Thursday, June 30, 2011

Stock markets extend gains to 4 days

Dow closed H2 with a gain of 152, advancers ahead of decliners 3-1 & NAZ was up 33.  Bank stocks led the way up again, but the Financial Index is still down 14 YTD.

S&P 500 Financials Sector Index

Value206.87One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change  0.79    (0.4%)

The MLP index held the modest gains from the AM.  That gave it a gain of 3 in Jun & up 7 YTD.  It's trying to find its footing, but the increased risk of changes to the tax law will weigh on MLPs for some time.  The REIT index was up a fraction to the 241s.  It's down 8 in Jun, but up 19 YTD.  Junk bond funds were higher today, but off their best levels of the year.  Treasuries were weak again, as they have been all week,  Now that QE2 is over, not a lot of change is expected in these markets, at least from the Federal Resrve (FED).  The FED will continue buying Treasuries to pump money into the economy, using proceeds from holdings that mature   Oil & gold were little changed today but are up YTD with a 6 month chart for gold below.

Alerian MLP Index

Value371.59One-Year Chart for Alerian MLP Index (AMZ:IND)
Change   0.68   (0.2%)  

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLQ11.NYM...Crude Oil Aug 11...95.06 ...Up 0.29    (0.3%)

Live 24 hours gold chart [Kitco Inc.]

Here is today's Market Update video:

Gartner (IT), a  leading research firm, raised its 2011 outlook for global spending on tech products & services, saying fears that the Japan earthquake would seriously hurt tech spending appear to have been overstated.  It now predicts that tech spending will climb 7.1% in 2011 to $3.7T, above the previous forecast of 5.6%.  Last year, tech spending rose 5.9% to $3.4T.  "For 2011 as a whole, we expect Japan IT spending to be down in local currency, but we expect a positive growth trend to emerge in the second half of the year and continue into 2012," said Richard Gordon VP.  He expects telecom spending will rise 6.9% to $2.1T, compared with 7.3% growth last year & information technology services should rise 6.6% to $846B, compared with 3.1% growth in 2010.  Computing hardware spending is estimated to rise 11.7% to $419B, compared with 12.1% last year & enterprise software spending will grow 9.5 % to $268B, compared with 8.4% last year.  Cloud computing services, while still a tiny segment of tech spending, will rise to $89B in 2011, compared with $74B last year & spending in this market should climb to $177B by 2015.  This sounds like a pretty good year for tech spending.  IT stock, not well known, is a good way to play the growth in technology, up 48¢ today.

Gartner raises 2011 tech spending forecast AP

Gartner, Inc. (IT)

stock chart

Eli Lilly said the keys to overcoming the expiration of patents for key drugs lies in its labs & emerging markets like China.  33 potential drugs are in mid- or late-stage testing in the development pipeline.  While revenue may dip in the next few years, some of these drugs should fuel growth after 2014.  LLY also expects strong growth from Japan, the company's animal health business & countries like China, which has a growing middle class that will fuel a demand for new treatments.  But it has had pipeline failures that pressure the company into a big acquisition or a reduction in its quarterly dividend of 49¢.  LLY reiterated  it has no plans for a large-scale deal or to diversify outside its core business & said it expects to maintain its dividend "at least at its current level."  Because of this uncertainty, the stock has been lumbering along in the 30s for several years.  Today it rose 26¢.

Lilly pitches plan to overcome key patent losses AP

Eli Lilly and Company (LLY)

stock chart

The markets have been on a run all week.  Dow gained 94 in Q4, thanks to this week's recovery & is up over 800 in H1.  Considering the turmoil in world financial markets, highlighted by Greece & the threat to the credit standing of US Treasuries, stock markets held up well.  This week has seen a relief rally, relieved that Greece didn't fall apart.  But that's still not a done deal.  A rebellious population has to cooperate & there are no signs it will.  Tomorrow is a new month, new qtr & new half in 2011.  But Jul 1 should be quiet going into a long weekend.

Dow Industrials (INDU)

stock chart

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