Higher service sector activity lifts stocks

Dow rose 60, advancers ahead of decliners almost 4-1 & NAZ was up 17 after selling off last week. Banks were strong, helped by upgrades for major banks. Wells Fargo (WFC), in particular, is having a very good day, up 1.47.

S&P 500 FINANCIALS INDEX

Value 196.44

Change 4.21

% Change 2.1%

MLPs have not been able to get out of the 240s sideways range for over 2 months. Today the index is up 3 to the 248s. REITs are also strong, the Dow Jones REIT Index gained 3+. Junk bond funds are mixed to up a little. Treasuries continue strong, the disconnect between higher prices for quality & junk bonds is continuing. The yield on the 10 year Treasury bond fell 4 more basis points to 3.18%, lowest yield in almost 5 months as risk averse thoughts are not going away.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




Oil pulled back below 70 again. Gold was flat, just over 1K.

CLX09.NYM

...Crude Oil Nov 09

...68.32

... 1.63 .......(2.3%)

GCV09.CMX

...Gold Oct 09

...1,003.80

... 0.60 ........(0.1%)

The Institute for Supply Management reported its service index hit 50.9 last month, up from 48.4 in Aug (analysts expected 50, the dividing line between growth & contraction). The index, tracking more than 80% of the country's economic activity, hadn't grown since Aug 2008. The new orders index jumped to 54.2 in Sep up from 49.9 in Aug, also the first growth reading in a year. Present business activity rose to 55.1 from 51.3 in Aug. However, service-sector employment shrank in Sep but at a slightly slower pace than in Aug. Despite the overall growth, the chair of the ISM's committee was not "overly excited" about this report saying that several months of growth are needed to establish a pattern of recovery.

•U.S. Service Industries Expand for First Time in a Year as Recovery Widens


Nouriel Roubini, New York University Professor, said “Markets have gone up too much, too soon, too fast.” Roubini, who accurately predicted the financial crisis, is calling for a significant market drop. In addition, George Soros warned the “bankrupt” U.S. banking system will hamper its economy, highlighting doubts about the sustainability of the global recovery.

•Roubini, Prechter See Stock Declines as Soros Says Banks to Hurt Recovery


Markets continue to slosh around while trying to go higher. Dow lost its upward momentum as shown below. The service sector report was favorable but high unemployment numbers will be a major damper on future economic expansion. Alcoa (AA), Dow stock, reports earnings Wed evening, kicking off earnings season. Markets may be looking for more than just higher earnings from cost cutting efforts, increased sales will be getting more attention in Q3 reports.


Dow Jones Industrials --- 2 weeks