Stocks fall on negative consumer attitudes

Dow dropped sharply on the opening & remained sloshing around its low levels. However, buying in the last hour reduced the losses. Dow was off 76, decliners over advancers 3-1 & NAZ is now under 2K after falling 23. Banks recovered most of their losses. Citigroup (C) was flat & Bank of America (BAC), Dow stock, up 38¢. Citi has fought its way back to $4.

S&P 500 FINANCIALS INDEX

Value 191.58

Change -0.95

% Change -o.5%

S5FINL:IND




Citigroup --- YTD





MLPs & REITs recovered much of the AM losses in the PM. The Alerian MLP Index ended down pennies in the 240s & the Dow Jones REIT Index was off only 1+. Junk bond funds were higher, many at levels not seen since Oct. Over $19B of junk debt was sold this week, more than double the prior week. YTD junk debt sold is running 30% over last year with much of it coming in the most recent months. Treasuries had their best week of the year. The yield on the 10 year Treasury bond fell from 3.85% at the start of the week to 3.56% (today down 4 basis points). Buying Treasuries has to have hurt stocks this week.

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




10-Year Treasury Yld Index - 2 weeks





Nervousness about the future of economic recovery gave oil one of its biggest daily losses this year. The graph below shows the trend of how oil prices have been bouncing around recently.

CLU09.NYM

..Crude Oil Sep 09

..67.42

.. 3.10 ......(4.4%)

OIL (ETF) --- 2 months





Stocks are coming off a stellar month in July, but going nowhere in Aug. Dow is up only 34 since Aug 3 when it closed at 9286. The Treasury has to keep auctioning off more debt but interest rates are holding at the same levels they were at last fall during the worst of the credit crisis. Money is embracing stocks (risk) & massive amounts of new treasury debt (viewed as risk free). If the current balance between the 2 holds, stocks should do well. The question becomes when will risk averse thoughts start to grip investors & bring on selling pressure?

Dow Jones Industrials --- YTD