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.

S&P 500 FINANCIALS INDEX

Value	219.74
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)

Treasury yields:

U.S. 3-month		0.07%
U.S. 2-year		0.58%
U.S. 10-year		3.28%

CLJ11.NYM

...Crude Oil Apr 11

...100.90

...

0.52 (0.5%)

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)

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)

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.