Thursday, August 26, 2010

Markets drift lower on economic worries

Stocks began higher on the relatively good jobless claims report, then starting sinking at midday. Late day buying limited losses, but selling into the close brought the Dow back below 10K. Dow finished down 74 to 9985, decliners ahead of advancers almost 2-1 & NAZ dropped 22. Selling in bank stocks took the Financial Index back to its yearly lows of 180.


Value180.48One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change-1.60 (-0.9%)

The MLP index was up a ½ to 320 & the REIT index fell 1+ to the 199s. Junk bond funds were flat to higher. The VIX was up fractionally in to 27 & the € gained ½ a penny to over $1.27. Like it has been all summer, the real action is in the Treasury markets. The yield on the 10 year Treasury bond fell 4 basis points to just under 2.50%. All Treasury rates are very near record lows for their "safe haven" value..

Treasury Securities

U.S. 3-month0.15%
U.S. 2-year0.52%
U.S. 10-year2.49%

Alerian MLP Index -- 2 months

Dow Jones REIT Index -- 2 months

VIX -- 2 months

10-Year Treasury Yld Index -- 2 months

Oil continued higher in the PM while gold slipped on profit taking.

CLV10.NYM..Crude Oil Oct 10..73.25 ..Up 0.73

GCQ10.CMX..Gold Aug 10..1,236.50 Down 3.00

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Dell (DELL) upped its bid for 3Par (PAR) to $24.30 a share topping the Hewlett-Packard (HPQ), a Dow stock, $24 offer & PAR accepted the increased bid. But it's expected that HPQ will counter the latest offer. DELL & HPQ are both offering a higher premium than acquirers in comparable transactions. The DELL bid values PAR at 8X times revenue. In 24 acquisitions of US computer hardware, storage, printing & services companies during the past 5 years, buyers paid a median of 1.26X times sales. PAR stock is trading above the DELL bid, indicating they are looking for more bidding. PAR fell 73¢ to $26.03 while DELL & HPQ were flattish.

Dell Raises 3Par Offer to $1.6 Billion, Topping HP

3Par --- 1 month

Dell --- 1 month

Hewlett-Packard --- 1 month

This was another quiet summer day with 1B shares traded on NYSE floor, little was decided. The jobless report sounded good, but when combined with prior ones it wasn't that great. Weekly claims persist at unacceptably high levels (around 500K) with no sign of improvement coming for the rest of the year. Even Dems are starting to talk about giving up on the economy going into election season. Rather than waffling, bulls would probably rather see Dow go down another couple hundred to gave a real test of the old lows.

Dow Jones Industrials -- 2 months

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