Thursday, December 9, 2010

Jobless claims drop but markets are mixed

Dow fell 32, advancers & decliners were even & NAZ was flat.  Bank stocks continued their strength in Dec, the Financial Index is up 14.


Value 208.47 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   1.32  (0.6%)

The Alerian MLP Index was up a fraction to 356 where it's been for over 3 weeks & the REIT index dropped a fraction to 217 (sideways for a couple of months).  Junk bond funds were pretty mixed, with only modest changes.

Alerian MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

Oil fluctuated after falling jobless claims bolstered optimism in the economy of the biggest oil-consuming country & a rising dollar reduced the appeal of commodities.  Gold rose, halting a 2 day slide from record levels.

CLF11.NYM...Crude Oil Jan 11...87.85 ...Down 0.43  (0.5%)

GCZ10.CMX...Gold Dec 10....1,384.60 .....Up 2.10  (0.2%)

Gold Super Cycle Link! Click Here

Initial Jobless Claims Fell 17,000

Photo:   Bloomberg

Applications for unemployment benefits dropped last week to the 2nd lowest level this year.  First-time claims for jobless aid fell 17K to 421K according to the Labor Dept.  The 4-week average dropped for the 5th straight week to 427K, the lowest since Aug 2008 (just before the financial crisis intensified with the collapse of Lehman Brothers).  Claims have fallen steadily in the past 2 months raising hopes that companies will soon accelerate hiring.  Still, claims have only been below 425K for 2 of the last 3 weeks. They need to be below that level for an extended period to have any real impact lowering the unemployment rate. The number continuing to collect jobless benefits fell 191K to 4.09M which does not include the number of workers receiving extended benefits under federal programs. Those who’ve used up their traditional benefits & are now collecting emergency & extended payments decreased by about 393K to 4.51M in the latest week.  This reports adds to the view that the gloomy Nov jobs report does not provide an accurate reading of job creation. 

U.S. Initial Jobless Claims Fell 17,000 to 421,000 Last Week

Weekly jobless claims - 1 year

One-Year Chart for Claims (INJCJC:IND)

4 Week average - 1 year

One-Year Chart for 4 Week Moving Avg (INJCJC4:IND)

# continuing to receive benefits - 1 year

One-Year Chart for Unemployment SA (INJCSP:IND)

Treasuries advanced, the 10-year note yield at almost a 6-month high attracted investors speculating that it will be hard for US debt to drop much further.  The benchmark 10-year bonds rose after their biggest 2-day slump since 2008 following the agreement this week to extend for 2 years an extension of tax cuts. The 30-year security gained before the $13B auction later today.  The yield on the 10-year note fell 6 basis points to 3.21%.  The 10-year note yield increased a huge 35 basis points over the past 2 days, the biggest such gain since Sep 2008, when markets were in upheaval. The yield touched 3.33% yesterday, the highest level since Jun 4. The 30-year bond yield fell 5 basis points today to 4.41% after rising yesterday to 4.50%, the most since May. The 2-year note yield decreased 2 basis points to 0.61%. Higher interest rates hurt.

Treasuries Rise as 10-Year Note Yields Near Six-Month High Attract Buyers

Treasury yields:

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

10-Year Treasury Yield Index   ---   2 weeks

30-Year Treasury Yield Index   ---   2 weeks


YoukuCom (YOKU) & China Dangdang (DANG), the hot Chinese IPOs from yesterday, are still hot. YOKU is up 4+ to the 38s & DANG rose 1.19 to 31.  Money going into these stocks is diverted from US companies, but so far this amount of money is insignificant.

YoukuCom   ---  2 days

China Dangdang  ---   2 days

The chart below shows Dow has been drifting all week, as is the case for many popular averages.  Debt problems in Europe & China concerns are taking a back seat to what will happen to US tax rates next year.  Nobody knows, that spells uncertainty & uncertainty is not good for the markets.  Until the tax picture is cleared up, markets will continue to drift with a downward bias.  All indications are that that won't be resolved until the last few days of the year.

Dow Jones Industrials   ---   2 weeks

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