Tuesday, March 8, 2011

Dow is up 5550 from its low 2 years ago

Bulls returned to the stock markets with a vengeance. Dow gained 124 finishing near its highs, advancers ahead of decliners 3-1 (could have been better) & NAZ was up a more moderate 20. Bank of America (BAC), a Dow stock, came clean about its problems which was refreshing for investors. Bank stocks led the rally with the Financial Index having an excellent day, but remains 5 below its interim high reached last month.

S&P 500 FINANCIALS INDEX

Value	225.57
Change	4.92 (2.2%)

The MLP finished off its lows, but still had loss of 2 to the 376s & the chart shows sideways trading since Feb. REITs had a good day, taking the index up 3½ to the 234s. Junk bond funds were higher but Treasuries were weak when stocks rose. The yield on the 10 year Treasury bond was up 5 basis points to 3.54%.

Treasury yields:

U.S. 3-month		0.10%
U.S. 2-year		0.72%
U.S. 10-year		3.54%

JPMorgan Chase Capital XVI (AMJ)

OPEC is still trying to determine if it needs to hold a meeting related to production problems in Libya & oil ended well off its lows around $103.50. Gold slipped from yesterday's record. A chart shows its dramatic rise in the last 6 weeks.

CLJ11.NYM

....Crude Oil Apr 11

...105.05

....

0.39 (0.4%)

GCH11.CMX

...Gold Mar 11

.......1,426.90

....

7.20 (0.5%)

$$ Gold Super Cycle $$

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The average price for gas at the pumps was $3.52 yesterday. These prices have not been seen since the ugly days in the summer of 2008.

Source: AAA

McDonald’s February Same-Store Sales Rise 3.9%

Photo: Bloomberg

McDonald's (MCD), a Dow stock & Dividend Aristocrat, reported softer-than-expected Feb sales at established US restaurants as high unemployment & rising gas prices threaten to curb consumer spending. Sales at US restaurants open at least 13 months were up 2.7%, less than the 3.6% gain expected. Sales in the US account for about 35% of overall revenue. In Europe, which contributes 40%, same-restaurant sales were up 5.1% for a 2nd consecutive month of strong gains (after a decline in Dec). Same-restaurant sales rose 4% in Asia/Pacific, Middle East & Africa, better than the 1.8% increase expected. The stock fell 75¢ to the 75s where it yields 3.2%.

McDonald's February Sales Climb 2.7% in U.S., Missing Analysts' Forecasts

Stocks markets want to roar again. But Dow has been sputtering for weeks. Today's gain returned the Dow to where it was 5 weeks ago. This is the 2 year anniversary of the low for the Dow which has been followed by probably its best rally in history. The MCD sales data for Feb could be telling. Higher gas prices are being felt by consumers & they are pinching hard. Gas prices will continue to rise, the full effects of $105 crude oil has not fully worked its way into prices at the pump. An old rule of thumb is that higher gas prices bring falling stock markets.