Monday, September 27, 2010

Markets edge lower on profit taking

Stocks were weak but losses are limited.  Dow fell 33, decliners over advancers 4-3 & NAZ is off 11.  Banks led the way down, but again not with serious selling.


Value 195.38 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  -1.34  (-0.7%)

The Alerian MLP Index rose a fraction to 333, just 10 away from setting a record while the REIT index fell 2+ to 211.  Junk bond funds edged higher & the VIX was up a fraction to the 22s remaining in a sideways trading zone.  The € is little changed close to $1.35, a 5 month high.  But the yield on the 10 year Treasury bond fell 6 basis points to 2.55% & closing in on the lows reach a couple of weeks ago.  These low rates are very troubling for the stock markets. 

Treasury Yields

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

VIX Index   ---   2 weeks

10-Year Treasury Yld Index   ---   2 weeks

Oil futures fell as a stronger US dollar reduced the appeal of commodities as an alternative investment  But gold is hanging in just below the 1300+ record reached last week.  This alternative still has a lot of appeal.

CLX10.NYM...Crude Oil Nov 10...76.07 ...Down 0.42  (0.6%)

GCU10.CMX...Gold Sep 10...1,297.70 ...Up 1.70  (0.1%)

Gold Super Cycle Link! Click Here

Photo:  Yahoo

Southwest Airlines (has the cute symbol LUV) will buy AirTran (AAI) for $1.04B in cash & stock that will allow LUV to expand in major East Coast markets.  "The acquisition of AirTran represents a unique opportunity to grow Southwest Airlines' presence in key markets we don't yet serve and takes a significant step toward positioning us for future growth," said CEO Gary Kelly.  Kelly added the deal with Atlanta-based AirTran would allow Southwest to expand in markets such as New York LaGuardia, Boston Logan, and Baltimore/Washington & get access to leisure markets in the Caribbean & Mexico.  AAI shares jumped $2.75 to $7.30 & LUV rose 81¢.  LUV said excluding the impact of one-time costs, the acquisition is expected to add to its pro-forma earnings per share in the first year after the closing of the deal.

Southwest expands presence with AirTran buyReuters 

AirTran  ---  1 month

Southwest Airline   --   2 years

IBM (IBM), a Dow stock, agreed to buy closely held Blade Network Technologies to gain products that connect server computers in company data centers.  No value was given for the transaction.  Blade Network makes switches that connect servers, storage & networks in data centers, large rooms of computers that handle corporate tasks. This is the 3rd acquisition IBM has announced in Sep.  IBM was up 29¢.

IBM to Buy Blade Network to Gain Data-Center Switches

IBM   ---   2 years

Wal-Mart (WMT), Dow stock & Dividend Aristocrat, is buying a retail chain in South Africa.  But Monday merger fever is not affecting the markets.  Quarter end adjustments might be muddling the direction of the markets. 

Dow Jones Industrials   ---   2 weeks

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