Mixed markets but Dow posts new 2009 high

Stocks continue to look for direction, with an upward bias. They hovered near break even all day. Dow rose 17 to another 2009 high, advancers over decliners 3-2 & NAZ was down 5 (failing to crack thru the 2K ceiling). Banks had a good day, the Financial Index is getting closer to its 175 high.

S&P 500 FINANCIALS INDEX

Value 174.78

Change 1.42

% Change 0.8%

S5FINL:IND




July has been an outstanding month for stocks, especially the riskier ones. Graphs below for 3 high yield groups show how well they performed. When they rise, their corresponding yield falls which reduces the premium of their yield over the 10- year Treasury bond. That yield is pretty much where it started the month, near 3½%.

Today MLPs are back in favor, bringing their Index up 2.94 to 248.32, not too far from the 250 high. REITs were flat but junk bond funds continue strong.

Alerian MLP Index --- 1 month




Dow Jones REIT Index --- 1 month




Barclays Hi Yld Bonds ETF - 1 month




Oil has had a spectacular 2 day rise of $7 after the plunge on Wed. Oil may try to take out its recent high of 73.

CLU09.NYM

..Crude Oil Sep 09

..69.56

.. 2.62 ......(3.91%)

The IMF expects the economic recovery in the US to be “gradual” & may need more monetary & fiscal stimulus if the rebound stumbles. They expect a “gradual” recovery, with risks “tilted to the downside” & warned that potential growth “could remain well below past trends for a considerable period.” Note, the word "gradual" is used twice. On Bloomberg TV, IMF predicted the US economy will start “recovering decisively” by the middle of next year & the unemployment rate will peak above 10% in 2010. The IMF said the US economy will contract 2.6% in 2009 before expanding 0.8% next year. A “key priority” will be to craft “comprehensive exit strategies to unwind the extraordinary crisis-driven interventions, once a sustainable recovery is under way.”

IMF Says US Economic Recovery Will Be ‘Gradual’


Oils have sold off lately in response to negative earnings reports. That was to be expected after oil prices have fallen more than 50% from their peaks. However the big buys have attractive yields. Chevron (CVX), Dow stock, is the 2nd largest US oil company. They have a 7 P/E with a well covered 4% yield. Profit plunged in Q2, as expected but the stock is up 1.77 today. Worth looking at for those who are interested in fallen angels.

• Chevron profit tumbles, misses Wall Street view- Reuters

Chevron --- 2 years





The president tried to put a favorable spin on the GDP data. The economy is coming back from the lows, but the many looking for work are hurting. Congress heard the news reports about the Cash-for Clunkers program maxing out. The House just voted approval for a $2B expansion of the program. Next week will bring reports on Jul auto sales which could be good coming off a low base last year & the sudden surge in buying this week. But Jul retail sales featuring the early portion of back-to-school season could be glum.

• House approves $2B for clunkers program- AP

Dow Jones Industrials --- 1 month