Stocks rise on strong economic news

Markets are not phased by the looming negative findings on stress tests for banks or Chrysler (& possible GM) bankruptcy. Dow is up 168, advancers 4-1 ahead of decliners & NAZ is 27 higher. The FINANCIALS INDEX is up today but has been flat, trading in the 140s since Apr 9.

S&P 500 FINANCIALS INDEX

Value 148.31

Change 5.35

% Change 3.7%

The high yield sector is strong along with the rest of the market. The Alerian MLP Index is up 2.05, pushing to reach 215 (another 2009 high). REITs & junk bond funds are up while the VIX slipped pennies, staying near 35 (the low for 2009).


Alerian MLP Index --- YTD





Oil rose to a 5 week high on the bullish sentiment in the stock markets.

CLM09.NYM

...Crude Oil Jun 09

...53.73

... 0.53 .......(1.0%)

Construction had a good month in Mar after 5 consecutive down months. Construction spending rose 0.5% vs a drop of 1.5% forecasted by economists. Lower mortgage rates helped, but there is a question about how long increases will last given the state of the economy.

•U.S. Construction Spending Unexpectedly Rises for First Time in Six Months


The index of pending home sales gained 3.2% to 84.6 in Mar, beating analysts' flat expectations. In addition they were 1.1% higher than last year, the first time that has happened since Dec. Homebuyers are taking advantage of bargain prices, low interest rates & a tax credit for first-time buyers. However, home prices are expected to keep falling for at least another year. Many homes are tied up in the foreclosure process, not yet ready for sale. Mounting job losses may also keep buyers from signing contracts. Realtors estimate about half of existing home sales are now foreclosures & other must-sell transactions. But they are counting on the $8K tax credit for first-time homebuyers as their best hope for boosting sagging sales.

Pending US Home Sales Up 3.2 Percent in March- AP


Obama wants to tax multi nationals viewed for using their overseas subsidiaries to "hide" overseas profits. The legislation will affect major companies such as Procter & Gamble & Caterpillar. Individuals will also be challenged more by the IRS about hiding assets in offshore accounts. This is part of the administration strategy to meddle more in business affairs. So far, the markets are ignoring or deferring judgement on this philosophy.

•Obama Seeks to End Tax-Haven Strategies That Save Companies $190 Billion


Dow reached 8.4K as it is trying to establish 8K as a floor once again. For the time being, bulls are in charge! The link below gives one assessment of how the stress tests may play out:

• Stress test 101: How will the banks do?- CNNMoney.com