Markets retreat on Johnson & Johnson earnings

Stocks have been losing steam. Dow is sooo close to 10K, but may take its time before cracking that barrier. Dow fell 37, decliners over advancers 3-1 & NAZ was off 4. Banks are leading (as has been the case all year) the way down today. The Financial Index is down from yesterday's new 2009 high.

S&P 500 FINANCIALS INDEX

Value___203.92
Change___-3.040
% Change_-1.469


MLPs are resting after yesterday's new yearly high. The Alerian MLP Index is down almost 1 to the 257s. But that's off its yearly high yesterday which is still up an amazing 46% from Dec 31 (reinvested distributions would add another 6%). The REIT Index has been feeling headwinds in recent weeks on worries about higher vacancy rates for properties. It dropped 2½ to the lower end of its range in the last month. Junk bond funds were weaker. The VIX, volatility index, is up but in the 23s, the low end of its range for the last 2 months. Speculation has been rewarded on lower fear levels.

Treasuries rallied after a bad 3 day period when the yield on the 10-year Treasury bond shot up over 20 basis points, but today it settled back down 6 basis points to 3.32%. Bond traders are betting that interest rates will not be raised until later in 2010. However, even these rates are low by historical standards.

•Treasuries Rise on Speculation Fed Won't Raise Rates Until Late Next Year


Johnson & Johnson (JNJ), Dow stock & Dividend Aristocrat, reported a meager 1% increase in Q3 net income. Generic competition slashed sales of several of its top drugs & the recession hurt consumer product sales. JNJ reported earnings of $1.20 per share up from $1.17 last year (the estimate by analysts was $1.13). However, JNJ raised earnings forecast for all of 2009 to a range of $4.54-4.59 per share, up from $4.45-4.55 (analysts were expecting $4.52).

J&J Profit Rises on Cost Cuts; Sales Miss Estimates


Disappointing earnings from JNJ may be setting a negative tone for earnings season. The item of greatest interest was that sales came in at $15.1B compared with $15.2B expected by analysts.