Markets caught in summer doldrums

In another undecided day with low volume, stocks are thrashing around. Dow is down 5, advancers over decliners 3-2 & NAZ is up 7. Banks are getting hit with selling, the Financial Index has a fairly big decline. Flyers AIG (AIG) was down $5 but Citigroup (C) fell only 6¢ taking it below $5.


S&P 500 FINANCIALS INDEX

Value 194.93

Change -2.44

% Change -1.2%

The Alerian MLP Index is down pennies while the REIT Index fell 3½. Junk bond funds are mixed again. Treasuries eased, the yield on the 10 year Treasury bond rose 4 basis points to 3.44% remaining near its low of the last 3 months.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil rebounded taking it towards 71, still near its yearly high of 75.

CLV09.NYM

...Crude Oil Oct 09

...70.99

... 1.03 .......(1.5%)

Pimco, the largest bond holder, is cautious on the outlook for junk bonds. After their enormous rally in 2009, junk bond yields of 13% along with lower yield spreads are more than adequate given risks going forward. They advise being careful, expecting higher defaults rates on these bonds.

•Pimco Says Avoid `Black Holes' in High-Yield Bonds as Recovery Rates Fall


Construction spending edged down slightly in Jul as weakness in nonresidential building & gov projects (stimulus spending is not going all that well!) offset the best showing for home building in 10 months. Construction spending dipped 0.2% in Jul following 0.1% rise in Jun. The decline occurred even though construction of homes & apartments rose 2.3%. It was the best showing for that indicator in a year, further evidence that the housing slump may be bottoming out. This is the mixed kind of news that leaves traders scratching their heads about the recovery. As a result, the Dow has been trading sideways in recent days at 2009 highs.

Dow Jones Industrials --- 2 weeks