Thursday, April 14, 2011

Markets slip on weak economic data

Stocks were under water from the start on disappointing news from inflation & jobless claims. Dow fell 50, decliners ahead of advancers a mild 4-3 & NAZ was off 16. Bank stock were leading the way down with the Financial Index back to where it started the year.

S&P 500 FINANCIALS INDEX

Value	216.93
Change	-2.07 (-0.9%)

The MLP index slipped a fraction in the 377s, a 3 week low, while the REIT recovered almost 2 to 233 (again where is was 3 weeks ago). Junk bond funds barely budged as was the case for Treasuries. Oil climbed as a fire shut a unit at a Philadelphia refinery & a gov report showed US gas supplies plunged the most in 12 years. The gold chart below shows it's heading for new record highs.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.06%
U.S. 2-year		0.73%
U.S. 10-year		3.45%

CLK11.NYM

...Crude Oil May 11

...107.74

.....

0.63

(0.6%)

GCJ11.CMX

.....Gold Apr 11

........1,466.20

...

11.30

(0.8%)

Photo: Bloomberg

Initial claims for unemployment rose 27,K to 412K, well above expectations for a decline to 380K. The 4-week moving average climbed 5K to 395K. This rise in claims interrupted a downward trend that had kept them below the 400K threshold for 4 weeks (a level associated with steady job growth). Estimates for claims were 370K-395K Despite last week's rise, the 4-week average held below the 400K mark for a 7th straight week. The number continuing to collect benefits declined 58K to 3.68M in the latest week, the fewest since Sep 2008 (Lehman collapse). The continuing claims figure does not include the number of workers receiving extended benefits under federal programs. The data is just for one week, but this is another reminder that all is not well with the recovery.

Jobless Claims in U.S. Jumped Reflecting Quarter-End Volatility

Core producer prices (PPI) rose slightly faster than expected in Mar & the core increase from a year ago was the largest since Aug 2009. The Labor Dept said its index for prices paid at the farm & factory, excluding volatile food & energy, rose 0.3% after gaining 0.2% in Feb. Light trucks prices, which advanced 0.7%, accounted for 1/3 of the rise in core PPI last month. The increase was the biggest since Jul. Passenger vehicle prices increased 0.9%, the largest since Jun 2009. In the 12 months ending in Mar, PPI rose 1.9%, the biggest increase since Aug 2009, after gaining 1.8% in Feb. Inflation worries always make markets nervous.

Wholesale Prices in U.S. Increase 0.7%, Led by Energy, Trucks

Worlwide PC shipments unexpectedly fell 3.2% sequentially in Q1 as businesses & consumers held off on purchasing new machines & shifted focus to tablet computers according to IDC, a market-research firm. It projected that worldwide shipments would grow 1.5% from the year-earlier period. Hewlett-Packard (HPQ), a Dow stock, remained #1, accounting for 18.9% of the global market. Dell (DELL) was 2nd with 12.8% & Acer was 3rd with 11.2%. The growth of media tablets may not have been the only factor in the decline. Extending PC lifetimes & a lack of compelling new PC applications also were significant. Higher fuel & commodity prices as well as disruptions caused by Japanese disaster may also have curbed sales. Worldwide PC shipments totaled 80.6M in Q1 led by a 10.7% drop to 16.1M.in the US. Sluggish sales are most disturbing for Apple (AAPL), a stock priced to perfection AAPL fell 2 to the 334s after going nowhere for months.

PC Shipments Unexpectedly Decline 3.2 Percent in First Quarter, IDC Says

Apple Inc. (AAPL)

Dow has retreated to 3 week lows. Bigger picture stories are weighing on traders. The Japanese disaster drags on, making it tougher for economic recovery. Fighting in Libya continues although the rest of MidEast has quieted down. European sovereign debt issues are rising. Budget deficits in The US are getting much more attention with negative implications associated from lower growth in gov spending. Markets have been largely forgotten about corrections. Earnings season is just beginning, but a sluggish performance by the Financial Index signals banks will have a tough time making favorable comparisons over last year's relatively good numbers. And bank stocks are traditionally market leaders.