Markets tumble on strong dollar & disappointing FedEx earnings

Dow felt selling pressure all day, finishing at its lows. Dow dropped 132, decliners over advancers 5-2 & NAZ fell back 26. Banks had a rough time, hurt by Citigroup's (C) massive stock sale. Unfortunately the Financial Index broke thru its 190 floor, not good. It's a bad sign for the markets when investors are nervousness about banks.

S&P 500 FINANCIALS INDEX

Value 188.75

Change -3.48

% Change -1.8%

The MLP index was up pennies, good enough for another 16 month high. The REIT index slipped 1, still just a few points from its 2009 high. Junk bond funds were mixed with more down than up. Treasuries were very strong as the yield on the 10-year Treasury bond sank 11 basis points to 3.49%.


Alerian MLP Index --- 3 months




Dow Jones REIT Index --- 3 months





A strong dollar once again, brought down commodities. Oil behaved well, but gold had a serious sell-off. The Japanese ¥ is about 89.6 to the dollar, not too much of a change from recent values. But the € (Euro) is down to the $1.43s from $1.51 a couple of weeks ago.

CLF10.NYM

..Crude Oil Jan 10

..72.65

.. 0.01 ......(0.0%)

GCZ09.CMX

..Gold Dec 09

..1,103.10

..32.40 ......(2.9%)

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Yesterday Citi said it would sell 5.4B shares of stock at $3.15 (9% under the market) per share to help repay 20B in bailout loans. The market did not take the news well. The gov, owning 34%, backed away from talking about selling its shares. Today C fell 25¢ to 3.20, its recent chart looks pretty ugly:

• Citigroup stock sale shows investors still nervous- AP

Citigroup --- 2 weeks





FedEx (FDX) said the economy has "reached a turning point," but a full recovery could still be a long way off. Their tepid outlook for the qtr ending in Feb also said it's not sure if strong holiday season shipping volume will hold up. In the long run, it sees strong demand in Asia & Latin America leading the way to global economic recovery. FedEx has its fingers on the pulse of world economic growth. FDX said earnings for the qtr ended in Nov fell 30% from a year ago & its forecast for the fiscal Q3 fell well below expectations. FDX predicts earnings of 50-70¢ per share this quarter, well under estimates of 84¢. It forecast full-year earnings above forecasts, 3.45-3.75 per share, compared with the average estimate of 3.46. The stock was hit hard, down 5.48 to 89.47.

FedEx Tumbles Most Since May After Forecast Trails Estimates

photo from Bloomberg










FedEx --- 1 year





Dividends Aristocrats, companies in the S&P 500 with a minimum track record of 25 years of annual dividend increases, were hit hard in 2009. Ten will be dropped next week with only 2 additions, bringing the size of the group down to 43. A few years ago, there were around 55. The banks are gone along with familiar names like 2 Dow stocks, General Electric (GE) & Pfizer (PFE).

Surviving companies include:

3M (MMM)
Abbott Labs (ABT)
Coca Cola (KO)
Exxon Mobil (XOM)
Johnson & Johnson (JNJ)
Kimberly Clark (KMB)
Eli Lilly (LLY)
McDonald's (MCD)
Procter & Gamble (PG)
VF Corp (VFC)
Wal-Mart (WMT)
Walgreen (WAG)


Following yesterday's Federal Reserve meeting, there was a growing realization that recovery from the recession, especially in the US, will be slow. Slow means painful. Dow has had a tough time cracking thru its ceiling, while NAZ has been doing better. If Dow wants to break thru the ceiling, it better do it soon.


Dow Jones Industrials --- 3 months




NASDAQ --- 3 months