Dismal outlook, stock close at lows

Nothing like a grim global economic forecast to take down an overbought stock market. Dow sank 200 (finishing at the lows), decliners over advancers a very big 7-1 & NAZ sold off 61. Few buyers for banks today, the index closed at levels last seen in the early days of May.

S&P 500 FINANCIALS INDEX

Value 152.40

Change -10.02

% Change -6.2%

The Alerian MLP Index had a terrible day, down 6 to the 213s. REITs & junk bond funds also were punished while Treasuries were higher. The 10 year Treasury bond rose, taking the yield down 10 basis points to 3.69%.

10-Year Treasury Yield Index - 1 month




The VIX was strong all day, finishing up 3 (11%). Below is an article on the big gain for VIX today. Traders are starting to worry that the bulbs are not going to blossom quickly. This could be a drawn out recession bringing worries about what to do next.

• VIX soars as signs of summertime blues increase- CNBC

VIX ---- 1 month




Buyers for oil did not return in the PM. Oil had one its biggest decliners this year.

CLN09.NYM

..,Crude Oil Jul 09

..66.93

.. 2.62 ......(3.8%)

Consumer debt & high levels of unemployment are putting home ownership beyond the reach of would-be buyers according to a report today by Harvard University’s Joint Center for Housing Studies. The head of the study group gave an interview at lunch on Bloomberg TV, painting a dreary picture for the housing market going forward.

Housing Eludes Recovery as Job Losses, Foreclosures Climb


Today's decline took the Dow back to May 5 levels. It may be necessary to test the 8K floor again (which had been a ceiling for several months prior). At the heart of the sell-off is forecasting the kind of recovery following a bottoming phase of this recession. Unemployment keeps climbing despite reassurances by the administration that stimulus money is "working" to help the economy & especially to create jobs. I don't think so, only a small % has done much good to create additional jobs. More unemployment reports will come with fears unemployment can go over 10%. Climbing out of that hole will be slow. Sellers came in at the end, driving Dow down to close at its lows.

Dow Jones Industrials --- YTD