Early gains trimmed on first day of new quarter

Stocks began Q3 very strong, Dow gained more than 130 at its high. But selling throughout the day dragged it lower to a close of plus 57, advancers were over decliners 5-2 (far less than in the AM) & NAZ was up 10. Banks were strong in the AM but also gave way to selling pressure in the PM, turning green into red.

S&P 500 FINANCIALS INDEX

Value 159.96

Change -0.80

% Change -0.5%

MLPs posted a gain of 1+ to the 224s. The 1 year chart shows how far they've come & how how much they need to reach new 12 month highs. The Dow Jones REIT Index was up 1+, remaining in its sideways trading range of the last few months. REITs have had a tougher go of it in the last year. If the recovery is less than rapid, I fear that type of chart may become relevant for other high yield sectors (like MLPs). Junk bond funds were firm & the VIX slipped fractionally still in the 26s. The yield on the 10 year Treasury bond rose 2 basis points to 3.54%.

Alerian MLP Index --- 1 year




Dow Jones REIT Index --- 1 year




AM gains for oil were lost, it closed below 70 again. Bulls have been having a difficult time cracking thru 72 resistance.

CLQ09.NYM

..Crude Oil Aug 09

..69.30

..0.59 ......(0.84%)

The gov said it won't continue to bail out General Motors after Jul 10. The assets of GM are supposed to be sold to a new GM, but there are numerous objections. Reports of Jun auto sales are in & the industry continues to slug it out in the trenches. Ford (F), the relative winner, says the annualized sales rate is under 10M cars, far below the numbers in previous years. Ford sales were down "only" 11% from the prior year versus Toyota down 32%, GM down 34%, Nissan down 26%, Honda down 32% & Chrysler down 42%. And prior year's numbers were already beaten down.

• Gov't won't fund GM after July 10, official says- AP

•Ford, Honda, Nissan U.S. Sales Beat Estimates in Sign Auto Slump Is Easing


The first day of trading in the new qtr provided little excitement. Early gains were pared with selling in the PM. Volume continues low with (the more successful) traders taking this week off. There is a lot of talk about how the recovery will take shape. There may be modest growth in Q3 & Q4 with slower rates of growth next year. Slow growth rates can hurt. Among other problems, unemployment can climb further (from already high levels) in that environment.

Dow Jones Industrials --- 1 year