Tuesday, May 17, 2011

Lower markets on unreassuring economic data and earnings

Stocks were under water all day, but finished off their lows. Dow fell 68, decliners over advancers 3-2 & NAZ inched up a smidgen after yesterday's tumble. Bank stocks recovered a little, but the Financial Index remains essentially at its lows for 2011.

S&P 500 FINANCIALS INDEX

Value	213.34
Change	1.52 (0.7%)

The Alerian MLP Index pulled back a whopper sized 5¾ to the 351s, the strength of the 350 resistance line is being called into question. The chart for the tracking fund below shows that it broke thru its 200 day moving average, a negative signal. REITs did better as their index fell modest change in the 242s. Junk bond funds were soft but Treasuries rose, pushing 10-year note yields to their lowest level in 2011 as US housing starts unexpectedly fell & industrial output stalled. Oil fell for a 2nd day as US on damping optimism about the economic & fuel-demand outlook. The green line (showing today's trading) in the gold chart is sloshing around 1480 on negative thinking for commodities.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.03%
U.S. 2-year		0.52%
U.S. 10-year		3.12%

CLM11.NYM

...Crude Oil Jun 11

...97.04

...

0.33

(0.3%)

Housing Starts in U.S. Unexpectedly Decrease to 523,000 Pace

Photo: Bloomberg

US housings starts fell unexpectedly in Apr as flooding & tornadoes in the South shut down construction sites & homebuilders continued to struggle almost 2 years into an economic recovery. Work began on 523K houses (annualized), down 11% from the prior month & below 569K forecasted, according to the Commerce Dept. Building permits, a sign of future construction, also decreased. Falling home values & the prospect of more foreclosures entering the market indicate that home construction will be slow to gain traction & may take years to unfold. Building permits fell 4% to a 551K annual pace versus a projected 0.9% rise to a 590K level. Construction of single-family houses decreased 5.1% to a 394K rate & work on multifamily homes, such as townhouses & apartments, fell 24% to an annual rate of 129K (the weakest so far this year).

U.S. Housing Starts Unexpectedly Fall

Home Depot Profit Meets Analyst Estimates

Photo: Bloomberg

Home Depot, a Dow stock, EPS rose 12% in Q1 to 50¢ from 43¢ last year, in line with expectations & helped by lower expenses. But harsh weather in Q1 & a depressed housing market weighed on sales, which slipped 0.2% to $16.8B. Comparable sales at US stores were 0.7% lower & the number of customer transactions dropped 1.9%. “Our sales declined slightly due to a slow spring selling season, but for the year we expect sales to grow in line with the guidance we previously provided,” said Frank Blake, CEO. HD expects sales to rise 2.5% in 2011 & lifted its forecast to $2.24 for EPS from an earlier outlook of $2.20. The stock gained 42¢.

Home Depot Profit Meets Analyst Estimates

Home Depot, Inc. (The) (HD)

The price for gas at the pump pulled back from a recent high at $3.99 last week, but remains in very high territory.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.944	$4.085	$4.212	$4.116	$3.311	$4.357
Yesterday Avg.	$3.955	$4.096	$4.221	$4.123	$3.334	$4.388
Week Ago Avg.	$3.951	$4.096	$4.224	$4.148	$3.338	$4.393
Month Ago Avg.	$3.827	$3.964	$4.092	$4.131	$3.218	$4.234
Year Ago Avg.	$2.867	$3.045	$3.154	$3.102	$2.264	$2.980

Source: AAA

Lower stock prices brought back buyers in the PM, but not in force. Volume continues to just lumber along at low levels (NYSE floor volume was under 1B shares) . Even after the bounce back in the PM, Dow is down 330 in May. I don't mean to harp on the decline for MLPs, but that is disturbing for what is supposed to be a bull market for stocks in general & MLP units in particular. The index has already fallen 40 in May, one of its worst months over the last 15 years!