Chinese sun shines on stock markets

Stocks began higher, never looked back & closed at their highs. Dow rose 284, advancers over decliner 9-1 & NAZ popped 81. The only loser in the Dow was Johnson & Johnson (JNJ). All investors needed was to hear that China said it remains a long-term investor in Europe. Sounds good, but not sure that statement will do much to solve fundamental Euro financial problems. Bank stocks had a tremendous day. The Financial Index leaped forward going over 200 (first reached 9 months ago).


S&P 500 FINANCIALS INDEX

Value 201.74

Change 8.60

% Change 4.5%

MLPs had an excellent day, advancing a very big 7¼ to the 292s (down 18 in May). The REIT index advanced an enormous 10½ to 202 (one of its best days ever). Many junk bond funds were up around 2%. High yielders are back in demand as the VIX dropped 5 to 30 on easing fears. Treasuries continued to sell off. The yield on the 10-year Treasury bond gained 12 basis points to 3.34% (a very large gain for one day).


Alerian MLP Index --- 1 month




Dow Jones REIT Index -- 1 month




VIX --- 1 month





While oil had an excellent day, it's still merely heading for the high end of its longer term trading range. Gold was flattish but only needs a modest nudge to reach no record highs.

CLN10.NYM

..Crude Oil Jul 10

..74.59

.. 3.08 ......(4.3%)

GCM10.CMX

..Gold Jun 10

..1,210.50

.. 2.90 ......(0.2%)

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Dems scrambled to shore up support for a package of tax breaks & safety-net spending amid concerns about its $84B cost & doubts about a tax hike on fund managers. The House is expected to vote after slashing its costs by nearly a third, but prospects for passage appear uncertain as there is a feeling it would add too much to the deficit. Dems hope to pass the bill in the House & Senate by week's end to avoid disrupting jobless benefits & other expiring safety-net provisions. But there might be barriers in the Senate. Expiration of jobless benefits could damage an already fragile recovery

House Nears Vote on Job Bill With Buyout Tax Increase



The president finally had a press conference to answer a lot of questions on the oil spill. He announced there will be no offshore drilling for 6 months, but that does little to help the mess that shows no sign of ending. The € rallied about a penny to $1.23½ on the enthusiasm coming from China. Markets had their big day to clear out oversold conditions (now reversing into overbought conditions). The Dow remains down 1K from its 2010 highs & off about 750 in May. Risk averse is out & high yielders are back in demand. However, May showed how quickly emotions about owning high yielders vs safe haven securities can change.

Dow Jones Industrials -- 1 month

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