Markets had another wild, volatile day even for recent times. Dow bounced off its low, just under 8K, with a monster 800+ point rally in the last 3 hours. Dow ended up 552, advancers ahead of decliners 3-1 (rather mild considering what 550 points should bring) & NAZ jumped 97. S&P 500 FINANCIALS INDEX had a very good PM, up 12:
| Value 178.83 | Change 11.84 | % Change 7.1% |
The Alerian MLP Index was up 3 to 195½, a modest gain all considered. But this is still the lowest level in 5 years (aside from the horrible week of Oct 3). Standard & Poor's talked about difficulty for lower-rated oil & gas companies to access high-yield debt which may pose a liquidity risk. While their discussion did not specifically mention MLPs, this kind of thinking may be bleeding over to them causing the sell-off in the last few days taking the index below 200. Their very long term projects underway have financing in place. However, financing issues might negatively impact them going forward when they arrange new projects. As in the rest of the business world, uncertainty affects the future for all.
Weak appetite for junk bonds poses risk for oil sector: S&P
The Dow Jones REIT Index had an 15 point pop today, a reaction to the greatly oversold conditions for REITs with dividends which offer extremely high yields. High yield (junk) bond funds had more of a mixed day retaining yields near 20% or about 1600 basis points above the Treasury 10 year bond rate. The Volatility Index dropped 7 to 59, fear subsided a bit.
Oil finally had a pretty good day:
| CLZ08.NYM | Crude Oil Dec 08 | ....59.52 | .... 3.36 (6.0%) |
Nothing dramatic happened causing the 800+ point rally in 3 hours other than just a relief rally. A couple of months ago, a 500+ point rally for the Dow would have been headline news but today it has become routine. In the last few weeks daily point swings for the Dow have been reduced to 300 or fewer points, but today brought back prior times with a 900+ point swing.
Dreary macro economic problems drone on. Republicans look like they want to play hard ball about helping the autos with money from the loan package. The Treasury Dept is trying to figure out how to handle financial lending problems & bad loans. Yesterday reminded everybody they they have to make it up as they go along which brings complaints & uncertain markets. I think Citigroup (C), depending how the figures are calculated, is still the biggest financial institution in the US, but the stock is under 10. I just don't know. The rally today will probably be described as technical in nature. Let's see what tomorrow brings.
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