Tuesday, April 12, 2011

Markets decline on commodity sell off

Stocks sank at the opening & remained near that lower level for the rest of the day. Dow fell 117, decliners ahead of advancers 3-1 & NAZ dropped 26. Commodities & commodity stocks (i.e. oil) led the decline. Bank stocks were also weak, the Financial Index has gone nowhere for months.

S&P 500 FINANCIALS INDEX

Value	220.72
Change	-0.86 (-0.4%)

The MLP index fell 3 to the 376s, 4½ above its lows earlier but still a very bad day for MLPs. Commodity & energy stocks were hit hard & MLPs also suffered. The REIT index was off a fraction to the 231s & junk bond funds slipped around 1%. Treasuries rallied as stocks sold off, but gains were cut back in late day trading. The yield on the 10 year Treasury bond is at its low in the last 5 days. Commodities, such as oil & gold, were hit hard with selling from a reaization that the sky is not the limit. Most have been in a rally mode for months & even years. But fundamentals for gold remain strong, it's still close to the highs reached last Fri.

JPMorgan Chase Capital XVI

Treasury yields:

U.S. 3-month		0.04%
U.S. 2-year		0.75%
U.S. 10-year		3.50%

CLK11.NYM

...Crude Oil May 11

...106.10

....

3.82

(3.5%)

GCJ11.CMX

....Gold Apr 11

.........1,451.00

...

16.40

(1.1%)

Procter & Gamble (PG), a Dow stock & Dividend Aristocrat) raised its quarterly div to 52½¢, 9% above last year's rate of about 48.2¢ & in line with company guidlines about raising divs. PG has increased its div for 55 years, one of the longest streaks for any Dividend Aristocrat. The stock gained 70¢ in the 62s.

Procter & Gamble raises dividend 9 percentAP

Procter & Gamble Company (The) (PG)

Cisco to Close Flip Video-Camera Business

Photo: Bloomberg

Cisco (CSCO), another Dow stock, will close its Flip video-camera unit, cutting about 550 jobs as it reorganizes its consumer businesses. Pretax costs from the revamp won’t likely top $300M in H2 of FY2011. The remaining consumer business will be realigned to support core routing, switching & services, collaboration, architectures & videos. CEO John Chambers said that he will make several “targeted moves” to restore lost credibility & sharpen the company’s focus. CSCO has shed the “accountability that has been a hallmark of our ability to execute consistently” for customers & investors. The company is planning a series of changes aimed at revamping leadership & making it easier for customers & partners to work with Cisco, he said. The stock fell 3¢ & has one of the dreariest charts on the NYSE.

Cisco to Close Flip Video-Camera Business as Part of Revamp

Cisco Systems, Inc. (CSCO)

Stocks had their worst day in month, a reminder that stock prices can fall. By itself, this means little but troubles around the globe are mounting. In the US gas at the pump went up to $3.79 yesterday. Earnings estimates have been reduced, making it easier for companies to "beat" lowered numbers but the bigger picture is that this is not a good sign for an economy in a recovery mode. The looming battle in congress over the debt ceiling & next year's budget could have a bigger effect than earnings for the markets in the next few weeks.