Tuesday, March 8, 2011

Markets rise on easing oil prices

Dow shot up 102, advancers ahead of decliners 3-1 & NAZ rose 21.  Banks led the advance with the Financial Index having one of its best days in weeks.


Value 225.03 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   4.38  (2.0%)

The MLP index fell almost 3 to the 375s, an unusually large drop after the extraordinary run in the last 2 years.  But REITs are in demand, taking the REIT index up 3 to the 234s.  Junk bond funds were higher & Treasuries fell. The yield on the 10 year Treasury bond rose 3 basis points to 3.53%.

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

JPMorgan Chase Capital XVI (AMJ)

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Oil was lower as members of OPEC discussed whether to hold a special meeting & Libyan rebels prepared an offensive to regain a town.  Gold eased off in sympathy with the oil market.

CLJ11.NYM....Crude Oil Apr 11...104.61 ...Down 0.83  (0.8%)

GCH11.CMX...Gold Mar 11.......1,429.90 ...Down 1.50  (0.1%)

Gold Super Cycle Link! Click Here

Bank of America (BAC), a Dow stock, could have relatively high expenses for the next 2 years as it wrestles with mortgage losses, but longer term it plans to cut costs to improve profitability.  "We are still eating large costs" related to the financial crisis and foreclosures, CEO Brian Moynihan said.  He is not interested in major acquisitions for the next 5 years. BAC assets averaged $2.4T in 2010, ending  BAC hopes to bolster its bottom line through moves including selling more products to its existing customers & offering more services to customers outside the US.  The bank's efficiency ratio -- expenses relative to operating revenue -- is too high at over 62%. Long term, it should come down to 55% or lower. From 2004-2007, BAC efficiency ratio averaged closer to 50.  Investors liked what they heard, the stock rose 53¢ to 14.56.

BofA's Investment Bank Seeks Profitability Target Below That of JPMorgan

Air China to Buy Five Boeing 747-8 Planes on China Travel

Photo:  Bloomberg

Boeing (BA), another Dow stock, sealed deals worth $10B with 2 airlines in China, the world's fastest growing market that is likely to buy more than 2000 aircraft over the next 5 years.  As air travel becomes more popular among China's increasingly wealthy population, Chinese airlines will expand fleets to compete with players such as Singapore Airlines & Cathay Pacific.  China's purchases of aircraft will help drive overall demand in Asia-Pacific, where average annual air traffic growth is expected to grow by 6.8% over the next 20 years, higher than the global pace, BA said. Asia-Pacific is likely to make up a third of global plane demand over the next 20 years.  The stock gained 1.43 to the 72s.

Boeing Wins 43 Widebody Orders From Hong Kong Air, Air China

Stocks are having a good day on rather flimsy hopes from Libya.  The region remains very volatile as it looks like the rebels are going not going to give up.  They want a change in regime which will bring a new set of problems.  Dow has not done much in over a month, but bulls are back in force today.

Dow Industrials (INDU)

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