S&P 500 FINANCIALS INDEX
| Value | 198.18 | |
| Change | 0.21 (0.1%) |
After substantial selling this week, MLPs found buyers. The index rose 1+ to the 324s. The REIT index was up a fraction in the 205s. Junk bond funds were also higher while the VIX was flat at 24 (near recent 3 month lows). Treasuries rallied, viewing the GDP news favorable for gov bonds. The yield on the 10 year Treasury bond dropped 6½ basis points to only 2.93%. The € finally weakened, dropping ½ a penny to $1.30½.
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
VIX --- 2 weeks
10-Year Treasury Yld Index --- 2 weeks
The GDP news was a negative for oil, but it's it's still close to its highs in the last year. Gold is trying to build a base for more advances.
| CLU10.NYM | ...Crude Oil Sep 10 | ...77.38 | ... 0.98 .......(1.3%) |
| GCQ10.CMX | ...Gold Aug 10 | ...1,172.70 | ... 4.30 .......(0.4%) |
GDP recovery lost momentum in Q2 as growth slowed to a 2.4% pace, its most sluggish showing in nearly a year & too weak to drive down unemployment. Consumers spent less, companies slowed their restocking of shelves & the trade deficit dragged more on the economy in Q2. In a separate report, the Commerce Dept said the recession was deeper than previously estimated. Together, the reports raise doubts about whether employers will hire enough & consumers will spend enough to invigorate the economy. However, today's report also showed that the economy grew at a 3.7% pace in Q1, much better than the 2.7% pace estimated just a month ago.
U.S. Economy Grew 2.4% in Second Quarter, Below Forecast
The oil spill into Lake Michigan has prompted local health officials to call for the evacuation of as many as 50 homes & recommend residents living close to the Kalamazoo River stop using well water for drinking & cooking after the spill contaminated more than 20 miles of the river. There is plenty of finger-pointing between those leading the clean up & state & local officials who have described the response as inadequate & slow-footed. The pipeline, owned by Enbridge Energy Partners (EEP), is a 30-inch pipe that moves light synthetic, heavy & medium crude oil northeast about 1,900 miles. The affected section of the line stretches from Griffith, Ind, thru Michigan & just over the border to Sarnia, Ontario. EEP saw more selling at the opening, taking the price to 51. Buyers returned bringing it back to a gain of 33¢ in the 53s (although down almost 7 from its high on Mon). Traditionally these units are very low beta, this kind of volatility is eye popping.
Michigan Oil Spill Prompts Evacuations, Finger-Pointingat The Wall Street Journal
Enbridge Energy --- 2 weeks
Chevron (CVX), a Dow stock, had great earnings in Q2, easily beating expectations. EPS was $2.70 compared with 87¢ last year. Revenue jumped 32% to $53B. Expectations were for EPS of $2.44 on revenue of $52.5B. These results are similar to other major petroleum companies. But the stock fell 58¢ in the 75s.
•Chevron 2Q income triples on higher energy prices
AP
Chevron --- 2 years
Merck (MRK), a Dow stock, reported a 52% drop in Q2 net income, weighed down by big merger & restructuring charges from buying Schering-Plough , generic competition & other factors. MRK, the world's 2nd-biggest drug company, beat EPS expectations by 3¢ a share, but came up short on revenue & slightly reduced its sales forecast for 2010. EPS for Q2 was 24¢ down from 74¢ in 2009. Excluding a host of one-time items, EPS would have been 86¢, beating estimates of 83¢. MRK forecast full-year net income of 82¢-$1.16 per share or $3.29-3.39 excluding items, a slightly narrower range than before. Analysts are forecasting $3.37. Merck expects revenue of $45.4-46.1B, down slightly from its Apr forecast. The stock dropped 73¢ in the 34s.
Merck Profit Rises More Than Estimated on Cost Cuts
Merck --- 2 years
Earnings stories give mixed messages about the economic recovery & markets keep wandering, not knowing where to go. Dow was not able to charge forward to new highs this week as the 10½K ceiling is proving to be formidable. Maybe next week, with earnings season largely over, it will be able to climb again.
Dow Jones Industrials --- 2 weeks
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