Wednesday, August 4, 2010

Higher markets on service sector & jobs growth

Stocks had modest gains in the AM & were able to extend the gains in the PM. Dow rose 44, advancers over decliners 5-2 while NAZ added 20. Bank stocks were higher but the Financial Index remains in the middle of its rangebound trading zone for the last year.


Value201.28One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change0.55 (0.3%)

The Alerian MLP Index rose 1¼ to the 333s, recovering almost all of its loss in the last week (some of that loss was due to ex-distributions by MLPs). 2 more points & it will reach a new 2010 high. Its bigger goal is 343, a new record. The REIT index also gained 1¼ but to the 212s, close to its 219 high for this year. Junk bond funds were higher, most near their highs for this year as the VIX slipped a fraction in the 22s. The yield on the 10 year Treasury bond went up 4 basis points to 2.95%, it can't get away from sub 3% territory. The strong €, as of late, slipped a smidgen but is still near its interim highs of $1.32.

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD


10-Year Treasury Yld Index --- YTD

Oil continued its winning ways, still essentially at its yearly highs. Gold pulled back slightly from its highs earlier today when it went over 1200. Its getting more attention from foreign (i.e. Asian) investors who regard it as a store of wealth. Gold has been rising for over a week & may want to make another assault on its 1260+ records reached earlier this year.

CLU10.NYM..Crude Oil Sep 10..82.37 ..Down 0.18

GCQ10.CMX..Gold Aug 10..1,196.40 ..Up 11.20

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The jobs report on Fri is expected to show the economy shed 70K jobs in Jul & unemployment rose to 9.6%, a chilly thought. The forecasts are that the private sector created about 100K jobs but gov employment fell 170K, as temp census jobs disappeared. The massive $787B stimulus package was passed in Feb 2009 with the promise that because of gov spending, unemployment would not go above 8%. So much for promises! Now a lot of those guys who voted for the spending are up for reelection. Because of added tax burdens, a lot of business, especially small ones, are holding back on expanding their businesses. Higher costs & gov hassle on about everything they do is freezing their expansion plans, producing a tepid recovery

Ahead of jobs report: Outlook dark for economy, Obama- CNBC

The Institute for Supply Management’s index of non-manufacturing businesses, covering about 90% of the economy, rose to 54.3 from 53.8 in Jun (readings above 50 signal expansion). Another report showed companies added more jobs than projected last month. Payrolls, excluding gov agencies, added 42K workers last month after a 19K increase in Jun, according to ADP Employer Services. The problem is the "good" news is not "good enough" to provide significant help for a recovering a economy.

U.S. Economy: Service Companies Expanded Faster in July

Index of non-mfg business - year

One-Year Chart for Non ManNMI (NAPMNMI:IND)

Buyers returned to the markets giving stocks a needed lift. With earnings season pretty much over, Dow is up about 900 above its lows just a few weeks ago. Without major news, markets will probably drift (higher?) tomorrow while they wait for the jobs report on Fri. However, bullish thoughts should be tempered against low Treasury yields representing a major disconnect with rising stock markets.

Dow Jones Industrials --- YTD

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