Markets plunge on worries about consumers supporting a recovery

Stocks sank on the opening & it was downhill from there. The Dow sold off 250 (ending near its lows), decliners over advancers 5-1 & NAZ dropped 52. Banks led the selling, but the selling was widespread, affecting just about all industries. The Financial Index is at its lowest levels since Aug, the chart does not look pretty.

S&P 500 FINANCIALS INDEX

Value 189.03

Change -9.44

% Change -4.8%

The high yield sectors were hard hit with selling. The Alerian MLP index was off 4½ to the 254s, where it was early in Oct. The Dow Jones REIT index was off 3, near a 2 month low. Junk bond funds felt selling pressure, declines of 3% were common. The VIX, volatility index, soared, I repeat SOARED 6.04 taking it to 30.80, a level not seen since last Jul. This is the biggest one day jump in over a year. Fears are growing quickly! Meanwhile, safer Treasuries jumped. The yield on the 10-year Treasury fell 11 basis points to 3.39%.

Alerian MLP Index --- 1 month




Dow Jones REIT Index --- 3 months




VIX --- 6 months





Oil sold off badly, gold held up better. Oil feel the strength of world economies & how they are recovering. Worries about the global economic recovery are growing. The link about buying gold in my prior post may be of more interest now.

CLZ09.NYM

..Crude Oil Dec 09

..77.10

.. 2.77 ......(3.5%)

GCX09.CMX

..Gold Nov 09

..1,039.70

.. 6.70 ......(0.6%)

Simon Property (SPG) reported its funds from operations (FFO) improved in Q3 on lowered expenses even though occupancy levels slipped. Occupancy at regional malls fell to 91.4% in Q3 from 92.5% last year. The premium outlet center occupancy dropped to 97.5% from 98.8%. Total FFO grew but per share results were lower because more shares were outstanding from stock sales ($1.38 per share this year vs $1.61 per share last year), analysts forecasted FFO of $1.32 per share. SPG boosted the low end of its full-year FFO full year guidance for FFO of $5.40 - $5.50 per share, up from a range of $5.35 to $5.50. The stock dropped 3. SPG is the largest owner of commercial properties & considered to be well run. These are very choppy times for REITs & difficult times will continue.

Simon Property Says FFO Increased in Third Quarter

Simon Property --- 1 year





Markets are ending the month on a down note. Dow is off 400 from its peak just 2 weeks ago. Some of today's decline maybe year end selling (Oct 31) by fund managers. Or maybe investors really have greater worries about the recovery. Selling of the high yields is disturbing because they have a lot at stake in a speedy recovery. The proposed health care bill in Congress which the Dems are pushing hard, is another minus because of the higher taxes that it will bring. Next week Oct auto sales will be reported & then the jobs report which could show the unemployment rate reaching the dreaded 10% figure.

Dow Jones Industrials --- 1 year

Markets retreat on consumer confidence data

Yesterday's rally is history as the Dow fell 131 (giving back most of yesterday's gains), decliners over advancers 3-1 & NAZ was off 26. Banks led the way down, the Financial Index is having a bad day taking it to the low end of its 2 month range (190-210):

S&P 500 FINANCIALS INDEX

Value 192.61

Change -5.86

% Change -3.0%

In this market, the Alerian MLP Index is down only pennies in the 258s while the Dow Jones REIT Index slipped 1. Junk bond funds were mixed to higher. But the VIX, volatility index, was up .87 to 25.63. Treasuries rallied. The yield on the 10-year Treasury bond dropped 6 basis points to 3.44%.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil fell along with stocks, but it's hanging in there above the 65-75 range where its traded in recent months. Gold is down but remains near its recent record highs. If you are interested in learning more about gold, I've attached buttons below to to provide help from Ino.com:

CLZ09.NYM

...Crude Oil Dec 09

...78.53

... 1.34 .......(1.7%)

GCX09.CMX

...Gold Nov 09

...1,040.10

... 6.30 .......(0.6%)

Futures Prices Click Here


Consumer sentiment slipped in Oct, Americans fretted about personal finances & focused on paying down debt. The Michigan Survey of Consumers said its index of sentiment for Oct slipped to 70.6 from 73.5 last month (the chart below does not show Oct reading). However, sentiment remained well above where it was a year ago. While recovery expectations have improved over the last year, "consumers continued to voice very dismal assessments of their personal financial situation," according to the report. The majority of consumers said their finances had worsened in Oct for the 13th straight month, "the longest & deepest decline in the 60-year history of the surveys."

•U.S. Consumer Confidence Declines With Unemployment Rate at 26-Year High

Consumer sentiment - 12 months

Chevron (CVX), Dow stock & the nation's second-largest oil & gas producer, boosted revenues by increasing oil production 11% in Q3. But its average sale price for crude & natural gas liquids in Q3 was 62 per barrel. While above Q2, it was still well below 103 in last year's Q3. Profits dropped 51% to 1.92 per share from last year (the best one for oil companies when oil soared above 147). The stock dropped 1 to 77 after trading sideways for the last year.

•Chevron Profit Decline Is Smaller Than Analysts Estimated as Output Rises

Chevron --- 1 year

Yesterday's rally did not have legs. Earnings season is winding down, it clearly was not exciting for the markets. Dow is up 200 in Oct, but that all came in the first few days. It looks like stocks are back on defense.

Dow Jones Industrials --- 2 weeks

Stocks surge on GDP growth report

Buyers craved stocks, taking the Dow up 200 (but short of 10K) & closing near its high, led by cyclicals such as Alcoa (AA) up 9% & Caterpillar (CAT) up 5%. The only loser in the Dow was Merck (MRK). Advancers were ahead of decliners 4-1 & NAZ shot up 37. Bank stocks were back in demand but the Financial Index is still 10 below it's recent high.

S&P 500 FINANCIALS INDEX

Value 198.47

Change 8.24

% Change 4.3%

The high yield sector led the charge back today. They have a lot at stake since a strong economic rebound can solve many problems. The Alerian MLP Index shot up 6+ to the 258s (a 5 point gain is considered large) & the REIT Index gained 7. Junk bond funds were in demand, gains of 1-3% were common, taking them back near their 2009 highs. Meanwhile the VIX, volatility index, plunged 3 to the 24s. Fear has eased a lot! As expected, Treasuries sank. The yield on the 10-year Treasury bond rose 9 basis points to 3.50%.

Alerian MLP Index --- 3 months




Dow Jones REIT Index --- 3 months





Commodities also had a great day. Oil almost made it back into the 80s & gold may be pushing for another record if it keeps its head of steam up.

CLZ09.NYM

..Crude Oil Dec 09

..79.97 ..

2.51 ......(3.2%)

GCX09.CMX

..Gold Nov 09

..1,046.00

.. 16.10 ......(1.6%)

Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, reported Q1 (just ended) net income fell 1% from last year, but raised the low-end of its earnings forecast for FY2010 & signaled sales momentum is building again after suffering market share losses. P&G raised its FY2010 forecast for earnings in a range of $4.02 - $4.12 a share, up from its prior view of $3.99 - $4.12 a share (the figure includes a one-time gain from the sale of its pharmaceutical business). For Q1 ended Sep 30, P&G earned $1.06 a share, vs $1.03 a share in the year-earlier qtr helped by the number of shares falling to 3.1B from 3.2B last year (due to share repurchases). However, Q1 sales fell 6% to nearly $20B. This is the same story repeated by many companies, lower or soggy results which beat "street" estimates. As with many Dividend Aristocrats, in the last 2 years the stock didn't fall as hard but has had a more mild recovery. Today it's up 2.31 into the 59s.

Procter & Gamble’s Profit Falls Less Than Estimates

Procter & Gamble --- 2 years





The GDP report showing growth in the US economy was a powerful force in today's stock market, shown by the strong rebounds for cyclicals & high yield sectors. In contrast, drugs, defensive in nature, were flattish or down. The disconnect between stocks & commodities persists, they are rising aggressively together while problems of high unemployment & dreary housing, auto & retail sales figures drone on.

Dow Jones Industrials --- 3 months

Stocks rise on GDP growth

Markets got news they liked, the US economy returned to growth. The Dow was up 101, advancers over decliners more than 3-1 & NAZ gained 28. Banks as leaders participated, the Financial Index bounced strongly off its low yesterday.


S&P 500 FINANCIALS INDEX

Value 194.55

Change 4.32

% Change 2.3%

This is recovery day for the high yield sectors. The Alerian MLP Index rose 4 to the 256s (still down 10 from last week). The Dow Jones REIT Index was also up 4. Buyers were buying junk bond funds after yesterday's sharp sell-off as the VIX dropped 2 taking it below 26. Treasuries sold off, the yield on the 10-year Treasury bond rose 6 basis points to 3.47%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




Commodities were strong, buying enthusiasm spread from stocks to commodities encouraged by expectations of growth in demand:

CLZ09.NYM

...Crude Oil Dec 09

...78.95

... 1.49 .......(1.9%)

GCX09.CMX

...Gold Nov 09

...1,037.80

... 7.90 .......(0.8%)

The economy grew at a 3.5% annual rate in Q3, the best showing in 2 years, the strongest signal yet that the economy has entered a new, though fragile, phase of recovery. However, it is expected that the pace of the recovery will be plodding due to rising unemployment & continuing difficulties by both consumers & businesses to secure loans. This ended the streak of 4 straight quarters of contracting economic activity, the first time that's happened on records dating back to 1947. Consumers led the rebound in Q3, buying cars & homes. Consumer spending on big-ticket manufactured goods soared at an annualized rate of 22.3% in Q3, the most since the end of 2001, largely reflecting car purchases spurred by the Cash for Clunkers program. Spending on housing projects jumped at a 23.4% annual rate, the largest jump since 1986. It should be remembered that these numbers are being compared with depressed prior numbers explaining, some of the strength.

•U.S. Economy Expands for the First Time in More Than a Year Amid Stimulus

Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat, reported profits in Q3 dropped 68% to 98¢ per share. While its the best of the year, they're still less than a 1/3 of what Exxon earned last year when crude prices spiked above 147. Excluding the previous 2 quarters, XOM has not reported quarterly profits this low in the last 4 years. Since it increased oil & gas production in Q3 by 3% to 3.69M barrels of oil equivalent per day, the declines were price relate with crude averaging under $50 less per barrel. The shares dropped 1.40 in what has been a lackluster year for the stock.

Exxon Posts Fourth Straight Profit Drop as Oil Falls

Exxon Mobil --- 1 year





The 4 day sell-off for stocks may have been fueled by increased worries about the disconnect of stock, bond & commodity prices all going up. That's not supposed to happen, something may be wrong.

Dow Jones Industrials --- 2 weeks

Stocks fall for 4th straight day

Dow tumbled 119 (closing at the lows), decliners over advancers 7-1 (a very large spread) & NAZ dropped 56 (2.7%). Banks sold off in this decline, The Financial Index, again closing at its lows, is down 20 (10%) from its highs 2 weeks ago.


S&P 500 FINANCIALS INDEX

Value 190.23

Change -6.35

% Change -3.2%

MLPs are having a rough time of it, maybe it's just profit taking. After running 100 points from the lows, even the Alerian needs time to rest. Today it's down 9.28 to the 251s, one of its biggest daily drops ever. The Dow Jones REIT Index fell a very big 7, near its lows in recent months. Junk bonds took a nasty spill, maybe Bill Gross started selling some of his junk bonds. The Barclays Capital High Yield Bond ETF fell almost 1½% (buying near the close limited losses). Fears are growing as the VIX shot up 3.08 to 27.91. Money is flowing back into Treasuries, the yield on the 10-year Treasury dropped 5 basis points to 3.41%.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- 3 months




Barclays Cap High Yield Bond ETF




VIX ---- 2 months





The weekly energy report said supplies rose by 2M barrels instead of dropping (for a 3rd week in a row) as expected. Oil had a very bad day, it's returning to the 67-75 range it had been in for much of 2009. Gold was also down (from over 1060 last week).

CLZ09.NYM

..Crude Oil Dec 09

..77.36

.. 2.19 ......(2.8%)

GCV09.CMX

..Gold Oct 09

..1,029.90

.. 4.80 ......(0.5%)

CIT (CIT), one of the nation's largest lenders to small and mid-sized businesses, received $4.5B credit from its own lenders & bondholders as it tries to avoid collapse. The loan comes as CIT has been facing pressure from Carl Icahn who was been trying to get investors to reject the company's restructuring plan. The new loan is being financed by lenders, including some bondholders, that provided CIT with a $3B lifeline over the summer. CIT is asking bondholders to swap their debt for stock & new debt that matures later in trying to reduce near-term debt maturities by $5.7B. Even if approved, it still might have to file for bankruptcy protection. It's been living on the edge for months, today the stock is up 10¢ to 1.06.

•CIT Group Obtains an Additional $4.5 Billion in Financing, Spurning Icahn

CIT --- 1 year





Earnings season has not gone well, especially in the last week, despite what the bulls say. Bulls talk about a correction being healthy after the Dow has run 3½K unchecked. But this could prove more serious. Today's sell-off by junk (high risk) bonds may be sending an important signal about where the markets are going. Dow is is off 330 from its highs 2 weeks ago while the VIX shot up 7+ points. The shorter term charts are going from dreary to ugly!


Dow Jones Industrials --- 2 months




Nasdaq --- 2 months

Markets fall on home sales drop

Stocks started higher, but that didn't hold. Dow is down 29, decliners over advancers almost 4-1 & NAZ fell 29. The breadth numbers have been getting higher in the 4 day sell-off. Bank stocks fell again taking the Financial Index to the lowest level since the start of Oct.

S&P 500 FINANCIALS INDEX

Value 192.97

Change -3.61

% Change -1.7%

The graph tells the story about the strange behavior of the index yesterday. Today it's back where it belongs, near its highs for the year even with a 4½ pullback to the 256s. The Dow Jones REIT Index fell 3. The VIX, volatilty or fear index, is up 1.44 to the 26s & sharply up from the 20 lows just a few days ago. Treasuries are in demand again, the yield on the 10-year Treasury bond dropped 6 basis points to 3.40%, still near 3½% level where it has been for several months.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks





Oil sold off on mixed signals about economic recovery (felt by the oil stocks) while gold resumed its upward climb.

CLZ09.NYM

...Crude Oil Dec 09

...78.18

... 1.37 .......(1.7%)

GCV09.CMX

...Gold Oct 09

...1,039.90

... 5.20 .......(0.5%)

Sales of new homes fell 3.6% in Sep to an annual rate of 402K from a downwardly revised 417K in Aug. Economists expected a 440K rate. This was the first decline since Mar. Sep sales were down 7.8% from last year. The median sales price of $205K was off 9.1% from a year earlier, but up 2.5% from $200K in Aug. Buyers may be worried that they won't be able to complete the deal before the Nov. 30 deadline to take advantage of a tax credit of up to $8K for first-time buyers. Congress is considering extending the tax credit through Mar & gradually phasing it out over the rest of 2010.

•New-Home Sales in U.S. Unexpectedly Fall as End of First-Time Credit Nears

New Home sales - 12 months





Petro China (PTR), the 2nd largest oil company in the world, had its net income drop 24% in Q3, worse than forecasts. It was hurt after oil prices fell & lower margins. However earnings may recover in Q4 as China’s economy leads the world out of recession.

•PetroChina's Third-Quarter Profit Falls 24% on Oil Price, Misses Estimates

Petro China --- 1 year




Markets keep sloshing around in earnings season, not encouraging for the bulls. The Petro China earnings weren't helpful. Conoco Phillips (COP) dropped 1.34 on a 70% plunge in earnings from low refinery margins & weak gas prices. The 2 Dow oils, Chevron (CVX) & Exxon Mobil (XOM), were off pennies on nervousness about their reports. Dow may not have an up month in Oct. NAZ has also been on defense this week.

One more sign of lingering troubles in the finance, GMAC Financial Services is in talks with the Treasury for a 3rd bailout. The gov already holds a 35% stake in GMAC after giving it $12.5B in bailout money.

Dow Jones Industrials --- 2 weeks




Nasdaq --- 2 weeks

Markets lower, but oils lift the Dow

Stocks started high but then hovered near break even for the rest of the day. Strength came from oils on expectations that earnings reports later this week will be favorable (aided by the strength in oil prices in Q3). Dow was up 14 (½ higher & ½ lower), decliners were ahead of advancers almost 2-1 & NAZ was off a very big 25 after Baidu (BIDU), the Chinese Internet search company, warned its revenue could take a hit as it switches its advertising system. The stock plunged 50.

Baidu --- 3 months




Banks fell again to the middle of the 180-210 trading range for the last 3 months.

S&P 500 FINANCIALS INDEX

Value 196.58

Change -1.37

% Change -0.7%

Without an adjustment to yesterday's closing price for the Alerian MLP Index, it's difficult to tell how well MLPs are really doing. A quick look at MLPs in the Yahoo gadget on the right indicate they are probably up fractionally helped gains in oil stocks. Some MLPs have announced higher (over the prior qtr) distributions bringing out more buyers. The Dow Jones REIT Index fell 2½ & junk bond funds were mixed after negative comments by Bill Gross. Treasuries were very strong, the yield on the 10-year Treasury bond fell 9 basis points to 3.46%. The VIX, volatility index, rose .63 to almost 2r, far above the recent low of 20.

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




VIX --- YTD





Oil is heading back up to the 80s but gold slips again off its record highs last week.

CLZ09.NYM

..Crude Oil Dec 09

..79.37

.. 0.69 ......(0.9%)

GCV09.CMX

..Gold Oct 09

..1,036.30

.. 5.80 ......(0.6%)

IBM (IBM) will spend another $5B on its stock buyback program, another sign of hope inthe markets.

• IBM to spend $5 billion more on stock buyback- AP

IBM --- 1 year





In the prior earnings months, Apr & Jul, Dow did very well,gaining 474 in Apr & 634 in Jul (off smaller bases). So far, Dow is up only 170 in Oct & that's from the first few days in the month. The big oil companies should give good numbers which will help, but the reception from regular companies can only be described as muted.

7609
8083 474

8447
9081 634

9712
9882 175


Dow Jones Industrials --- 1 month




Dow Jones Industrials --- YTD