Dreary economic news sinks stocks

Reality got the better of stocks. Markets had a great run from their lows 2 weeks ago, but profit takers controlled markets today especially in the PM. Dow dropped 243, decliners over advancers 2-1 & NAZ dropped 24. Charts for the Dow are similar to many groups, up in the AM followed by continuous selling in the PM.

S&P 500 FINANCIALS INDEX surrendered most of the gains from yesterday:

Value 174.13

Change -8.96

% Change -4.9%

The Alerian MLP Index gave up early gains bringing it to a minor loss. The Dow Jones REIT Index pull back 12½, Lehman High Yield Bond ETF slid 1% while VIX advanced pennies (worries are up again). All yield instruments (aside from Treasury debt) are suspect & have to pay the price: lower prices resulting in even higher yields.

Oil slipped back to 42. Like stocks, economic worries brought on selling.

Talk about frightened capital, the Treasury sold 4 week T-bills at zero percent interest rate. I repeat, zero interest. That means a $1000 bill due in 4 weeks costs $1000 today. The bills were 4X oversubscribed. The 90 day T-bill traded at a slightly NEGATIVE rate today. These low rates may not hold next year when the Treasury has to finance a whopper deficit, partially caused by an economic rescue package

The auto bailout package may be decided tomorrow, but the outcome has not been settled. Economics mean little, politics will decide the details. The Dems are optimistic but the Reps are saying, not so fast. They could decide the fate of the autos by tomorrow. Approval of a package might give a quick lift to stocks, but negative news stories should carry the day.

3M, a Dow company & an S&P 500 Dividend Aristocrat, came out with negative guidance yesterday costing it on a strong up day. Selling continued today, bringing the 2 day losses to $4.