After a strong start, markets reverse direction

Stocks started the day with gains. The Dow was up 80 in the first hour, then sellers came in. Dow is down 43, decliners over advancers 4-3 & NAZ dropped 3. As expected banks are weak, the Financial Index fell below 200.

S&P 500 FINANCIALS INDEX

Value 199.80

Change -3.25

% Change -1.6%

MLPs are having another outstanding month, shown below, while REITs are stuck in sideways motion. But today The Alerian MLP Index is down 1.60 to the 263s while the REITs Index is up 2. Junk bond funds continue on their winning streak, the best performing group in an outstanding year for stocks. Yields on junk bond funds are around 10-12%, near low levels in the best of times. Treasuries are weak again, the yield on the 10-year Treasury bond rose 8 basis points to 3.56% taking it into the higher levels of this year. Oil dropped 1 to the 79s while gold was flattish at 1054.

Alerian MLP Index --- 1 month



Dow Jones REIT Index --- 1 month




10-Year Treasury Yld Index - 6 months





Earnings keep coming, but even when above estimates they are failing to bring enthusiasm back into the markets. Verizon (VZ), a Dow stock, said Q3 profits fell less-than-expected because it added more wireless customers than forecast. VZ added 1.2M net customers to its wireless network, better than estimates of 1M. Profits fell to 41¢ per share from 59¢ cents a share last year. Excluding one-time items, earnings were 60¢ per share, a penny better than estimates. Revenue rose 10.2% to $27B. The stock was down 6¢ & yields an impressive 6½%.

Corning (GLW) posted better-than-expected quarterly profits on stronger demand for glass for flat screen televisions & said it expects that market to grow 15% in 2010. GLW, the largest maker of glass for liquid crystal display screens, said Q3 EPS fell to 41¢ per share from 49¢ last year. However, excluding special items, EPS was 42¢ a share, beating estimates of 39¢. Revenue fell 5% to $1.48B (but above estimates of $1.42B). Display technologies combined glass volume increased 4% from Q2. The stock gained 7¢

Verizon Profit Exceeds Estimates on Wireless Gains
Corning Profit Beats Estimates on TV Glass Demand


Verizon --- 1 year




Corning --- 1 year




Bloomberg reported "Merrill Lynch’s High Yield Master II Index has climbed 51% in 2009, extending an advance from last year that pushed returns to the highest level ever relative to the S&P 500, which has increased 22%, including dividends. That compares with average annual gains of 9.3% for equities and 8.4% for high-yield credit since 1986, when monthly data on Merrill’s index begins." Opinions are divided between taking some profits now or riding the wave of optimism. Bullish thoughts for junk bonds are interwoven with favorable opinions about stock markets' future.

•Junk Bond Rally Signaling More Profits for Stocks With Markets' Divergence


Stocks are looking for direction. They're not getting support from earnings which beat estimates by a penny or 2 but are below last year. That broken record is not playing well. 10K is becoming a ceiling for the Dow.

Dow Jones Industrials --- 1 month