Stocks rise on GDP growth

Markets got news they liked, the US economy returned to growth. The Dow was up 101, advancers over decliners more than 3-1 & NAZ gained 28. Banks as leaders participated, the Financial Index bounced strongly off its low yesterday.


S&P 500 FINANCIALS INDEX

Value 194.55

Change 4.32

% Change 2.3%

This is recovery day for the high yield sectors. The Alerian MLP Index rose 4 to the 256s (still down 10 from last week). The Dow Jones REIT Index was also up 4. Buyers were buying junk bond funds after yesterday's sharp sell-off as the VIX dropped 2 taking it below 26. Treasuries sold off, the yield on the 10-year Treasury bond rose 6 basis points to 3.47%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




Commodities were strong, buying enthusiasm spread from stocks to commodities encouraged by expectations of growth in demand:

CLZ09.NYM

...Crude Oil Dec 09

...78.95

... 1.49 .......(1.9%)

GCX09.CMX

...Gold Nov 09

...1,037.80

... 7.90 .......(0.8%)

The economy grew at a 3.5% annual rate in Q3, the best showing in 2 years, the strongest signal yet that the economy has entered a new, though fragile, phase of recovery. However, it is expected that the pace of the recovery will be plodding due to rising unemployment & continuing difficulties by both consumers & businesses to secure loans. This ended the streak of 4 straight quarters of contracting economic activity, the first time that's happened on records dating back to 1947. Consumers led the rebound in Q3, buying cars & homes. Consumer spending on big-ticket manufactured goods soared at an annualized rate of 22.3% in Q3, the most since the end of 2001, largely reflecting car purchases spurred by the Cash for Clunkers program. Spending on housing projects jumped at a 23.4% annual rate, the largest jump since 1986. It should be remembered that these numbers are being compared with depressed prior numbers explaining, some of the strength.

•U.S. Economy Expands for the First Time in More Than a Year Amid Stimulus

Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat, reported profits in Q3 dropped 68% to 98¢ per share. While its the best of the year, they're still less than a 1/3 of what Exxon earned last year when crude prices spiked above 147. Excluding the previous 2 quarters, XOM has not reported quarterly profits this low in the last 4 years. Since it increased oil & gas production in Q3 by 3% to 3.69M barrels of oil equivalent per day, the declines were price relate with crude averaging under $50 less per barrel. The shares dropped 1.40 in what has been a lackluster year for the stock.

Exxon Posts Fourth Straight Profit Drop as Oil Falls

Exxon Mobil --- 1 year





The 4 day sell-off for stocks may have been fueled by increased worries about the disconnect of stock, bond & commodity prices all going up. That's not supposed to happen, something may be wrong.

Dow Jones Industrials --- 2 weeks