Tuesday, February 15, 2011

Markets lower on weak retail sales

Dow pulled back 35, decliners over advancers 3-2 & NAZ slipped 10.  Banks edged higher with the Financial Index at its highs reached last Apr.


Value 230.54 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   0.48  (0.2%)

The MLP index was up another fraction to the 375s, yet another record high.  Yesterday's big pop was related to a favorable mention in USA Today.  The REIT index fell a fraction in the 235s.  Once again, junk bond funds are doing little.  Treasuries are also quiet.  The yield on the 10 year Treasury bond is down a fraction of a basis point to 3.61%.

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 was flat at its low for the last 3 months.  Gold climbed to the highest in almost 4 weeks as rising consumer prices boosted demand for the precious metal as a hedge against inflation.

CLH11.NYM...Crude Oil Mar 11...85.02 ...Up 0.21  (0.3%)

GCG11.CMX...Gold Feb 11......1,372.00 ....Up 7.30   (0.5%)

Gold Super Cycle Link! Click Here

U.S. Retail Sales Increased Less Than Forecast

Photo:  Bloomberg

In Jan consumers bought more from retailers for a 7th straight month. But snowstorms limited the spending gains expected from workers with more money in their paychecks from a Social Security tax cut.  Retail sales rose 0.3% last month to $318.6B according to the Commerce Dept. Demand rose at department stores, electronic stores & auto dealerships. Sales are up more than 14% from the recession low in Dec 2008.  Less was spent at restaurants & on clothing while paying higher prices for gas.  Auto sales rose 0.5% after having increased 1.5% in Dec. Excluding autos, retail sales increased 0.3%, matching the Dec increase.  Sales at department stores gained 0.5%, but part of the overall retail sales gain reflected higher gasoline prices. Sales at gasoline service stations climbed 1.4%. Excluding the rise at gas stations, retail sales would have risen 0.2%.  This rates only as a so-so report.

Retail Sales in U.S. Increased Less Than Forecast in January

U.S. Homebuilder Confidence Stagnates in February

Photo:  Bloomberg

The National Association of Home Builders said that its index of builder sentiment for Feb remained unchanged at 16 for the 4th straight month (any reading below 50 indicates negative sentiment about the market & the index hasn't been above that level since Apl 2006).  The housing market is expected to show some signs of life this year but the recovery will likely be uneven. The latest regional data showed builders are becoming more optimistic in the Northeast & South while being more grim in the Midwest & West. But the amount of foot traffic by prospective buyers remained flat in Feb.

U.S. Homebuilder Confidence Stagnates in February on Slow Sales

Home Depot Adding More Than 60,000 Seasonal Jobs

Photo:   Bloomberg

Home Depot (HD), a Dow stock, is ramping up for spring, with plans to hire more than 60K seasonal workers to help with its busiest season of the year.  This seasonal staffing level is on pace with last year, when its Spring Black Friday promotion first started. "Spring is our Christmas and traffic is at its highest during this season," said Craig Menear, executive VP for merchandising. The seasonal workers, which will be hired & trained in Feb & Mar, will be in every market. HD currently has more than 300K employees.  In Dec, HD boosted its earnings & revenue outlooks on stronger sales. The chain also plans to open 10 new stores in 2011, including 7 in Mexico.  The stock was down 11¢.

 U.S. Homebuilder Confidence Stagnates in February on Slow Sales

 Home Depot   ---   1 year

Markets are back to muddling along.  With all the excitement in MLPs yesterday, the logical question becomes, how near is the index to its peak?  The index yield is 6%, very low by historical standards.  Higher prices will bring even lower yields.  Meanwhile the Dow has been flat for a week.  In the last few months, these resting periods have been followed by more advances.  Eventually, the Dow will need a reminder of what a serious decline looks like.

Dow Jones Industrials   ---   2 weeks

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