Markets rise as jobs claims fall to lowest level in 2 years

Stocks started the day higher & held on to those gains.  But volume was light, diminishing any meaning for the gains.  Dow rose 150, advancers over decliners 4-1 & NAZ shot up 48.  Bank stocks led the way forward but the Financial Index can't work its way out of the sideways rut it's been in for months. 

S&P 500 FINANCIALS INDEX

Value	196.63
Change	3.16  (1.6%)

The Alerian MLP Index was off a ½ to 358 but is only 7 below the record highs set 2 weeks ago.  REITs were strong, taking the index up a very big 4½ to the 217s (where it was 7 months ago).  Junk bond funds were mixed to higher, near their yearly highs.  Treasuries sold off in a major way.  The yield on the 10 year Treasury bond soared 15 basis points to 2.92%, a high since early Aug.  The excuse was that the refuge appeal of US debt declined & reports showing the economy strengthening reduced demand at a $29B 7-year note auction.  But there was more to this selling, maybe we'll find out on Fri.  Further advances in the yields could bring selling for MLPs if investors demand higher yields.

Treasury yields:

U.S. 3-month		0.15%
U.S. 2-year		0.53%
U.S. 10-year		2.92%

Alerian MLP Index   ---   YTD



Dow Jones REIT Index   ---   YTD



10 Year Treasury Yield Index   ---   YTD




Oil climbed the most in 4 months after jobless claims fell to the lowest level in 2 years, bolstering optimism the economic rebound will accelerate. Gold was lower for the first time in 3 days as demand for a haven dropped after Korean concerns eased.

CLF11.NYM

...Crude Oil Jan 11

....83.95

... 2.70

(3.3%)

GCX10.CMX

...Gold Nov 10

...,1,377.80

... 1.00

(0.1%)

** Gold Super Cycle **  

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Photo:  Bloomberg

Applications for unemployment benefits fell more than expected last week, to the lowest level in over 2 years. Jobless claims dropped 34K to 407K according to the Labor Dept.  The 4-week moving average of jobless claims declined to 436K from 444K in the prior week.  The number continuing to receive benefits dropped 142K to 4.18M. The continuing claims figure does not include Americans receiving extended benefits under federal programs.  Those who’ve used up traditional benefits & are now collecting emergency & extended payments decreased by 262K to 4.66M. The graph below is encouraging but it will take more weeks with even lower numbers to reduce the unemployment stuck at levels near 10%.

U.S. Jobless Claims Decline to 407,000, Lowest Since July 2008

Weekly jobless claims - 1 year

Photo:  Bloomberg


Sales of new homes unexpectedly dropped in Oct as near record-low borrowing costs are failing to lift the industry that precipitated the recession.  Purchases of new homes decreased 8.1% to a 283K annual rate according to the Commerce Dept.  Sales reached a 275K rate in Aug, the lowest since data collection began in 1963.  An overhang of distressed properties & high unemployment rats could restrain sales of new homes into next year.

Sales of New Homes in U.S. Unexpectedly Decreased in October

Purchases of new homes - 1 year





Markets erased yesterday's loss but the Dow can't get far away from the 11K support level.  MLPs remain near their record highs even though interest rates are on the climb.  Economic news is getting a little brighter with encouraging news on the unemployment front.  But housing is going nowhere & a rebound in housing will be instrumental in bringing down the unemployment rate.  Further damage to the industry will be an uptick in mortgage rates which follows increases in the 10-year Treasury bond yield.  Fri the NYSE will close at 1PM, little will be decided.  To one & all, have a Happy Holiday season!

Dow Jones Industrials   ---   YTD

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