Wednesday, March 16, 2011

Markets extend losses, Dow down 430 this week

Nuclear problems in Japan are growing worse along with an increased understanding of how much damage the disaster will do to companies around the world. Dow sank 244 (sliding all day & ending near the lows), decliners ahead of advancers 3-1 & NAZ fell 50. Bank stocks had a bad day, the Financial Index is 18 below the highs last month.

S&P 500 FINANCIALS INDEX

Value	213.56
Change	-4.12 (-1.9%)

The MLP index rose 3½ to the 362s, but is still 21 below its record highs last month. The REIT index fell 3½ to 226, a 7 week low. Junk bond funds were weak, falling 1% but Treasuries were strong amidst confusion in the markets. The yield on the 10 year Treasury bond plunged 11 basis points to 3.21%, esentially matching yesterday's low at the open. Oil pared gains as concern over Japan's nuclear crisis overshadowed fighting in the oil-rich regions of the MidEast & Northern Africa. Gold rallied to over $1400 but selling in the PM brought it back under $1400.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.09%
U.S. 2-year		0.56%
U.S. 10-year		3.21%

CLJ11.NYM

....Crude Oil Apr 11

...98.40

.....

1.22 (1.3%)

GCH11.CMX

...Gold Mar 11

.....1,403.60

...

11.00

(0.8%)

Chairman of the U.S. Federal Reserve Ben S. Bernanke

Photo: Bloomberg

The Federal Reserve signaled that it's unlikely to expand a $600B bond purchase plan as the recovery picks up steam & the threat that inflation will fall too low begins to wane. The economy is on a “firmer footing, and overall conditions in the labor market appear to be improving gradually,” the FOMC said in its statement yesterday after its meeting in Washington. While commodity prices have “risen significantly,” inflation expectations have “remained stable.” This program will end in Jun.

Fed Signals Further Stimulus Unlikely as Economic Recovery Gains Strength Fed Signals Further Stimulus Unlikely as Economic Recovery Gains Strength

Apple Downgraded for First Time Since October

Photo: Bloomberg

Apple (AAPL), with the 2nd largest market cap in the world, fell the most in almost 2 months from an analyst downgrade on risks related to manufacturing partner Foxconn Technology. Slower sales growth at Foxconn, with Chinese factories that make AAPL products, may signal lower-than-expected revenue for AAPL. The Q2 sales target was reduced to $22B from $23B & EPS was cut to $5.10 from $5.49. AAPL stock was lowered to “market perform” from “market outperform.” This is its first downgrade since Oct. Of the 55 analysts covering AAPL, 50 recommend buying the shares while 5 rate it a “hold.” The earthquake & tsunami in Japan also present near-term risks for AAPL. Even after this downgrade, the analyst says there aren’t any long-term fundamental concerns for the stock. Uh huh! The average 12-month price target for the stock is $434, $104 above today’s price. AAPL stock fell $15 to $330.

Apple Is Downgraded by Analyst for First Time Since October; Shares Drop

Apple Inc. (AAPL)

The price of gas at the pumps remains at $3.55.
State's Graph

This is one of the worst week for the markets since the financial collapse 2 years ago. And no end is in sight. The 200 day moving average for the Dow looks to be far away, but not that much any longer. Breaking thru would be a very bad sign for the technicians. Yesterday's global problems continued & look like they will be around thru the rest of the week at a minimum. Japan is a mess with Tokyo becoming more involved in the story. Mideast unrest remains while the US does nothing to stop the violence. The federal budget mess should get a minimal extension, but fundamental problems remain. With this background, buyers are flocking to Treasuries & to a limited degree into gold.