Dow managed a gain at the close

Dow was under water for most day & went into the black at the close. Dow edged up 15, advancers ahead of decliners 3-2 & NAZ was up 2. Volume continues light, under 1B on the floor of NYSE. Banks did well, helped by regionals. With today's advance, the Financial Index is getting close to the 175 peak reached on May 10.


S&P 500 FINANCIALS INDEX

Value 169.94

Change 2.49

% Change 1.5%

S5FINL:IND





The Alerian MLP Index rose 3½ taking it just over 250, the first time since the massive sell-off after the Lehman collapse. The spread between the yield on the MLP Index & the 10 year Treasury bond has been reduced to 460 basis points, the lowest it has been since late last year. By way of comparison, the Dow Jones REIT Index is down almost 50% in the same time span. Today it was up 2.10 to the 138s (but it started the year at 151). Junk bond funds were up slightly. Treasuries fell as they completed the first auction for this week. The yield on the 10 year Treasury bond rose 4 basis points to 3.71%. Oil was up pennies in the 68s & not too far from its recent high of 73.


Alerian MLP Index --- YTD





The Treasury sold $6B in 20-year Treasury Inflation Protected Securities (TIPS) at a yield of 2.387%, higher than the forecast of 2.37%. The bid-to-cover ratio rose to a record 2.27X up from 1.92X at the previous auction. Indirect bidders, including foreign central banks, bought 47.8% of the offering. The average for the previous 5 sales had been 54.2%. The auction was rated as "fair."

Treasuries Fall as US Begins Auctions


Earnings continue to give a mixed picture. Dow stock Verizon (VZ) reported profits down 21% & will respond with job cuts for 8K employees. The stock fell 50¢. Aetna (AET), Honeywell (HON) & RadioShack (RSH) reported weak earnings. RSH earnings were up from cost cutting & beat forecast but the stock was little changed. The other 2 had lower earnings, although HON's stock managed a small gain.

Verizon Profit Drops; Carrier Plans 8,000 Job Cuts

Verizon --- YTD





When the Dow plunged thru 10K last fall, the 9K floor was strong & held for a few months as the chart shows. Then it gave way. After cracking thru it last week, it has held but without much testing. That could come this week, especially if the Treasury note auctions are weak.

Dow Jones Industrials --- 1 year