Tuesday, June 21, 2011

Markets rise on home sales data

Stocks have been strong so far.  The Dow is up 80, advancers ahead of decliners 4-1& NAZ gained 46.  Bank stocks are leading the way up, but the recent rise in the chart for the Financial Index is hardly noticeable.

S&P 500 Financials Sector Index

Value 203.06 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    2.39     (1.2%)

MLPs are having a good day, taking the index back over 360 & the REIT index rose 1 to just over 240.  Junk bond funds were higher, rebounding after last's sell off.  Treasuries were a lttle lower, but the yield on the 10 year Treasury is holding below 3%.  Oil rose for a 2nd day on speculation that the Greek Prime Minister would win a confidence vote today, moving the nation a step closer to avoiding a default on its debt.  Gold continues to work its way higher in small steps & a record high is not that far away. 

JPMorgan Chase Capital XVI (AMJ)

stock chart

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CLN11.NYM....Crude Oil Jul 11...94.27 ...Up 1.02 (1.1%)

GCM11.CMX...Gold Jun 11.....1,544.00 ...Up 2.50  (0.2%)

Existing Home Sales in U.S. Fell in May to Six-Month Low

Photo:   Bloomberg

Fewer people purchased previously occupied homes in May, bringing sales down to the lowest level of the year.  Home sales sank 3.8% last month to an annual rate of 4.81M, the weakest pace since Nov according to the National Association of Realtors.   But that's far below the 6M homes per year sold in healthy housing markets.  First-time homebuyers ticked down to 35% of sales (they typically drive half of sales).  The median sales price for a previously occupied home was $166K, 4.6% lower than last year.  Sales of homes at risk of foreclosure fell, but still made up 31% of all purchases. Additionally, a large number of pending foreclosures are backlogged in the courts or held up by state & federal probes into troubled foreclosure practices by lenders.  A record 1M homes were lost to foreclosures last year & 1.2M more are expected this year.  While housing remains stuck in the mud, this data was less worse than feared, a variation of  "good."

U.S. Existing-Home Sales Hit Six-Month Low

EU Greek Crisis

Photo:   Bloomberg

Greece's prime minister faces a crucial confidence vote in parliament over the new unpopular austerity measures needed to avoid a national default.  If the new gov fails to get the necessary parliamentary support in a midnight vote, it would throw into question whether it can pass a new austerity bill by the end of the month as demanded by intl creditors.  Expectations that the Prime minister would win, lifted world markets.  Without parliamentary approval for the Cabinet & the new measures, Greece will not get the next €12B ($17B) installment of its €110B ($157B) bailout from the EU & the IMF, funds needed by mid-Jul to avoid default.  The picture remains fuzzy, but stock markets are betting on a favorable outcome. 

Papandreou Confidence Vote May Decide Fate of Greece With Aid in Balance

Best Buy Sets $5 Billion Share Buyback

Photo:   Bloomberg

Best Buy will buy back $5B of its common stock & raise its dividend 7%. The buyback replaces a $5½B repurchase program that had about $800M left.  The quarterly div was raised to 16¢.  Last week BBY reported Q1 results that topped expectations, helped by a bigger presence in China & renewed focus on hot-selling gadgets like smart phones.  The stock gained 91¢.

Best Buy Sets $5 Billion Share Buyback

Best Buy Co., Inc. (BBY)

stock chart

Sellers are on vacation, so buyers are carrying the day.  Bulls like to see banks leading the advance.  Strength in MLPs is another plus for market strength.  But it's still too early to say this turn is significant in the bigger picture.  The Greek situation remains muddy while raising the debt ceiling for the US seems to be going nowhere.  To pass that legislation, budget cuts will be needed which will pinch the economic recovery.  Then there is the QE2 program from the FED which ends next week.  A lot of worries, but the Dow chart looks less ugly than it did last week.  

Dow Industrials (INDU)

stock chart

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