Thursday, June 9, 2011

First days of gains for stocks in more than a week

Dow rose 75 (but 60 below its earlier highs), advancers ahead of decliners 3-2 & NAZ was up 9. There was selling in the last hour, not a good sign coming off strong early gains. Bank stocks had a similar fate with the Financial Index closing below its highs due to selling in the last hour.

S&P 500 Financials

Value	200.62
Change	2.36 (1.2%)

The MLP index had a very big rebound (5 is substantial in this world) from oversold conditions. Bulls will point to the 350 floor which is still holding. But the REIT index was soft, falling 2½ to the 238s. Junk bond funds were generally higher while Treasuries were a little weaker. Oil was strong. A trader on Bloomberg said it bounced nicely off the $96 lows & should go higher with $110 as his target. Gold has been flattish in recent days but remains at high levels, making its investors happy.

Alerian MLP Index

Value	360.95
Change	5.69 (1.6%)

Treasury yields:

U.S. 3-month	0.041%
U.S. 2-year	0.416%
U.S. 10-year	2.993%

CLN11.NYM

...Crude Oil Jul 11

...101.88

...

1.14

(1.1%)

Photo: Yahoo

The economic recovery is losing steam. Jobs are limited & food prices are likely to stay high into next year. The trade deficit narrowed in Apr partly because American companies sold more goods overseas & imports fell, but much of the improvement was the result of temporary factors. Today's reports reinforced the view the economy has slowed. The number of people seeking unemployment benefits hardly changed for a 2nd straight week. A wet spring will likely cut the size of this fall's corn harvest & keep food prices high through 2012. Exports rose to a record $176B while imports dipped to $219B, but a key factor was a 26% decline in imports from Japan. Wholesale companies added to their stockpiles in Apr for a 16th straight month, boosting inventories to 3 year highs, a sign that businesses were expecting stronger sales. More recent data suggests that high gas prices have since weakened demand for manufactured goods. On the polical front, Congress still needs to agree to raise the $14.3T debt ceiling, not to mention passing budgets for this fiscal year & next (with budget cuts). Stock markets have been selling off on this gloomy news until today. Economic fundamentals remain weak.

High unemployment claims, food prices slow economy AP

Bond prices slipped after the 3rd auction of Treasury debt this week didn't go as well as the prior ones. Demand was tepid for 30-year bonds at auction. The Treasury sold $13B bonds at a yield of 4.24%. The yield on 30-year bonds already in circulation rose to 4.22% from 4.19% yesterday.

Treasury sells $13 bln in 30-year bonds at 4.238% at MarketWatch

Fusion-io (FIO), a maker of fast, chip-based "hard drives" for servers, & stockholders offered 12M shares to the public at $19. above early expectations of $13-$15. The price closed at $22.50, off its highs in the high 20s. Fusion-io's ioDrives are composed of flash memory, faster than traditional spinning hard drives, making for faster servers for enterprise users.

Fusion-io Advances After Pricing Shares Above Range in $233.7 Million IPO

The average price for gas at the pump keeps slipping, down about a nickel in the last week. I still have doubts about how long this trend will continue with oil at $102.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.734	$3.879	$4.006	$3.988	$3.219	$4.236
Yesterday Avg.	$3.748	$3.894	$4.022	$3.993	$3.223	$4.242
Week Ago Avg.	$3.784	$3.923	$4.049	$4.007	$3.242	$4.267
Month Ago Avg.	$3.951	$4.096	$4.224	$4.148	$3.338	$4.393
Year Ago Avg.	$2.713	$2.881	$2.984	$2.981	$2.190	$2.88

Source: AAA

There was a lot of talk about improving economic figures being responsible for higher markets today. I'm not so sure & the selling in the last hour seems to back up my thoughts. Economic problems drone on. A succesful IPO was a good sign, especially when many of the recent ones have not done so well. But I see this as a relief rally. Dow is still down 700 from its highs 5 weeks ago. However MLPs had an exceptional day with a very strong gain for the index, closing at its high.