Markets fall on lower energy use

Dow dropped 93 closing near the lows, decliners ahead of advancers 4-1 & NAZ fell 17 on a sluggish day of trading. Banks & energy led stocks lower. The Financial Index is well below 200, a new floor it was hoping would hold. Its graph below shows it has been hugging the 200 line for 3 months.

S&P 500 FINANCIALS INDEX

Value 197.60

Change -3.71

% Change -1.8%

High yields were soft along with the markets. The Alerian MLP index fell .37 in the 259s. The chart shows it has done very well in the last 2 months after already having its best year in history. The REIT Index fell 2½ & junk bond funds were weak. The 10 year Treasury bond rose, taking the yield down 3 basis points to 3.45%. The yield has been near 3½% for more than 3 months despite the Treasury constantly going to the market to raise more money. Today Treasury sold a record $16B of 30 year bonds at a mediocre auction. Treasury reported after the close that the federal deficit for Oct set a record of $176.4B, revenues plunged while spending remained high. Sadly there is no end in sight for Treasury auctions.

Alerian MLP index --- 2 months




Dow Jones REIT Index --- 2 months




10-year Treasury Yld Index - 3 months





A jump in petroleum supplies last week stirred worries that falling demand for energy was a sign of more weakness in the economy. The report dropped oil 3%, below 77. Gold fell but is above the 1100 floor.

CLZ09.NYM

..Crude Oil Dec 09

..76.69

.. 2.59 ......(3.3%)

GCX09.CMX

..Gold Nov 09

..1,108.00

.. 6.80 ......(0.6%)

Wal-Mart (WMT), up 27¢ today, is seen as a key indicator of consumer spending trends. Its report today raised fears about consumer spending. Investors have worried for months that consumers are so strained by unemployment & lower home prices that they won't spend more to help the economy recover. This resulted in falling stock prices on a light volume day (floor volume on NYSE was just over 1B shares).

Tomorrow KKR is expected to bring Dollar General to the market at a healthy price of $20 per share (around 29 times EPS). By comparison, WMT is valued at 15 times EPS. They plan to sell 34M shares in the largest IPO for a retailer in 17 years. It will be closely watched as the IPO market has been uneven (I call it mushy) this year.

Dow Jones REIT Index --- 2 months