Stronger economic data gave Dow its best gain in almost 3 months

Dow began the day higher & kept rising to close near its best levels in the session. Dow gained 143, advancers ahead of decliners 3-1 & NAZ jumped 37. US economic data looked good to traders, the manufacturing sector grew in Apr at its fastest pace in almost 6 years & consumer spending was strong because consumers saved less. Banks continue in demand, the Financial Index is heading back up to take out its recent 226 high.


S&P 500 FINANCIALS INDEX

Value 221.54

Change 4.00

% Change 1.8%

MLPS lagged behind, but still had a decent gain. The index rose 1¾ to the 313s but has been trading sideways above 310 for over a month. The REIT index gained 7+ to the 218s & is within inches of its 2010 highs. REIT s were helped by General Growth Properties (GGP) backing the latest plan for reorganization which would allow it emerge from Chapter 11. That's music to the ears of REIT stock buyers. The index only needs to add another 25 points or so to reach triple (I repeat triple) its lows last year. Brave traders have done quite well since then! Junk bond funds continue to fly higher. Treasuries meander, the yield on the 10-year Treasury bond rose 4 basis points to 3.71%.


Alerian MLP Index




Dow Jones REIT Index -- YTD





Oil & gold slipped back in the PM, having to settle for modest gains. But they have following winds behind them & are looking to rise further.

CLM10.NYM

..Crude Oil Jun 10

..86.19

.. 0.04 ......(0.1%)

GCK10.CMX

..Gold May 10

..1,183.80

...... 3.70 ......(0.3%)

Ford (F) reported Apr sales rose 25%, GM sales went up 6.4% & sales for Toyota (TM) shot up 24% after its safety recalls. Even struggling Chrysler reported a 25% sales increase (its first double-digit sales gain in nearly 5 years), while Nissan, Honda, Hyundai & Subaru also saw gains. However, car makers won't likely be able to maintain this pace, when big sales promotions (led by Toyota) end. The auto industry stayed on its road to recovery, but eased up on the gas pedal a bit.

•GM, Ford, Toyota U.S. Car Sales Lag Estimates in `Ebb and Flow' of Rebound


Car sales (annualized) - 1 year






After being beaten back on Fri, markets roared back on favorable economic data. Everybody likes to see high stock prices, but it becomes troubling when junk bonds (stocks with high yields), which I view as leaders in these markets, continue very strong despite no special news to account for the strength. Investors are looking to capture yields higher than available on other securities, but with little regard for the added risk. They are betting that a rising tide will lift all boats. That works as long as there's no hiccup along the way.

Dow Jones REIT Index -- YTD

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