Stocks advance on first day of new quarter

Markets greeted the new month with solid gains. Dow rose 152 (closing near the highs), advancers ahead of decliners 3-1 & NAZ was up 23. Only 3 Dow stocks were down: GM (naturally), Boeing (BA) & Intel (INTC) was down a penny.

Banks had a good day, but short of outstanding. While the S&P 500 FINANCIALS INDEX gained, it's still at levels from mid Jan, down sharply YTD & down substantially from 300 in mid Sep when the banking crisis was widely recognized.

Value 122.09

Change 3.08

% Change 2.6%

I just took a look at a medium size, no name bank. Over the last year, that stock is down only slightly. The yield is a modest (for banks) 3+% & the div has been flat over the last 2 years. EPS has not been disturbed (although probably not helped) by the banking crisis. I would guess that there are a large number of "small" banks out there which did not get caught up in the sub-prime mess or wild financial products nobody really understands. If they made it thru this far without significant damage, they would be good target companies for investment.


Today the Alerian MLP Index gained 2+ while the Dow Jones REIT Index fell 1 & junk bond funds were mixed.


Oil fell again, down sharply from the 55 area last week. Oil traders did not share in the bullish euphoria of the stock markets.

CLK09.NYM

..Crude Oil May 09

..48.34

.. 1.32 ......(2.7%)

Today's economic data may have brought on the feeling that the slump is moderating. The thinking behind it is that the economy may be getting worse, but at a slower rate & might have even turned the corner. OK! Unemployment remains grim, new numbers will show that on Fri. Economists widely expect unemployment to climb another 2 percentage points to 10%.


Auto sales for last month are out & they are less bad than feared, but still dreadful. The sales declines were:

GM.......45%
Ford......41%
Chrysler..39%

Toyota...39%

The sales rate is equivalent to an anemic 8.8M annual rate. Sales didn't deteriorate further & beat expectations slightly, bringing a modest sense of comfort.

•Ford, GM, Toyota U.S. Sales Slump Less Than Estimated on Buyer Incentives


GM has been given an absolute deadline. They have $1B of convertible notes due on Jun 1 & the gov won't repay those notes. Know anybody with a spare $1B to help out GM? The concept of controlled bankruptcy or negotiated bankruptcy are being talk about a lot. Lawyers must be already preparing work.

•GM Said to Be Warned Government Won't Provide Aid for June 1 Debt Payment


Optimism from housing & manufacturing data brought out buyers on the first day of the new qtr. The jobs report on Fri is the next big hurdle for the markets to confront.