Monday, May 2, 2011

Markets extend gains after Bin Laden is killed

Stocks remain strong,but were not propelled by earnings gains today. Dow rose 44, advancers ahead of decliners 3-2 & NAZ rose 4. Banks were also higher, but the Financial Index remains stuck in its rut near 220.

S&P 500 FINANCIALS INDEX

Value	220.84
Change	0.35 (0.2%)

The MLP index fell 2 to the 387s while the REIT index was down only pennies in the 248s. Junk bond funds were a little higher as were Treasuries. Oil was also rose after declining as much as $2 in overnight trading. Silver futures (the red hot metal) plunged as much as 13%, the biggest intraday drop in 2½ years, as margins were raised for traders. Early last year, silver was $15! Gold touched a record before paring gains.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.04%
U.S. 2-year		0.61%
U.S. 10-year		3.29%

CLM11.NYM

...Crude Oil Jun 11

..........114.32

0.39

(0.3%)

GCK11.CMX

....Gold May 11

............1,550.80

...

5.20

(0.3%)

ZIK11.CBT

......Silver 5000 oz. May 11

...44.49

...

4.05

(8.3%)

Photo: Bloomberg

Manufacturing grew for the 21st straight month in Apr, though at a slightly slower pace than the previous month. The Institute for Supply Management (ISM) says its index of manufacturing activity dipped to 60.4, down from 61.2 in Mar & 61.4 in Feb, the fastest expansion in nearly 7 years. A reading above 50 signals growth. The index has topped 60 for 4 straight months after bottoming during the recession at 33.3 in Dec 2008. Manufacturing has been one of the economy's brightest spots since the recession ended. Factories have benefited from strong overseas demand for machinery & other goods. In addition, US consumers have spent more on autos, appliances & computers.

U.S. Manufacturing Grows at Slower Pace as ISM April Index Falls to 60.4

Builders began work on more office buildings, hotels & factories in Mar, after 3 straight monthly declines. Construction spending rose 1.4%, according to the Commerce Dept, the biggest advance since last Apr & was helped by a rise in spending on home-improvement projects. The overall increase, however, came after building activity had fallen in Feb to the lowest level in in more than a decade. Even with the advance, activity in Mar stood at an annual rate of $769B, just half the $1.5T pace considered healthy. It could take 4 years for the construction industry to fully recover from the housing bust & deep recession. Private construction projects increased 2.2% to an annual rate of $476B (a 2.6% rise in residential construction & a 1.6% increase in nonresidential projects). The gain in residential activity came from spending on home-remodeling projects but spending on both single-family homes & apartments declined. The rise in nonresidential projects was led by a 5.5% increase in the construction & expansion of factories.

U.S. Construction Spending Rises More Than Forecast as Manufacturing Gains

Photo: Yahoo

Chrysler turned its first profit since leaving bankruptcy 2 years ago. It reported Q1 net income of $116M on revenue of $13B. The profit is a milestone after its last reported profit was in 2006. Sales rose 18% worldwide in Q1. "Chrysler Group's improved sales and financial performance in the first quarter show that our rejuvenated product lineup is gaining momentum in the marketplace and resonating with customers," Chrysler CEO Sergio Marchionne said. Momentum is crucial to Chrysler for it to have an IPO later this year or early next. This is another sign of recovery in manufacturing.

Chrysler turns first profit since bankruptcy AP

Markets are digesting the news about Bin Laden, although not greatly affected. Retail sales & auto sales figure will be released shortly, giving a quick read on how much higher priced oil is affecting spending patterns. The big jobs report is coming on Fri & it is not expected to have dramatic new news. A gain in jobs is forecasted to be around 190K, good enough to only maintain the current high unemployment rate.