Thursday, July 14, 2011

Lower markets after Bernanke nixes QE3

Dow closed down 54 or about 150 off the AM highs, decliners ahead of advancers almost 4-1 & NAZ fell a big 34 (ahead of Google (GOOG) earnings. Bank stocks keep leading the way down after the Financial Index tried for a gainer in the AM.

S&P 500 Financials Sector Index

Value	200.42
Change	1.57 (0.8%)

MLPs & REITs slipped again with selling in the stock markets. Junk bond funds were lower as were Treasuries & the yield on the 10 year Treasury is back over 2.9%. Oil tumbled on Bernanke's comments that there would be no QE3 to stimulate the economy. Gold rose to a record (nearing $1600) for the 2nd straight day on speculation that debt woes in the US & Europe will escalate, boosting the appeal of the precious metal as a safe haven.

Alerian MLP Index

Value	370.41
Change	-0.96 (-0.3%)

Treasury yield:

U.S. 3-month	0.005%
U.S. 2-year	0.367%
U.S. 10-year	2.952%

CLQ11.NYM

...Crude Oil Aug 11

...95.82

...

2.23 (2.3%)

The latest daily market update below:

Photo: Bloomberg

Testy lawmakers & the President headed back for a 5th day of debt-limit negotiations, pointing fingers at each other while trying to stave off a financial default. Meanwhile, Ben Bernanke warned that failing to raise the debt limit in time to avoid default would only end up increasing the federal deficit, calling that a "self-inflicted" wound. He said default would drive up interest costs on the $14T debt & reduce gov revenues by slowing economic growth could "throw the financial system potentially into chaos." He also said that the central bank isn’t currently ready to embark on a 3rd round of gov bond-buying to stimulate the economy. “We’re not prepared at this point to take further action,” Bernanke said. Treasury Secretary Tim Geithner served notice there was no finessing the Aug 2 deadline for solving the debt crisis. "We have looked at all available options and we have no way to give Congress more time to solve this problem," he said. "We're running out of time." Headaches are getting worse day by day & the clock is ticking.

Bernanke Says Failure to Raise Debt Limit Would Be ‘Self-Inflicted Wound’Bernanke: No Plans Now for Bond Purchases

Bernanke: No Plans Now for Bond Purchases

Gold has had an excellent run this year & its future looks bright.:

This was another dreary day in a dreary week for the markets. The only bright spot has been yesterday's hope that Bernanke would roll out a QE3 to stimulate the economy. When he said that was not on the table, the markets went back to selling off. JPMorgan (JPM) finished with a 73¢ gain, after reporting what were considered good earnings, but about $1 below its high. Tomorrow Citi (C) reports & its mixture of businesses will probably give good but not great numbers. Debate about raising the debt ceiling keeps going from bad to worse & that's dominating market sentiment. Until that worry is removed, markets will be heading south.