. The strength in crude oil prices and strong fourth-quarter performances drove midstream stocks up in the first quarter. The Alerian MLP Index (^AMZ), an index of midstream MLPs, rose 16.8% on a total return basis in the first quarter. The Alerian Midstream Energy Index (^AMNA), an index of North American energy companies, rose 22.2% on a total return basis. AMNA is a broader index that includes midstream C corporations and Canadian midstream companies. In contrast, AMZ only includes MLPs.
Enterprise Products Partners (EPD), TransCanada (TRP), and Enbridge (ENB) are the top three constituents of AMNA. AMNA’s outperformance over AMZ likely indicates investors’ preference for larger, C corporation stocks instead of only MLPs as vehicles for investment in midstream infrastructure.
The Energy Select Sector SPDR ETF (XLE) rose ~15%, while the S&P 500 Index rose ~13%. The midstream sector outperformed the broader energy sector and the broader market in the first quarter. Kinder Morgan (KMI), ONEOK (OKE), and Williams Companies (WMB) rose ~30% in the first quarter. Enterprise Products Partners rose ~18%, while Energy Transfer (ET) rose ~17% during the first quarter.
Natural gas prices
Natural gas prices fell ~9% in the first quarter. However, the longer-term trend of rising gas production is expected to benefit midstream stocks. Low inventory levels could be bullish for gas prices in the short term. Also, if the summer temperatures are higher than normal, it might increase the gas demand and support prices in the short term.
Despite handsome gains in the first quarter, midstream stocks continue to offer attractive yields for income investors.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.