Monday, March 7, 2011

Markets retreat on rising gas prices

Stocks digested the news on higher oil prices with only moderate damage. The Dow ended 48 above its low at midday (although there was selling into the close). Dow dropped 79, decliners over advancers 5-2 & NAZ fell 39 after a downgrade on semiconductors. Banks also dropped, taking the Financial Index 10 below its interim high on Feb 18.

S&P 500 FINANCIALS INDEX

Value	220.65
Change	-1.48 (-0.7%)

The MLP index fell over 1¾ to the 378s & the REIT was down a like amount to the 231s. The chart is for AMJ, a fund which tracks the AMZ index. Junk bond funds were down a tad, still at lofty levels with only moderately high yields.

JPMorgan Chase Capital XVI (AMJ) Stock Charts

Oil had to settle at $105 after getting within a hair of $107. Gold was also off its high at an amazing $1445. These commodities are hot & will remain that way (at a minimum) until the unrest in Libya & the rest of the Mideast quiets down. Bulls see a new record high for crude oil & gold going over $1500.

CLJ11.NYM

....Crude Oil Apr 11

...105.38

.....

0.96

(0.9%)

GCH11.CMX

...Gold Mar 11

.......1,438.20 ...

10.00

(0.7%)

$$$ Gold Super Cycle $$$

Click Here

Treasury 5-year notes rose, pushing the yield to the lowest level in almost a week, as the Federal Reserve (FED) purchased $6.6B in debt to support the US recovery. Its yield dropped 1 basis point to 2.18%. Yields on the benchmark 10-year bonds were little changed. Dennis Lockhart, Atlanta FED President, said policy makers shouldn’t rule out more debt buying, echoing comments from Bernanke last week. Uh, oh!

Lockhart Says Fed Shouldn't Rule Out More Asset Purchases If Economy Slows

Treasury yields:

U.S. 3-month		0.10%
U.S. 2-year		0.69%
U.S. 10-year		3.50%

This is the latest set of data from the AAA on prices at the pump.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.509	$3.643	$3.772	$3.878	$2.941	$3.870
Yesterday Avg.	$3.503	$3.634	$3.763	$3.863	$2.929	$3.854
Week Ago Avg.	$3.368	$3.468	$3.613	$3.713	$2.840	$3.737
Month Ago Avg.	$3.122	$3.251	$3.377	$3.480	$2.672	$3.516
Year Ago Avg.	$2.747	$2.917	$3.022	$2.896	$2.339	$3.079

Stocks have been adjusting quite well to the news about oil disruptions. On the other hand, bulls have lost command over the markets as Dow has given back gains made in the last 5 weeks (but up 500 YTD). This is shaping up as another tough week