Thursday, October 22, 2009

Dow advances to new 2009 high

Markets began the day with sideways trading following the sharp sell-off in yesterday's last hour. Buyers returned during the day despite a gloomy weekly unemployment report. Dow rose 131, to 10,081 (barely reaching another 2009 high), advancers over decliners 2-1 & NAZ was up 14 (not quite good enough for a new 2009 high). 3M (MMM), Exxon Mobil (XOM), IBM (IBM), McDonald's (MCD) & Travelers (TRV) had big gains taking the Dow to new heights. Banks snapped back strongly after the late day sell-off yesterday but the Financial Index needs to get to 212 for another 2009 high.


% Change

MLPs continue their winning streak. The Alerian MLP Index gained 1.31 to the 266s. The index rose 10% off its low in the trading band it was stuck in during Aug-Sep. That's not a bad move for an entire year, but this was done in just 3 weeks. The Dow Jones REIT Index had a good day, gaining 4+. The YTD chart for the REIT index better describes the how the US recovery has progressed (compared with the straight up chart for MLPs or the Dow Jones Industrial charts shown at the bottom of the post). Junk bond funds were higher & the VIX, volatility index, slipped in the PM, taking it back near 20 (a 14 month low). The yield on the 10-year Treasury bond was flattish, up 1 basis point to 3.44%.

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD


Oil buyers returned in the PM to limit the loss for the day to only pennies, essentially at yesterday's yearly high. Buyers also had bid up the price of gold to near yesterday's close. Commodities benefit from the low dollar. The dollar is at its lowest value in over a year. The € is above $1.50 while the Japanese ¥ weakened ever so slightly to more than 91 (needed to buy a dollar). The weak dollar generally helps earnings for multi nation companies.

CLZ09.NYM..Crude Oil Dec 09..81.10 ..Down 0.27

GCV09.CMX..Gold Oct 09..1,059.50 ..Down 4.20

Lavish gov spending & bank lending helped China's growth rate accelerate to an 8.9% rate in Q3, far outstripping other expansions elsewhere & raising questions about whether the rapid rebound can be sustained. That rates puts the economy on track to at least meet the official target of an 8% expansion rate for 2009. China announced that industrial production & investment spending are growing at a faster pace. But this news unsettled local investors on fears Beijing may need to rein in its stimulus policies to avoid asset bubbles & inflation. The Shanghai Composite slipped 19 to 3051.

China's growth rate - 1 year

Shanghai Composite - 1 year

A dreary jobless report was forgotten in the PM as buyers bid up the Dow to a new 2009 high. The first chart below shows that impressive gain.

Dow Jones Industrials --- 2 weeks

Dow Jones Industrials --- YTD

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