Friday, June 4, 2010

Markets collapse after a bad jobs report

Stocks went from bad to worse. Dow began down 100+ & ended falling 324 (closing near its lows & below 10K), decliners over advancers 7-1 & NAZ dropped 83. All 30 Dow stocks sold off including defensive types like Coca Cola (KO) & Johnson & Johnson (JNJ), both Dividend Aristocrats. Banks also had a terrible day. The Financial Index is within a few points of its 9 month lows.


% Change

Selling hit MLPs later in the day. The Alerian MLP Index dropped 5½ to the 291s while the Dow Jones REIT Index plunged 11½ to 187 (a very ugly day for REITs). Junk bond funds were down around 1-2%. The VIX, soared 6½ to 36 heading back to 40s on higher investment fears, very scary territory. Treasuries soared! The yield on the 10-year Treasury bond plunged 18+ basis points to just under 3.20%.

Alerian MLP Index -- YTD

Dow Jones REIT Index -- YTD


10-Year Treasury Yld Index - YTD

Negative thoughts about stocks bled thru to commodities, i.e.oil. But it's still in its sideways range, little changed in the last 18 months. However gold came back into favor with demand by investors looking for a safe haven & is only 35 away from setting a new record. The 2 year chart for the gold ETF (GLD) is the envy of 99% of the stocks.

CLN10.NYM..Crude Oil Jul 10..71.18 ..Down 3.43

GCM10.CMX..Gold Jun 10..1,217.70 ..Up 9.40

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GLD (ETF) --- 2 years

Photo: Bloomberg

Standard & Poor’s lowered its long-term corporate credit rating on BP (BP) to ‘AA-’ from ’AA’. S&P also placed both the long & short term ratings on CreditWatch with negative implications. The short-term credit rating remains ’A-1+’. BP said its effort to divert oil leaking from its Gulf of Mexico well to a ship on the surface is working, with a goal of capturing more than 90% of the spill. Recovery may have reached a rate of 1K barrels a day, based on a BP estimate. Gov scientists estimate the well was leaking 12-19K barrels of oil a day. BP fell 2.09 to 37.18 & yields 9% for the very hearty.

BP Long-Term Corporate Credit Rating Cut to AA- by S&P
BP Recovers Gulf Oil Via Cap, May Be Able to Capture 90% of Leaking Crude

BP --- YTD

The € dropped below $1.20. All of a sudden, Hungary appears on the radio screen of troubled countries in Europe. One more worry the Euro group does not want! The oil spill situation is getting better, but there is also worry it might not be properly plugged until Dec. Nobody knows. The jobs picture in the US is back to bleak. No wonder worries are running high again. Dow went below 10K, where it was in Oct when it was on the rise. This is not the picture of a strong recovery! This weekend, the G-20 countries may come up with another silver bullet, but that could be seen as trying to fix financial problems with 1 or 2 band aids.

Dow Jones Industrials -- YTD

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1 comment:

Jay Jay said...

Hi Avi

I added your blog to my blo roll so folks can jump on over to your blog from mine. Please take a look at my blog and maybe you can ass it to your blog roll also.

Thanks Jay