Stocks surge on GDP growth report

Buyers craved stocks, taking the Dow up 200 (but short of 10K) & closing near its high, led by cyclicals such as Alcoa (AA) up 9% & Caterpillar (CAT) up 5%. The only loser in the Dow was Merck (MRK). Advancers were ahead of decliners 4-1 & NAZ shot up 37. Bank stocks were back in demand but the Financial Index is still 10 below it's recent high.

S&P 500 FINANCIALS INDEX

Value 198.47

Change 8.24

% Change 4.3%

The high yield sector led the charge back today. They have a lot at stake since a strong economic rebound can solve many problems. The Alerian MLP Index shot up 6+ to the 258s (a 5 point gain is considered large) & the REIT Index gained 7. Junk bond funds were in demand, gains of 1-3% were common, taking them back near their 2009 highs. Meanwhile the VIX, volatility index, plunged 3 to the 24s. Fear has eased a lot! As expected, Treasuries sank. The yield on the 10-year Treasury bond rose 9 basis points to 3.50%.

Alerian MLP Index --- 3 months




Dow Jones REIT Index --- 3 months





Commodities also had a great day. Oil almost made it back into the 80s & gold may be pushing for another record if it keeps its head of steam up.

CLZ09.NYM

..Crude Oil Dec 09

..79.97 ..

2.51 ......(3.2%)

GCX09.CMX

..Gold Nov 09

..1,046.00

.. 16.10 ......(1.6%)

Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, reported Q1 (just ended) net income fell 1% from last year, but raised the low-end of its earnings forecast for FY2010 & signaled sales momentum is building again after suffering market share losses. P&G raised its FY2010 forecast for earnings in a range of $4.02 - $4.12 a share, up from its prior view of $3.99 - $4.12 a share (the figure includes a one-time gain from the sale of its pharmaceutical business). For Q1 ended Sep 30, P&G earned $1.06 a share, vs $1.03 a share in the year-earlier qtr helped by the number of shares falling to 3.1B from 3.2B last year (due to share repurchases). However, Q1 sales fell 6% to nearly $20B. This is the same story repeated by many companies, lower or soggy results which beat "street" estimates. As with many Dividend Aristocrats, in the last 2 years the stock didn't fall as hard but has had a more mild recovery. Today it's up 2.31 into the 59s.

Procter & Gamble’s Profit Falls Less Than Estimates

Procter & Gamble --- 2 years





The GDP report showing growth in the US economy was a powerful force in today's stock market, shown by the strong rebounds for cyclicals & high yield sectors. In contrast, drugs, defensive in nature, were flattish or down. The disconnect between stocks & commodities persists, they are rising aggressively together while problems of high unemployment & dreary housing, auto & retail sales figures drone on.

Dow Jones Industrials --- 3 months