Dow up while stocks are little changed

Dow started weak, but finished strong. It had been in the red for much of the day as shown in the Bigcharts widget on the right. Buyers returned in the PM giving the Dow a gain of 50, but decliners were 20% over advancers & NAZ fell 15. The 3 big gainers (up 1+ points) in the Dow were Chevron (CVX), Coca Cola (KO) & Exxon Mobil (XOM), an odd mix of oil & soda. Below is a snapshot view of the Dow courtesy of Bloomberg:

DOW JONES INDUS. AVG SNAPSHOT

1 YEAR




Banks were weak, generally selling off 2-5%.

S&P 500 FINANCIALS INDEX

Value 160.86

Change -2.99

% Change -1.8%

The Alerian MLP Index dropped 2.42 to the 213s, profit taking after it's long run. The REIT index dropped 1 & junk bond funds were mixed. The yield on the 10 year Treasury was essentially even at 3.175%.


Oil topped 60 for a brief time (highest price in 6 months) as the price for gas at the pump is up to 2.25. But traders are talking about gas prices topping out around 2.30.

CLM09.NYM

..Crude Oil Jun 09

..58.82

.. 0.32 ......(0.6%)

The gov reported the first budget deficit for Apr since 1983. Tax payments usually increase because of tax payments made by Apr 15. This year, the deficit for the month was 21B compared with a surplus of 154B last year. Spending for Apr rose 18%, from the prior Apr, to 287B while revenue & other income fell 34% to 266B. That's to be expected when the budget deficit for the full year explodes 4X last year's deficit of 455B.


US Posts First Budget Deficit for April Since ‘83


The Office of Management and Budget released a report on proposed overhauls of Fannie Mae & Freddie Mac that included the possibility of liquidating their assets. The gov run mortgage companies have cost far more in bailout money than they saved in cheaper mortgages. OMB says that they will need at least $92B more in fiscal 2010 on top of the $78B in aid they've already received since Sep. Fannie & Freddie may have saved Americans as much as $100B in mortgage payments. Now the OMB says they'll need that much just to get them thru next year. Shutting down the money pits is one of the options being considered, but not the most likely as the 2 companies are too well-connected.

Fannie and Freddie Will Need Almost $100 Billion in 2010


Dow has adjusted to accepting 8K as a floor. It has had only had minimal fluctuations in the last week & a half. MLPs & REITs have a similar trading pattern. But the Barclays Capital High Yield Bond ETF jumped 2 (from 32 to 34 with a reduced yield of 14½%) in 2 weeks. Investors continue seeking out high yield junk bond funds.


Dow Jones Industrials --- 2 weeks