Friday, March 18, 2011

Stocks advance after cease-fire in Libya

Markets moved higher for their 2nd day of gains.  Dow rose 98, advancers ahead of decliners 4-1 & NAZ was up 10.  Bank stocks led the way with the Financial Index up 5 in 2 days.


Value 219.74 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change   2.25  (1.5%)

The MLP index rose 2½ to 370 (up 11 in 3 days) & the REIT index was up 3 to 231.  Junk bond funds rose but Treasuries were soft.  The yield on the 10 year Treasury bond rose 3 basis points to 3.28%.  Oil was down a fraction, remaining above $100, but gold headed higher, aiming for $1420.

JPMorgan Chase Capital XVI (AMJ)

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Treasury yields:

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

CLJ11.NYM...Crude Oil Apr 11...100.90 ...Down 0.52  (0.5%)

Live 24 hours gold chart [Kitco Inc.]

The ¥ backed away from historic highs after the Group of 7 major industrialized nations promised coordinated intervention in currency markets to support Japan's recovery from a catastrophic earthquake & tsunami.  The G-7 pledge came a day after the ¥ soared to an all-time high against the dollar, possibly threatening Japan's exports & hampering its economic recovery.  The dollar jumped to 81.26 ¥ from 79.45¥ immediately after the announcement. However it was not clear whether that was due to intervention or to traders reacting to the news. The dollar briefly slumped to 76.53¥ on Thu, a record high. The intervention was meant to calm "volatility" & G-7 govs had no target exchange rate.

G-7 Sells Yen as Japan Seeks Post-Quake Currency Floor

Oil prices fell after Libya declared a cease-fire & said the gov would stop military operations against rebels.  The cease-fire was announced shortly after the UN voted to authorize a no-fly zone & "all necessary measures," including airstrikes, to protect Libyan citizens from forces loyal to Gadhafi, & "will take the country back to safety" to ensure security for all Libyans.  We'll see.

Libya Declares Immediate Ceasefire After UN No-Fly Resolution

Nike Falls Most Since May on First Profit Miss Since 2006

Photo:   Bloomberg

Nike (NKE) reported Q3 was hurt by higher costs.  Consumer demand remained solid, revenue rose 7%, but NKE said higher costs will cut profitability into 2012. It will raise prices on a broad array of products & do more to control costs, though such measures may not pay off until much later.  Analysts expects cost headwinds to persist.  EPS rose 5% to $1.08 while  revenue rose 7% to $5.08B.  The stock plunged 8 to the 77s.

Nike Falls Most Since May on First Profit Miss Since 2006

Nike, Inc. (NKE)

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Cisco (CSCO) declared its first cash dividend will be 6¢ after shares fell 35% in the last year.  It has about $40B in cash & short-term investments.  CSCO was the only Dow company that didn’t pay a dividend. Last month, CSCO posted a profit margin that missed analysts’ estimates after it spent more to develop products & competitors undercut it on prices.  The stock rose 36¢.

Cisco Systems Declares First-Ever Quarterly Cash Payout of 6 Cents a Share

Cisco Systems, Inc. (CSCO)

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A sense of calm in North Africa is doing wonders for stocks.  Oil slipped on the news, but its price remains in a troubling high area.  MLPs have had strong gains even though the news from Libya should not have much effect on their operations. The 2 day rally has brought Dow into the black by over 300 YTD.  However, turmoil in oil countries in the MidEast is not going away & Japan could be facing a horrible nuclear disaster.  The VIX, volatility index, had been lumbering along the mid teens for months, but shot up to 30 on Wed & has settled back to 23 today.  There may be more wild gyrations ahead.

Dow Industrials (INDU)

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