Markets higher on Alcoa earnings & favorable unemployment data

Stocks gained on Alcoa (AA) turning a profit in Q3 & the jobless report. Dow is roaring ahead, up 94 (needing 11 for another 2009 high). Advancers are ahead of decliners 4-1 & NAZ is up 25. Averages are nearing their yearly highs & Dow could be getting ready for an assault on 10K. Banks are leading the way up & the Financial Index may want to take out its 207 high from 3 weeks ago.

S&P 500 FINANCIALS INDEX

Value 205.27

Change 2.24

% Change 1.1%

MLPs finally broke thru their 2009 high in a meaningful way. The Alerian MLP Index shot up 2+ to the 254s, a new 2009 high. REITs were strong, the index gained 3 ignoring more talk that REITs may have a very tough 12 months in front of them. Junk bond funds rose with the euphoria in the markets. Meanwhile, the yield on the 10-year Treasury bond was down 1 basis point to 3.17% (i.e. the bond price inched up). Many risk averse investors are still out there.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil buyers were encouraged that favorable economic data will bring more demand for oil. And buyers continue to support gold. While stocks have waffled in recent weeks, gold kept marching ahead.

CLX09.NYM

...Crude Oil Nov 09

...70.75

... 1.18 .......(1.7%)

GCV09.CMX

...Gold Oct 09

...1,046.50

... 3.20 .......(0.3%)

Gold (ETF) --- 2 weeks





The number of claims for jobless benefits fell to the lowest level since the start of 2009. This is the 4th drop in new claims in 5 weeks, a sign the labor market is slowly healing. But employers remain reluctant to hire new workers & the unemployment rate is expected to keep climbing well into next year. New claims for unemployment insurance fell to 521K last week from the previous week's upwardly revised 554K (540K was the street estimate). The 4-week average fell to 539K, the lowest since Jan 17. The number continuing to claim benefits declined by 72K to 6.04M. Including federal emergency programs, the total number collecting jobless benefits dropped 90K to 8.9M in the latest reporting week. While encouraging, the magnitude of these numbers continues to be dreary & they will be a severe drag on any economic recovery.

•Initial Jobless Claims in U.S. Decrease 33,000 to 10-Month Low of 521,000

A late Labor Day with delayed school openings helped boost back-to-school sales in Sep & stores' figures are looking better compared to last Sep when spending plummeted in the ballooning financial meltdown. However, business still remains weak & consumers are tight-fisted. The International Council of Shopping Centers preliminary tally showed an increase of 0.1% for Sep compared with a 1.0% drop last year. While modest, the results mark the first gain since Jul 2008, when the index was up 1.3%. JC Penney (JCP), Macy's (M) & Target (TGT) reported smaller-than-expected declines in sales at stores open at least a year. Limited Brands Inc (LTD), which runs Victoria's Secret & Bath & Body Works, & The Buckle (BKE) posted increases for the month. All stocks rose except for JCP. There are worries the recession in retail sales could drag on for another year, further endangering some retailers (& in turn, REITs owning those properties).

•Retail Sales in U.S. Climb for the First Time in 13 Months on Discounting


Excitement over Alcoa stock is cooling a bit. It's up 46¢ at 14.66 but 47¢ off its high. This is the first major earnings report & it looks like "beating lowered estimates" will continue to be the important test. If that remains the key driving force, the bulls will be in charge of earnings season.

Dow Jones Industrials --- 2 weeks