Friday, January 29, 2010

Markets lower after focusing on GDP's 2.2% growth rate

After gains in the first hour of trading, it was all downhill. Dow fell from +100 to close down 53, decliners over advancers 2-1 & NAZ was off a very big 31 following a week with generally gloomy news from some of its biggest stars. Banks were weak again. The Financial Index can't get away from the bottom of it trading range (190).


% Change

The Alerian MLP index dropped 5½ to the 184s, bringing it down YTD. The REIT Index dropped a more modest 1. Junk bond funds continue to slide from their highs. The yield on the Treasury 10-year bond fell 5 basis points to 3.60% (a fairly big decline).

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD

Oil & gold were lower following weak stock markets. Things are tough for oil when very cold weather doesn't bring out buyers!

CLH10.NYM..Crude Oil Mar 10..72.78 ..Down 0.86

GCG10.CMX..Gold Feb 10..1,078.60 ..Down 5.00

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Microsoft (MSFT), Dow stock, reported earnings in Q4 jumped 60% due to success of its its new Windows operating system. However results in other divisions show that while consumers have resumed spending on new PCs, big corps have not. The company's other cash cow, Office, saw revenue slip 3% & revenue from its fast-growing server software group edged up just 2%. In both cases, MSFT blamed the ongoing lull in corp spending on technology & it expects corps to start spending this year, but that increase would be gradual. In FY Q2 MSFT net income rose to 74c per share from 47c per share last year. Revenue increased 14% to $19B. Windows revenue jumped 70% & net income nearly doubled to $5.4B. MSFT fell 98¢.

Microsoft Windows 7 Fuels Growth as Office, Xbox Lag

Microsoft --- 2 years

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Markets started the year on the wrong foot, Dow & NAZ had significant losses in Jan. Stocks were weak today after traders learned it was more important to concentrate on the 2.2% growth rate figure for GDP rather than the headline number of 5.7%. The former is more representative of what to expect in the rest of the year. Earnings continue to disappoint. Most Dow stocks which have already reported, sold off after reporting. This looks like it will be another tough year. Maybe not as bad as 2008, but tough nevertheless.

Dow Jones Industrials --- YTD

Nasdaq --- YTD

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