Wednesday, May 11, 2011

Markets tumble as commodities sell off again

Dow fell 130, decliners over advancers 3-1 & NAZ dropped 26. Bank stocks (along with oils) led the way down again. In over 2 months, the Financial Index has fallen from 230.

S&P 500 FINANCIALS INDEX

Value	215.44
Change	-2.90 (-1.3%)

The MLP index sank (a move greater than 5 is considered very large) to where it was last Nov & the REIT index lost 3 to the 244s (but only 5 below its yearly highs). Junk bond funds were mixed & Treasuries were strong on uncertainties over European debts. The yield on the 10 year Treasury bond dropped 4 basis points to under 3.16%, essentially at the multi month lows reached on Mon. Oil fell below $100 & gasoline tumbled the most in more than 2 years after an Energy Dept report showed that US supplies surged & fuel demand slipped. The oil contract retreated to where it was in late Feb. Gold fell, halting a 3-session rally, as a stronger dollar eroded the appeal of the precious metal.

ALERIAN MLP INDEX

Value	366.27
Change	-5.10 (-1.4%)

Treasury yields:

U.S. 3-month		0.02%
U.S. 2-year		0.55%
U.S. 10-year		3.16%

CLM11.NYM

...Crude Oil Jun 11

...98.99

...

4.89

(4.7%)

The federal monthly budget deficit narrowed to $40.5B in Apr from a year earlier as tax revenue climbed, an improvement from last year's shortfall of $82.7B. For fiscal YTD, the deficit totaled $869.9B, compared with $799.7B in the same period last year (the fiscal year runs from Oct 1 to Sep 30). This year’s deficit is projected to reach $1½T (9.8% of (GDP), according to the CBO. In FY2009, the gov reported the previous record deficit of $1.4T & in FY2010, the gov reported a $1.3T deficit, the 2nd-largest on record. Huge deficits mean the Treasury will have more auctions selling additional notes.

U.S. Budget Deficit Narrowed to $40.5 Billion in April as Revenue Climbed

Intel Boosts Dividend for Second Time in Six Months

Photo: Bloomberg

Intel (a Dow stock) raised its div 16% for Q3, the 2nd increase in 6 months, on expected robust demand for computers in 2011. The new div will be 21¢, up from 18.1¢ in Q2 which followed a 15% boost last Nov. For 2011, INTC will pay over $4B in divs, up from $3½B paid in 2010. "Worldwide demand for computing continues to increase at a very rapid rate, putting Intel on track for revenue growth of over 20 percent this year," CEO Paul Otellini said. INTC posted Q1 results ahead of expectations & forecast Q2 revenue growth that eased fears about the company struggling to find its footing as personal computer sales growth wanes. The stock gained 38¢ & the new div provides a generous 3.6% yield.

Intel Boosts Payout a Second Time in Six Months as Spending Lifts Earnings

Intel Corporation (INTC)

The average price at the pump climbed a penny yesterday to $3.96, something which is difficult for this economy to adjust to.
State's Graph

Raj Rajaratnam, the hedge-fund tycoon & Galleon Group co-founder at the center of an insider-trading crackdown, was found guilty of all 14 counts against him in the largest illegal stock-tipping case in a generation. While this is only a story for regular investors, it could greatly affect stock markets in general & may have been a factor in today's selling. He is a billionaire who will go to prison & that has to shake up money managers who more closely identify with his case. If so aftereffects could linger for weeks, even months. Meanwhile MLPs have lost a lot of luster after the scare about changing their tax status last week.