Markets jump on upbeat earnings

Stocks rose on encouraging reports although the reporting companies are not doing all that well.  Dow is up 110, advancers over decliners 4-1 (could have been better all considered) & NAZ gained 26 helped by Apple (AAPL) going over 300 to another record.  Banks were higher taking the Financial Index over 200, again.

S&P 500 FINANCIALS INDEX

Value	201.34
Change	1.43  (0.7%)

The Alerian MLP Index rose another 2+ to the 351s, yet another record & up over 80 from its lows in May.  It's racing with gold to see which one will do better!  High yield instruments are in demand.  The REIT index, with stocks that yield about 3-5%, rose 2½ to over 220, a new yearly high.  Junk bond funds advanced, pretty much at yearly highs bringing lower yields.  Bonds were sold in this stock rally.  The yield on the 10 year Treasury bond was up 4 basis points to 2.46%, remaining in very low territory.

BONDS

U.S. 3-month		0.12%
U.S. 2-year		0.36%
U.S. 10-year		2.46%

Alerian MLP Index   ---   2 weeks



Dow Jones REIT Index   ---   2 weeks




10-Year Treasury Yield Index   ---   2 weeks




Oil benefited from the rally in the stock market.  Gold rose to a record amid mounting investor demand for the metal as an alternative to currencies. GLD, its biggest tracking fund, is up 24% YTD while the red hot MLP index is up "only" 22%.  A link is provided below for those who want to learn more about investing in gold

CLX10.NYM

...Crude Oil Nov 10

...82.67

.... 1.00

(1.2%)

GCV10.CMX

...Gold Oct 10

......1,365.80

... 20.10

(1.5%)

Gold Super Cycle Link! Click Here

GLD  (ETF)   ---   YTD








Photo:   Yahoo




JPMorgan Chase (JPM), a Dow stock,  reported Q3 profit jumped 23% because it was able to set aside less money to cover loan losses.  However Jamie Dimon, CEO, warned that loan losses are still high in both the mortgage & credit card portfolios, but they are no longer rising like they did during the recession. JPM set aside $1.55B to cover losses in its retail financial services division, less than half the $3.99B last year. Loan loss provisions in its credit-card business fell to $1.63B from $4.97B last year.  Dimon said the bank expects losses in its credit-card division to fall in the next qtr.  The bank had EPS of $1.01 versus 82¢ last year, well ahead of the 90¢ expected.  Profit in the investment bank, a big strength for JPM in recent qtrs, fell 33% due mainly to lower fees from underwriting stock offerings.  But a pickup in earnings from retail banking jumped to $907M from just $7M during the Q3 last year.  The credit card business earned $735M in Q3 after losing $700M during last year.  Jamie Dimon said there’s almost “no chance” the bank made mistakes in seizing homes. “It will cost us some money to go back and make sure it’s done right; it will delay some foreclosures,” Dimon said. “But the whole mortgage issue costs us so much money now, to me it will be incremental.” The stock fell 27¢.

JPMorgan Net Beats Estimates on Lower Credit Costs
Dimon Calls Foreclosure-Probe Costs `Incremental,' Says Mistakes Unlikely


JPMorgan   ---   3 years






Mike Duke, the CEO of Wal-Mart (WMT), a Dow stock & Dividend Aristocrat, expects positive US sales in its Q4 as it works to turn around several qtrs of sluggish sales.  The world's largest retailer benefited during the recession as affluent shoppers traded down to cheaper stores. But stubbornly high unemployment & tight credit are still squeezing its US customers, lower-income workers who are having even more trouble stretching dollars to the next payday because of tight credit & an unemployment rate stuck at almost 10%.  In its most recent qtr, WMT intl business rose 16% to $25.9B, while US store revenue rose a meager 0.6% to $64.6B.  The company has also been trying to fix some merchandising missteps, restoring items it cut last year & returning to everyday low pricing after steep rollbacks failed to excite shoppers.  The stock was up 30¢.  It held up well during the recession but has not done well this year.

Wal-Mart Sees `Positive' Fourth-Quarter U.S. Results, CEO Mike Duke Says


Wal-Mart   ---   3 years

Photo:  Bloomberg


Intel (INTC), a Dow stock, predicted Q4 sales that beat estimates, helped by demand in emerging economies. Revenue in Q4 should be $11.4B (plus or minus 0.4B) which compares with an average projection of $11.3B.  More computers were sold in less developed markets, helping INTC weather slumping demand in the US & Europe.  The last 4 weeks of the qtr were better than the company predicted & that improving demand was the basis for predictions about the Q4.  The stock fell 9¢ to 19.68, about where it was before the earnings announcement.

Intel's Fourth-Quarter Revenue Forecast Tops Analyst Estimates


Intel  ---   3 years






Markets are happy with the early earnings reports.  Dow is pushing towards its 11.2K high for 2010.  The general story remains the same, gold & MLPs (along with AAPL) are red hot at record levels.  Low yields on Treasuries & investment bonds are driving demand for the high yield sectors.  AAPL is simply sexy, since it doesn't pay a div.  The big "but" is that gold is also at record levels.

Dow Jones Industrials   ---   2 weeks

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