Tuesday, May 10, 2011

Stocks lifted by Microsoft's $8 billion purchase of Skype

Dow was higher all day & finished near its highs. Dow rose 72, advancers over decliners 5-2 & NAZ gained 27. Bank stocks finally were able to lead a rally.

S&P 500 FINANCIALS INDEX

Value	218.34
Change	2.04 (0.9%)

The MLP index fell & has been sluggish after last week's sell-off. But the REIT gained 4 to nearly 248, taking it within 2 of its multi year high. Junk bond funds were slightly higher & Treasuries fell after a weak auction for 3 year notes today. The yield for 10 year Treasury bond fell to uinder 3.15% yesterday, a 5 month low, but shot up after the auction today. Oil rose as concern increased that flooding of the Mississippi River will disrupt fuel output. Buyers returned to gold & silver (the green lines in the charts are for prices today).

ALERIAN MLP INDEX

Value	371.37
Change	-0.63 (-0.2%)

Treasury yields:

U.S. 3-month		0.03%
U.S. 2-year		0.58%
U.S. 10-year		3.20%

CLM11.NYM

....Crude Oil Jun 11

....103.65

....

1.10 (1.07%)

Live 24 hours silver chart [ Kitco Inc. ]

Citigroup became a $40 stock for the first time in 3½ years, but investors aren't any richer, because of a 1 for 10 reverse stock split (1000 shares of old stock were swapped for 100 shares of new stock). The move instantly erased its single-digit stock price which is expected to allow fund managers who shun stocks under $10 or $5 to consider investing in Citi. In addition, there will be a div, a measly penny, but good enough to allow it to be counted as a div paying stock so that it can be added to lists of div paying stocks. The new stock was a few pennies higher.

Citigroup instantly becomes a $40 stock- WSJ

Citigroup Inc. (C)

GM to Invest $2 Billion in U.S. Factories

Photo: Bloomberg

General Motors will invest $2B in US plants to boost production & market share. The plans were announced at a transmission factory in Toledo, Ohio, where GM will invest $205M which potentially could add 250 jobs. The overall investment should create or save 4K jobs at 17 facilities. GM's market share in the US increased to 19.6% in Apr from 18.7% in the same period last year. GM has been spending on factories, since its bankruptcy, to add new models & technologies for an expected improvement in auto sales. It forecasts that auto sales in the US will get back to 14-15M units eventually (near record levels in the last decade). The stock was up 22¢ but hasn't strayed far from its $33 IPO last year.,

GM to Invest $2 Billion in U.S. Plants

General Motors Company (GM)

Gas fuels cars & the average price at the pump has eased back from just under $4. But $3.95 is still very high, up substantially YTD & above last May.
State's Graph

Stock markets were feeling better as the bulls returned. But MLPs did not join the rally, maybe on lingering worries about changing the tax laws for MLPs. Tomorrow the Treasury will sell $24B of 10 year notes & another $16B of 30 year notes on Thurs. These issues ask that investors accept the inflation risk over a much longer period of time & will be interesting to follow after today's sluggish demand of 3 year notes. Euro debt problems are still overhanging the markets, but today they were forgotten.