Friday, December 17, 2010

Sleepy day for the markets

On a another boring day for stocks, Dow fell 7, adavancers barely ahead of decliners & NAZ was up 5 (helped by Oracle earnings).  Bank stocks also edged higher.  


Value 208.72 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   0.59 (0.3%)

The Alerian MLP Index fell 1½ to 350 & down 10 from highs early this week.  The REIT index rose 1½ into the 214s, little changed in the last few months.  Junk bond funds had a good day, typically up 1%.  There was a report that last month the default rate on junk bonds was at the lowest level in 3 years.  Treasuries were in a rally after being oversold.  The yield on the 10 year Treasury dropped a massive 15 basis points to 3.33%. 

Treasury yields:

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

Alerian MLP Index   ---   YTD

Dow Jones REIT Index   ---   YTD

10-Year Treasury Yield Index   ---   YTD

Oil bounced back after recent selling.  It may decline next week on speculation that the Energy Dept will report an increase in supplies after the biggest drop in more than 8 years in this week’s data.  Gold also had a bounce back following recent selling.

CLF11.NYM...Light Sweet Crude Oil... 88.08 ...Up 0.38  (0.4%)

GCZ10.CMX...Gold Dec 10............1,378.60 ....Up 8.20  (0.6%)

+++  Gold Super Cycle  +++  

The index of leading economic indicators increased in Nov by the most in 8 months.  The Conference Board’s gauge for the outlook for the next 3-6 months rose 1.1% after a revised 0.4% gain in Oct.  Americans grew more confident last month as stocks rose & fewer people filed for unemployment benefits, boosting the prospects for consumer spending in coming months. The biggest contributors to the increase were a slowdown in supplier deliveries, the spread between short & long-term interest rates & a drop in jobless claims. This kind of data is fueling optimism about a stronger economic recovery in 2011.

Leading Indicators in U.S. Gain by Most in 8 Months

Oracle (ORCL) net income jumped 28% in the latest qtr, its biggest increase in more than 2 years & another sign that companies are spending more liberally on technology.  It also forecast net income & revenue in the current qtr above analysts' expectations.  ORCL, one of the world's biggest software makers, demonstrated in its latest numbers that it is shielded somewhat from sudden market swings because nearly half of its revenue comes from support contracts that provide consistent revenue throughout the year.  ORCL also cited improving profitability at Sun Microsystems, bought nearly a year ago, as another reason for its better-than-expected results. That acquisition gave Oracle a computer-server business & transformed the company into more of a one-stop shop for technology.  The stock was up 1.19, after recovering nicely from its lows last year. 

Oracle reports profit jump, bucking industry fearsAP

Oracle   ---   2 years

AT&T (T) increased the quarterly div to 43¢ a share, up a penny from previous quarters. The company also authorized the repurchase of up to 300M shares of stock (5% of the outstanding shares) with no expiration date. The buyback would total almost $9B. The stock slipped a few pennies in the 29s.

AT&T Boosts Dividend, May Buy Back $8.77 Billion of Stock

AT&T   ---   2 years

Markets ended the week with little accomplished today.  I thought resolution of the tax extension & dropping the omnibus spending bill of FY 2011 would have brought more buyers.  But there are plenty of worries about European debt problems which aren't going away soon. The Dow gained almost 1% this week while the MLP index fell almost 3%.  MLPs have been lagging behind the popular averages for a couple of months & they may have to get used to that in the new year.

Dow Jones Industrials   ---   YTD

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