Thursday, March 3, 2011

Markets rally on lower unemplyment claims

Dow gained 167, advancers ahead of decliners 7-2 & NAZ was up 40 (helped by a strong gain in Apple stock).  Bank stocks were also in a recovery mode. 


Value 224.06 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   3.698  (1.7%)

The MLP index gained 1¾ to the 381s & the REIT index was up 3 to the 234s, recovering after a steep 2 day slide.  Junk bond funds inched higher while Treasuries sold off on the good news about the economy. The yield on the 10 year Treasury bond rose 7½ basis points to 3.53%, its highest level in almost 4 weeks. 

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 saw profit taking on the possibility of calm coming to Libya & gold fell from a record level after Venezuela (hard to believe) offered to mediate a resolution to the crisis in Libya.

CLJ11.NYM...Crude Oil Apr 11...101.95 .....Down 0.28  (0.3%)

GCH11.CMX...Gold Mar 11......1,422.70 ...Down 14.50  (1.0%)

Gold Super Cycle Link! Click Here

U.S. Initial Jobless Claims Fall to 368,000

Photo:  Bloomberg

The number of people requesting unemployment benefits last week plunged to a nearly 3-year low, bolstering the likelihood that companies will increase the pace of hiring this year.  Applications for unemployment benefits fell 20K to 368K according to the Labor Dept, the 3rd decline in the past 4 weeks. Applications are at their lowest level since May 2008.  The 4-week average fell to 388K, the lowest level since Jul 2008 (the last time the average was below 400).  It is expected that the Feb employment report tomorrow will show strong job gains - 175K jobs.  The number receiving unemployment benefits dropped to 3.77M, the lowest level since Oct 2008. That doesn't include millions enrolled in emergency unemployment benefit programs funded by the federal gov.  An additional 4.5M unemployed received benefits under the extended programs & 9.2M were on the benefit rolls.  The faviorable jobs report was no great surprise, but hearing the news warms the hearts of the bulls.

U.S. Initial Jobless Claims Fall to 368,000, Lowest Since 2008

Last week, consumer confidence held close to the highest level in almost 3 years as more Americans said their finances were in good shape. The Bloomberg Consumer Comfort Index (formerly the ABC News U.S. Weekly Consumer Comfort Index) was minus 39.3 in the period to Feb 27, compared with minus 39.2 the prior week. Respondents’ view of their financial situation climbed to an almost 2-year high.  A 2-percentage-point cut in payroll taxes this year is trickling into bank accounts. Extra money & an improving job market are helping cushion the pinch from the biggest one-week jump in gas prices in 5 years.  The comfort index of personal finances rose to 2.4 last week, the highest since May 2009, from minus 2.3. 51% of those polled held positive views on their financial situation, up from 49% in the previous week & the first time in almost 2 years that the reading topped 50%.  Another indication about an economic recovery although higher gas prices will start pinching these numbers soon.

Income Optimism Keeps U.S. Comfort Index Near High

AT&T (T) and Verzon (VZ), both Dow stocks, will provide service for the Apple (AAPL) iPad 2.  This  follows announcement by AAPL that it sold 15M iPads between Apr-Dec last year.  AAPL is hot again, shooting up 7 to 359 (5 below its recent record).   The other 2 stocks hardly budged. 

AT&T, Verizon to provide iPad 2 serviceat

Apple   ---   YTD

AT&T   ---   YTD

Verizon   ---   YTD

Buyers are coming out of the woods today, taking the Dow within 150 of its recent recovery high.  This is one of those days when all that is needed to pick a winner is to throw darts.  Tomorrow the Feb jobs report will be released & expectations are very high.  The problem is to figure out how much of the good news is already baked into the markets.

Dow Jones Industrials   ---   2 weeks

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