Friday, April 1, 2011

Dow reaches a 2½ year high on March jobs report

Stocks started the new month higher but lost steam in the PM. Dow gained 56 to near a 2011 high, advancers 2-1 ahead of decliners & NAZ gained 8.

S&P 500 FINANCIALS INDEX

Value	222.48
Change	1.77 (0.8%)

The MLP index rose 1½ to the 381s while the REIT index was up a fraction in the 237s. Junk bond funds were higher at their lofty levels. I just wrote an article on junk bond funds for SeekingAlpha:

http://seekingalpha.com/article/261385-high-yields-on-junk-bond-funds-still-attractive-in-low-yield-environment

Treasuries gained, pushing 2-year note yields down from the highest level in 10 months, after Bill Dudley, New York Federal Reserve Bank President said the economic recovery is “still tenuous,” easing speculation policy makers are poised to unwind stimulus measures.The yield on the 10 year Treasury eased, but more importantly the yield on the 2 year Treasury note is 0.79% (annualized), up from under 0.40% at its low last year. This is a leading indicator for rising interest rates & needs to be watched. Oil is up to $108 & on the move (upward) again. Gold is rising as shown by the green line in the chart below. Tensions from the Mideast (Libya, Syria, etc.) are high & higher oil prices are bringing more uncertainties to the global economic recover.

ALERIAN MLP INDEX

Value	381.01
Change	1.19 (0.3%)

Treasury yields:

U.S. 3-month		0.06%
U.S. 2-year		0.80%
U.S. 10-year		3.44%

CLK11.NYM

...Crude Oil May 11

...107.93

...

1.21 (1.1%)

Ford SUVs
Photo: Bloomberg

Last month, Ford (F) sold more new vehicles than General Motors (GM) in the US. This was only the 2nd month Ford has outsold GM since 1998. Ford sales rose 16% over last year. Among the strongest sellers was the new Explorer, which saw sales double over last Mar. Buyers gravitated to smaller, more fuel-efficient cars & SUVs because of rising gas prices. The new Fiesta subcompact saw sales jump 56% from Feb. Fusion sedan & Escape small SUV also saw big increases for the month. Ford sold 212K cars & trucks 6K more than GM.

Toyota (TM) said deliveries of Toyota, Lexus & Scion models fell 5.7% to 176K vehicles. Nissan, the 2nd-largest Japanese automaker, increased deliveries 27%. Honda, the 3rd-largest, said its sales in the US rose 23% last month to 133K Honda & Acura brand cars & light trucks. Hyuandi, South Korea's largest automaker, said deliveries rose 32% to 61,K vehicles, a record for its US sales in Mar. Industrywide light-vehicle sales ran at a seasonally adjusted annual rate of 12.9M in Mar,.a decline from the 13.4M rate in Feb & would be the first sequential drop in 7 months.

Ford Outsells GM for First Time in a Year

Gas at the pump is at highs not seen since the ugly days in 2008. Early news about auto sales in Mar are saying that high prices are being felt by consumers.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.619	$3.754	$3.885	$3.966	$3.059	$4.026
Yesterday Avg.	$3.606	$3.740	$3.872	$3.963	$3.049	$4.013
Week Ago Avg.	$3.561	$3.698	$3.829	$3.946	$3.021	$3.975
Month Ago Avg.	$3.387	$3.495	$3.633	$3.744	$2.859	$3.762
Year Ago Avg.	$2.803	$2.976	$3.083	$2.947	$2.329	$3.065

Source: AAA

Big companies increased divs by a record amount in Q1. 117 companies in the S&P 500 index said they would raise or start paying divs. The value of the new & raised annual divs announced amounted to a record $16.6B. Just 78 companies raised their divs in the same period last year. Now that the economy is recovering, profits are rising & investors are demanding something for their patience. JPMorgan (JPM), a Dow stock, is quintupling its annual div to $1, amounting to an increase of $3.1B. The value of the payout is a record for an S&P 500 company. Cisco (CSCO), another Dow stock, will begin paying $1.3B in divs annually, a record amount for a first-time div payer in the S&P 500.

Dividends come roaring back in 2011- Breakout

The good jobs news should have brought more buying in the markets. Dow went over 12,391, the previous high in 2011, but ended 15 below. The offer by NAZ to buy NYSE hit winds from the start. Congress wants to get involved & it will need approval from gov agencies. Then there's the whisper about higher interest rates in the wind, the QE2 program has less than 3 months to run. Higher gas prices at the pump are being felt at retail with more increases ahead. Next week is the last week before earnings season.