First decline for stocks in 7 weeks

The markets tried to overcome the big drop on Mon, but couldn't muster enough strength to finish the week in the black. Dow dropped 55. Bigger picture, in Apr stocks have been stuck in the mud. Dow after starting Apr with 2 good days, has been pretty much clinging to 8K.


Dow Jones Industrials --- 1 month





Meanwhile risky investments with very high yields have done well. The Alerian MLP Index not only went up, but reached a new high for 2009. MLPs have been getting thru earnings season in good shape with only one eliminating its distribution. REITs & junk bond funds rose, investors are willing to accept lower levels of high yields from them. Fears are easing as the VIX, volatility index, dropped 8 points to the 36s.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




Barclays Capital Hi Yld Bond ETF - YTD




Rallies are always welcome, but they may be getting ahead of themselves. Larry Summers, director of the White House National Economic Council, said he expects the US economy to keep declining for much of this year. The International Monetary Fund (IMF) predicted last week that the US economy will decline 2.8% in 2009 with no growth next year. They expect unemployment to peak at 10.1%. The worst part of unemployment is that when it recovers, the recovery is very slow. Chrysler is on the edge of going under & General Motors (GM) is still an iffy situation. Stocks may go on defense again.

•Summers Says U.S. Economy, Employment Will Keep Declining for `Some Time'