Markets hesitate, uncertain about Goldman Sachs

Dow began trading higher but has drifted back to break even, barely above 11K. Decliners were over advancers 2-1 & NAZ fell 11. Banks inched their way up, but have been slipping in the last hour. The Financial Index is barely in the black.


S&P 500 FINANCIALS INDEX

Value 220.15

Change 0.22

% Change 0.1%

MLPs were a little higher, the index rose ½ a point still in the 310s. The REIT index was up ½ point, just over 200. Junk bond funds were little changed. Treasuries were quiet, the yield on the 10 year Treasury bond edged up a little more than 1 basis point to 3.78%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks






Selling in oil came from worries that the Icelandic volcano will lower demand for jet fuel & uncertainty about whether it would hamper the global economic recovery. Gold was not greatly bothered by those concerns.

CLK10.NYM

...Crude Oil May 10

...81.21

... 2.03 .......(2.4%)

GCJ10.CMX

...Gold Apr 10

...1,134.70

... 1.60 .......(0.1%)

A gauge of future economic activity jumped 1.4% in Mar, the fastest pace of growth in 10 months. The rise in the Conference Board's index of leading economic indicators suggests economic growth is likely to continue for the next 3-6 months. Expectations were for growth of 0.9%. Growth had been 0.4% in Feb & 0.6% in Jan. This data points to a slow recovery in the next few months.

•Leading Economic Indicators Index in U.S. Rises by 1.4%, Most in 10 Months

Citigroup (C) earned 15¢ per share on revenue of $25.4B, easily beating expectations of a slight loss. This was their first profitable qtr after a string of 9 straight losing qtrs. There are hopes that the worst of the credit crisis has passed & banks may be entering a period of sustained profitability. However, Vikram Pandit, CEO, sought to dampen short-term expectations for Citigroup, saying the bank remained cautious "given the uncertain economic recovery and high unemployment in the U.S." He continued, "Realistically, we do not expect our performance to follow an invariable trend-line upward ... Longer-term, however, the prospects for Citigroup are clear and bright." Reserves to cover losses from bad loans fell 22%, or $2.4B, from Q4, to its lowest level in 2 years. Credit losses fell 15% to $8.4B from almost $10B in Q4. Citi was up 26¢ to 4.82, near its high reached last Jul-Aug.

•Citigroup First-Quarter Profit More Than Doubles as Bad-Loan Costs Decline

Citigroup --- 1 year

Eli Lilly (LLY), Dividend Aristocrat, Q1 profits fell 5%. Health care reform charges more than offset strong sales growth from some of its top-selling drugs. LLY took a one-time charge of $85M in Q1 due to its retiree prescription drug coverage & it expects Medicaid-related rebates to shrink revenue by $350-$400M in 2010. As a result, 2010 adjusted EPS guidance was reduced to between $4.40-$4.55 per share from $4.65-$4.85 guidance given late last year. In Q1, earnings were $1.13 per share, down from $1.20 per share. Excluding charges, the adjusted earnings were $1.18 per share. The stock was even at 36.54.

•Lilly 1Q profit falls 5 pct in part on reform cost
AP


Lilly --- 2 years





Markets are looking for direction again. After finally going over 11K, the Dow may give that back. Goldman Sachs (GS) is dominating attention & probably for some time to come. That drag will be too much to overcome, even for bullish stock markets. They needed a rest & this could be a good time to pause & reflect.

Dow Jones Industrials --- 2 weeks

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