Wednesday, February 23, 2011

Lower markets on Libyan turmoil

The Dow dropped 59, decliners over advances 3-2 (not so bad all considered) & NAZ fell 25 on weakness by tech heavyweights.  Bank stocks are also lower, the Financial Index is down 8 from its high 2 weeks ago..


Value 223.05 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   -0.96  (-0.4%)

The MLP index rose 2+ to the 368s, helped by surging oil & energy prices while the REIT index fell a fraction in the 234s.  Junk bond funds were mixed to higher & Treasuries were a little higher.  The yield on the 10 year Treasury bond fell 1+ basis point to 3.45%.

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

Oil rose to the highest price since Oct 2008, as violent uprisings in Libya threatened to disrupt exports & spread to other oil producing nations in the Mideast.  Gold is, heading for the longest rally in 6 months, on mounting tensions in Libya & the Mideast, boosting demand for an investment haven. Charts for the near term contracts below show oil spiked this week & the steady rise for gold in Feb.  A link is provided to learn more information about investing in gold.

CLJ11.NYM...Crude Oil Apr 11...97.41 ...Up 1.99 (2.1%)

GCG11.CMX...Gold Feb 11.....1,405.30 ...Up 4.70  (0.3%)

Gold Super Cycle Link! Click Here

CLJ11 (oil contract)   --  YTD

GCG11 (gold contract)   --  YTD

Sales of U.S. Existing Homes Climb to Eight-Month High

Photo:  Bloomberg

More people bought previously occupied homes in Jan, but sales surged on a rising number of foreclosures & all-cash deals (not first-time home-buyers).  The rising number of distressed sales forced home prices down to the lowest level in nearly 9 years, a troubling sign for the struggling housing market.  The National Association of Realtors said that sales of previously occupied homes rose slightly in Jan to an annual rate of 5.36M, uo 2.7% from 5.22M in Dec.  The pace is still far below the 6M homes per year that represents a healthy market. And the number of first-time home-buyers shrunk to 29% of the market (a more healthy level of first-time home-buyers is about 40%).  Foreclosures represented 37% of sales in Jan & all-cash transactions accounted for 32% (double the rate from 2 years ago).  One reasons cash sales are rising is that a growing number of purchases are being made by investors (not home residents).  The median price of a home in Jan was $159K,.3.7% lower than a year earlier & the lowest point since 2002.  Housing data remains stuck in the mud & it is a key driver for continuing high unemployment.

Sales of U.S. Existing Homes Climb to Eight-Month High

Hewlett-Packard (HPQ), a Dow stock, delivered some disappointing news yesterday & it said revenue growth, will be slower in 2011 than many had envisioned. HPQ is considered a good proxy for the tech market. HPQ reported EPS jumped 16% to $1.17 in Q1, ended Jan 31, up from 93¢ in the prior year.  Excluding one-time items, it earned $1.36 per share, ahead of the $1.29 expected.  Revenue rose 4% to $32.3B but analysts expected $32.96B.  HPQ guided full-year profit forecast for EPS of $5.20-5.28, excluding items, which is in line with estimates by analyst of $5.23.  But revenue prediction fell short at $130-131.5B for fiscal 2011 ending in Oct. Analysts expected $132.9B.  The guidance raised concerns after HPQ has spent heavily in recent years on acquisitions that were expected to propel substantial growth in areas IBM (IBM), another Dow stock, found lucrative.  Markets did not take the news well, the stock sold off 5+ to 43.

HP shares slide as powerhouse faces growth fearsAP

Hewlett-Packard   ---   2 years

Markets have lost their zest & are drifting lower.  The unrest in the Mideast will not go away soon.  In addition, there is a fair amount of unrest in the US as state workers are protesting budget cuts which hurts them along with reexamining collective bargaining for civil servants.  Lower spending at the state & local level will pinch the economic recovery.  Uncertainty is finally attracting more buyers for gold (when they sell stocks).

Dow Jones Industrials   ---   2 weeks

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