Thursday, January 20, 2011

Lower markets despite favorable economic data

Dow dropped 66, decliners over advancers 5-2 & NAZ fell 31.  Dow began near break even followed by selling.  The Financial Index started in the black, but selling brought it back below break even.


Value 218.54 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change    -0.22  -(0.1%)

The Alerian MLP Index fell 5½ to 362, bringing the 2 day slump to a 11.  Meanwhile the REIT index was up a fraction in the 224s.  Junk bond funds were a tad lower.  Treasuries were weak.  The yield on the 10 year Treasury bond rose 7 basis points to 3.41%  but pretty much were it's been for over a month. 

Treasury yields:

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

Alerian MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

10-Year Treasury Yield Index   ---   2 weeks

Commodities took a nasty tumble.  Oil declined after the Energy Department said stockpiles gained 2.6M barrels.  Gold fell to a 2 month low as a strengthening dollar cut demand for the precious metal.

CLG11.NYM...Crude Oil Feb 11...88.38 ...Down 2.48  (2.7%)

GCF11.CMX...Gold Jan 11...1,345.00 ...Down 25.20  (1.8%)

Gold Super Cycle Link! Click Here

Jobless Claims

 Photo:  Bloomberg
Claims for initial jobless benefits last week posted their biggest decline in nearly a year, erasing a holiday-related spike to show a trend toward a healthier labor market remained intact.  The number filing for unemployment benefits dropped sharply to 404K from a downwardly revised reading of 441K in the prior week, according to the Labor Dept.  The 37K drop in claims was the biggest since Feb 6, when claims fell 51K  While layoffs are lower, hirings are still very slow. The 4 week moving average of new claims dropped 4K to 412K.  Continuing claims fell to 3.86M, the lowest level in over 2 years.  However, Americans on benefit rolls, including extended benefits under emergency gov programs, jumped to 9.6M in the week ended Jan 1 from 9.2M in the prior week.

Initial Jobless Claims in U.S. Fell to 404,000 Last Week

A gauge of future economic activity rose in Dec, suggesting the economy will strengthen over the next few months.  The Conference Board said its index of leading economic indicators rose 1% last month after a 1.1% increase in Nov, the biggest increase since Mar, when the index jumped 1.4%.  This beat an  expected lower reading of 0.6% for Dec.  The measure had stalled this summer as Europe's debt crisis & a weak jobs market hit stocks. It began accelerating at the end of last year as the country's economic condition improved. The gain came from a stock market rally, the manufacturing sector continues to grow & consumers & businesses are spending more. 

Leading Indicators Index in U.S. Increases More Than Forecast

December Sales of U.S. Existing Homes Jump to Seven-Month

Photo:  Bloomberg

US home resales jumped more than expected in Dec despite bad weather as sellers cut prices, offering some hope for a sector that has been struggling to recover from its worst slump in modern history.  Existing home sales went up 12.3% to an annual rate of 5.28M units, according to the National Association of Realtors, far surpassing forecasts for a rise of a 4.85M rate. However, sales were down 2.9% compared to a year earlier.
Higher mortgage rates may have brought buyers into the market by raising concern of even further increases. Sales are expected at 5.2M units in 2011, with prices remaining stable.  Sales peaked above 7M units in Sep 2005, as the housing bubble reached fever pitch & hit a 15-year low below 4M in mid-2010 after the market collapsed.  Median home prices fell to $169K, down from $170K in Nov & the lowest since Feb 2010. That was in partly related to properties considered "distressed" accounting for 36% of sales, up from 33% in Nov.

Sales of U.S. Existing Homes Probably Rose as Demand Struggled to Rebound

Markets are not behaving well considering earnings reports are encouraging & optimism from virtually all analysts.  It seems like most news is viewed as bad, a depressing theme for the markets.  This sentiment is showing up with MLPs.  Their earnings reports are looking good with more distribution hikes, but selling is overwhelming this market.  MLPs are noted for being a low beta group, easy to forget after the sell off in the last 2 days.  Banks have been market leaders for the last 2 months, but their earnings reports are not getting good grades.  Tomorrow, Bank of America (BAC), a Dow stock, reports.

Dow Jones Industrials   ---   2 weeks

Find out what's inside Trend TV!  

Link to the 2 week Free Trial  

Get your favorite symbols' Trend Analysis TODAY!  

No comments: