Thursday, June 24, 2010

Markets drop on weak economic data

Stocks fell at the start & are heading lower. The Dow is down 128 (only 170 above 10K), decliners over advancers 3-1 & NAZ is down 35. Glum figures for jobless claims & orders for durable goods are keeping buyers away in what is becoming a bad week for the markets. Bank stocks are also lower as the Financial Index may want to test its 186 lows.


Value 191.90 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change -3.80 (-1.9%)

The Alerian MLP Index was down 1 to the 301s, 300 has been a formidable ceiling all year. The REIT Index fell 4 to 195 & is having a very bad week. Junk bond funds are a little lower. But the VIX, volatility index, is up 1½ to the 28s. Most troublesome is the yield on the 10-year Treasury bond fell 2½ basis points to 3.09%. Investors are willing to accept only 3% for 10 years, a very bad sign for stocks!

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

10-Year Treasury Yld Index - 2 weeks

Oil & gold did little while stocks pulled back.

CLQ10.NYM...Crude Oil Aug 10...76.13 ...Down 0.22

GCM10.CMX...Gold Jun 10...1,237.00 ...Up 2.90

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Jobless claims fell by the largest number in 2 months last week, but remain above levels consistent with healthy job growth. Despite the drop of 19K, claims are at about the same level they were at the beginning of the year. The stubbornly high level of requests for jobless aid is a sign hiring remains weak even as the economy recovers. New jobless claims dropped to 457K, slightly below forecasts of 460K. First-time requests for unemployment insurance have been stuck at about 450K all year. New claims dropped steadily last year after reaching a peak of 651K in Mar. The 4-week average dipped slightly to 463K, the first drop in 6 weeks. The total number receiving benefits, meanwhile, dropped 45K to 4.5M. But that doesn't include about 5.3M who received extended benefits paid for by the federal gov in the week ended Jun 5.

Separately, the Commerce Dept said orders for big-ticket manufactured goods (durable goods) fell 1.1% last month as demand for commercial aircraft declined. But excluding the volatile transportation sector, orders rose 0.9%, suggesting the manufacturing sector remains a key driver of the economic recovery.

Jobless Claims Drop From Two-Month High

U.S. Durables Orders Indicate Manufacturing Boost to Recovery

Jobless claims - 1 year

One-Year Chart for Claims (INJCJC:IND)

Number receiving benefits - 1 year

One-Year Chart for Unemployment SA (INJCSP:IND)

Orders for durable goods - 1 year

One-Year Chart for Month % change (DGNOCHNG:IND)

Orders for durable goods
excl transportation - 1 year

One-Year Chart for Less Trans % (DGNOXTCH:IND)

Dow is down almost 300 this week. On light trading anything is possible, but this decline does not make the bulls happy. The € is little changed, just above $1.23. Chances are trading will slow further going into the weekend (with a negative bias).

Dow Jones Industrials --- 2 weeks

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