Friday, January 22, 2010

Dow drops 550 in 3 days

The last 3 days have been brutal for the markets. Today the Dow tumbled 219 to 10,172, decliners ahead of advancers 4-1 & NAZ dropped 60. Gainers in the Dow were: Coca Cola (KO), General Electric (GE), McDonald's (MCD), Procter & Gamble (PG) & Wal-Mart (WMT). Aside from GE, these are defensive stocks. Banks had another bad day following so-so earnings (at best) & threatened new fees (taxes). The Financial Index had been solidly above 200 last week. Much of the loss came late in the day on increased worries that Ben Bernanke may not be renominated to serve as head of the Federal Reserve Bank.


% Change

MLPs were hit with profit taking (whatever) again. Their index fell 3 to the 293s. The Dow Jones REIT Index fell over 3 to the 174s, distancing itself from the 181 level it had been near for several weeks. Junk bond funds were modestly lower. The yield on the 10-year Treasury bond fell 1 basis point to 3.60%.

Alerian MLP Index --- YTD

Dow Jones REIT Index --- 2 weeks

Oil broke thru the 75 floor, a very bearish signal. The chart shows that gold is testing its recent lows. If market sentiment continues, it's also heading lower. However its fundamentals remain strong, more of the world & especially Asia, appreciates its value at a time when the US is borrowing massive amounts of new debt.

CLH10.NYM..Crude Oil Mar 10..74.54 ..Down 1.54

GCF10.CMX..Gold Jan 10..1,090.80..Down 11.90

GLD (ETF) --- 2 months

Photo: Bloomberg

Ben Bernanke's nomination for a 2nd term as the Federal Reserve chairman, once seen a sure thing, appeared increasingly under threat after 2 Senate Dems said they would vote against it. Senators Barbara Boxer & Russ Feingold brought the total of known 'no' votes among the Democratic majority to 4, while many others have said they were undecided. "It is time for Main Street to have a champion at the Fed," Boxer said. "Our next Federal Reserve chairman must represent a clean break from the failed policies of the past." Senate Majority Leader Harry Reid has not said whether he would vote to confirm Bernanke. Assistant Senate Democratic Leader Richard Durbin is "undecided" on Bernanke. Dems are anxious to find somebody else to blame after the embarrassing loss in Mass this week. Bernanke's term expires on Jan 31, extra uncertainty which affects markets is another headache keeping buyers away.

Senate's Reid Says He's Undecided on Bernanke Confirmation for Second Term

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Popular Averages have gone into the red YTD as they close out the month next Fri. The direction in Jan is important because some think that forecasts direction for the full year. The last 3 days were an unusually difficult period for the markets & they did not react well. Next week should be very interesting!

Dow Jones Industrials --- 2 weeks

S&P 500 --- YTD

Nasdaq --- YTD

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