Friday, April 30, 2010

Stocks sink led by weak financials

Dow dropped 158 (barely above 11k) with selling into the close, decliners over advancers 2-1 & NAZ fell a big 50. Stocks sold off all day because of a weaker than expected GDP report & a mushy report on consumer sentiment. Banks led the way down 7 & closed at the lows, as shown by the large fall for the Financial Index. However, it's still only 10 below its 2010 high.


% Change

MLPs fell again today (off 1¼ to the 311s), but have a had another good month (up 4%). The index is hurt at this time of the year by ex-distributions, but the oil spill can be bleeding over to MLPs. While not directly connected, it does remind investors that even these companies with excellent fundamentals are subject to massive outside forces over which there is no control. The REIT index gave back most of yesterday's enormous gains (down 6½), although the month has also been a good month for them. Junk bond funds were mixed, still at their lofty levels. Treasuries advanced, the yield on the 10-year Treasury bond fell a very big 7 basis points to 3.66%.

Alerian MLP Index --- 1 month

Dow Jones REIT Index -- 1 month

Oil buying may come from the oil spill in the Gulf. Supply is be reduced because of all the waste which encourages buyers. Gold keeps creeping up, just needing another 40 to top its former record highs. The chart below looks pretty.

CLM10.NYM..Crude Oil Jun 10..86.02..Up 0.85

GCK10.CMX..Gold May 10..1,179.50 ..Up 11.10

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GLD (ETF) --- 2 weeks

Talk about falling off a cliff, the chart for Goldman Sachs (GS), now a bank, has been under severe pressure for 2 weeks. Even those multimillionaires who will go on criminal trial are feeling this sell-off. The thinking is it will take a monumental amount of evidence for a conviction, but the hassle is something nobody wants to go thru. Today GS fell 16½ to 143s.

Goldman Sachs --- 1 month

The oil spill is getting more attention, with greater worries about the damage it could do to the industry & entire economy. The home buyer tax credit ends today, home builders will have to find other ways to attract buyers. Goldman Sachs is operating under a cloud, hurting not only the banking industry, but, today, the Senate is talking about strengthening the regulation bill it wants to pass (in May!). Greece is facing loan repayments in a couple of weeks. If it is unable to tap a joint European Union & IMF bailout package (now it's talking about $158B) before May 19, it could default. But a European Union led bailout would be in exchange for budget cuts (denounced by unions). A default has the potential to stunt global economic recovery. The Dow managed a small gain for the month, its string of weekly gains was halted. Earnings season is winding down, it has gotten medium grades with high tech biggies generally giving disappointing outlooks. But Apple (AAPL) keeps soaring to new heights despite today's drop of almost 7.

Dow Jones Industrials -- 1 month

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