Markets crumble from overseas financial problems

Stocks were crushed by a barrage of negative financial news from Europe & Asia.  Dow fell 178, decliners over advancers 6-1 & NAZ was off 43.  Bank stocks are leaders & they brought the Financial Index back below 200, although the index finished off its lows. 

S&P 500 FINANCIALS INDEX

Value	198.10
Change	-3.69  (-1.8%)

All high yield sectors were hard hard with selling.  The Alerian MLP Index fell 7½ to 354, one of largest declines in its 15 year history.  It's still only 11 below its recent record highs but uncertainty in the financial markets can bring it lower.  The REIT index fell 7½ to 209 & down more than 20 from its recent yearly highs.  Junk bond funds, stocks with high yields, fell 2-4%, very big in this world. 

Alerian MLP Index   ---   1 month



Dow Jones REIT Index   ---   1 month



10-Year Treasury Yield Index   ---   1 month




Commodities were caught up in today's selling.  Gold fell to the lowest price in almost 2 weeks as the dollar rallied, eroding the appeal of the precious metal. The € fell to under $1.35, down a penny today after rising to $1.42 last week.

CLZ10.NYM

...Crude Oil Dec 10

...82.29

..... 2.57

(3.0%)

GCX10.CMX

...Gold Nov 10

....1,336.10

..... 32.30

(2.4%)

**Gold Super Cycle**  

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Treasuries rose, recovering from the biggest 2-day decline in almost 2 years, as Federal Reserve (FED) officials reinforced support for the QE2 $600B asset purchase program.  Benchmark 10-year yields have soared during the previous 2 trading days, the most since a back-to-back surge of 33 basis points in Jan 2009.  The FED today bought $5.4B of Treasuries maturing from July 2012 to May 2013.  Yields on 10-year notes fell 6 basis points to 2.85%.  Volatility in the Treasury market has picked up.  The MOVE index, which measure price swings in Treasuries based on prices of over-the-counter options maturing in 2-30 years, rose to 103.9 yesterday, the highest since Sep 13.  High volatility means the markets don't understand what's going on, not good for Treasuries or the stock market.

Treasuries Advance as Dudley Seeks to Ease Inflation Concern

Treasury yields:

U.S. 3-month		0.13%
U.S. 2-year		0.50%
U.S. 10-year		2.85%

Wal-Mart  (WMT), a Dow stock & Dividend Aristocrat, reported a 9.3% rise in Q3 profits & raised full year guidance.  WMT had EPS of 95¢ in the qtr compared with 81¢ last year. Excluding one-time items, it earned 90¢ in line with expectations.  Revenue inched up 2.6% to $101.95B, slightly under estimates for $102.26B. Gross margins slipped, from 25.1% to 25%.  The important measure of same-store sales for US stores fell 1.3% last quarter, marking the 6th-straight qtr of declines.  However, intl net jumped 9.3% to $26.92B. Lifted by a 2.4% rise in same-store sales, excluding fuel, Sam’s Club brought in $12.1B of revenue.  WMT raised its full-year outlook, projecting EPS of $4.08-4.12, beating estimates for $4.02. Previously, the company forecasted EPS of $3.95-4.05.  For its Q4, it sees EPS of $1.29-1.33, compared with forecasts of $1.28.  “Wal-Mart U.S. will be the price leader this holiday season, and I am confident about improving comp trends for the fourth quarter,” CEO Mike Duke said. “I’m pleased that we increased our full-year earnings per share guidance to reflect the tax benefit from the third quarter and our expectations for our business performance in the fourth quarter.”   The stock rose 31¢ today & has done well in the last month, a time when many stocks have faltered.

Wal-Mart 3Q Profit Up, Same-Store Sales Dropat Fox Business

Wal-Mart   ---   1 month




The one month chart below tells it all.  Dow had been charging ahead & finally made it above the former yearly high of 11.2K.  Then, in just 6 trading days, the Dow has dropped 400 & is barely holding above the important 11K support level.  This comes after the G-20 meeting wrapped up deciding nothing other than countries have given up on the concept of working together to solve financial problems.  Maybe it was just a coincidence, but the European accord reached 6 months ago, to save Greece, started unraveling.  Doubts are raising serious questions about where we go from here & there seems to be no simple answers.  Markets don't like this kind of thinking, more selling lies ahead.

Dow Jones Industrials   ---   1 month

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