Stocks slosh around

Markets, once again, began treading under water & remained at sub break even levels for the rest of the day. Dow fell 11, decliners over advancers by 20% but NAZ was up 7. Only 9 Dow stocks advanced & Exxon Mobil (XOM) was the only 1+ loser in the Dow. Banks also took a breather after a 20 point advance which started on Jul 10.

S&P 500 FINANCIALS INDEX

Value 169.31

Change -0.63

% Change -0.4%

S5FINL:IND




The high yield sectors were also quietly lower. The Alerian MLP Index slipped 1¼ (off its 2009 high) to the 248s while REITs & junk bonds were mixed. MLPs need time to catch their breath.


Alerian MLP Index --- 2 weeks




The 3 week rally in oil futures has stalled out. Worries about less driving in the US & industries becoming more efficient using oil caused oil to pull back. However, it's still $10 above its recent low.

CLU09.NYM

..Crude Oil Sep 09

..67.17

.. 1.21 ......(1.8%)

The $42B sale of 2-year Treasury notes drew a higher-than-forecast yield. The yield was 1.08%, above the 1.058% forecast (viewed as a weak auction). The yield on the 10-year note fell three basis points to 3.69% after it touched 3.76% yesterday (the highest level since Jun 22). Today’s auction was the biggest offering of 2-year notes since monthly auctions for them began over 30 years ago. The bid-to-cover ratio was 2.75X, compared with an average of 2.58X at the last 10 auctions. Indirect bidders, including foreign central banks, bought 33% of the notes, compared with 68.7% at the Jun auction (the most in at least six years). This disappointing auction raises concerns about how well future auctions (for 10 & 30 year bonds) will be. If disappointment plays out, that will translate into higher yields.

Treasury Two-Year Notes Decline After Record Sale of Securities

Janet Yelleln, Federal Reserve Bank of San Francisco President, said the U.S. economy is showing the “first solid signs” of emerging from the recession & should resume growth later this year. But she continued with, “Recovery is likely to be painfully slow” and then added that “a gradual recovery means that things won’t feel very good for some time to come.” FED officials anticipate the economy will contract less this year than they had projected in Apr, even though unemployment is climbing towards 10%.

•Fed's Yellen Seeing `First Solid Signs' of Emergence From U.S. Recession


This was one of those days when little was decided in the markets. Most significant was the weak Treasury auction & resulting concerns about auctions going forward. Tomorrow. $39B of 5-year notes will be auctioned followed by $28B of 7-year notes on Thurs. And that's just for this week. Growing supply may take money from stock markets. Dow has been flat for 3 days straight.

Dow Jones Industrials --- 2 weeks