Thursday, February 17, 2011

Markets waver after increase in jobless claims

Dow fell 6, advancers 5-4 ahead of decliners & NAZ was off 2.  Bank stocks were a tad lower, but the Financial Index remains essentially at its highs since late 2007.


Value 230.33 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change     -0.59  (-0.3%)

The MLP index fell a fraction (from its record) to the 376s while the REIT gained a fraction to a new 2½ year high.  Junk bond funds continue flattish, near their highs since 2007.  Treasuries were stronger on unrest in the Mideast.  The yield on the 10 year Treasury bond fell 6 basis points to 3.57%.

Treaqsury yiels:

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 fluctuated, remaining near its 3 month lows.  Gold advanced for a 4th day, touching a one-month high (up 75 from the lows), as rising consumer prices boosted investor demand for an inflation hedge.

CLH11.NYM...Crude Oil Mar 11...85.10  .....0.11  (0.1%)

GCG11.CMX...Gold Feb 11.......1,380.50 ...Up 5.80  (0.4%)

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The Labor Dept reported there were 410K jobless claims last week, a jump of 25K (larger than expected) from the previous week.  The big jump in applications followed a week in which they fell to 385K, the lowest since Jul 2008. That improvement had reflected severe winter weather in much of the country that forced the closing of gov offices, prevented people from filing applications.  The 4-week average for benefit applications edged up to 418K last week, slightly above the 2-year low of 411K reached in early Jan.  3.91M were receiving regular unemployment benefits & another 4.5M were receiving extended unemployment benefits.  The latest data available shows that 9¼M were receiving various types of unemployment support.

Consumer Prices in U.S. Climb More Than Forecast on Food

Photo:  Blooomberg

In Jan, US core consumer prices rose at their quickest pace in more than a year but the increase was not strong enough to suggest a troubling build-up in inflation pressures.  The Labor Dept reported its core Consumer Price Index (CPI), excluding food & energy, increased 0.2%, the largest gain since Oct 2009. The index rose 0.1% in Dec.  The increase for the core rate was driven by rises in the cost of apparel, shelter & airline fares.  Overall CPI rose 0.4% after increasing by the same margin in Dec. Food & energy accounted for over two-thirds of the rise in overall CPI.  Food price inflation will be troublesome all year.

Consumer Prices in U.S. Climb More Than Forecast

The Conference Board reported a slim rise of 0.1% in its index of leading economic indicators, the 7th consecutive monthly advance. But it was slower than the 0.8% rise in Dec & a 1.1% increase in Nov (the biggest increases since Mar).  The index can swing wildly from month to month, but the Jan slowdown isn't necessarily a sign that economic growth will slacken over the next few months.  6 of the 10 indicators in the leading index contributed to the increase, led by the interest-rate spread & the stock market. But 4 of the components retreated: building permits, money supply, weekly jobless claims & the factory workweek.

Index of Leading Economic Indicators in the U.S. Climbed 0.1%

Unrest in the Mideast is getting little attention in the markets. Pro-democracy protesters in Bahrain, home to the US Navy’s Fifth Fleet, stepped up demands for the gov to resign after a crackdown left at least 3 dead. Iran wants to send 3 gunboats thru the Suez Canal, adding to uncertainty in the region.  But MLPs are at record highs while junk bond funds & REITs are at multi year highs, with no signs of selling in sight.  US economic recovery data looks decent, but dreary unemployment  & housing data drags on.  The S&P 500 and Dow are only about 15-20% off their record highs reached in late 2007 & both have strong tail winds. 

Dow Jones Industrials   ---   2 weeks

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