Friday, July 1, 2011

Markets had their best week in a year!

Stocks had an amazing week, up every day with strong gains. Dow rose 168 today, advancers ahead of decliners 4-1 & NAZ was up 42. While most stocks were strong, banks led the way, taking the Financial Index up 11 this week.

S&P 500 Financials Sector Index

Value	210.45
Change	3.58 (1.7%)

The MLP index is climbing back to its record highs reached 2 months ago while the REIT had an excellent day, rising 4½ to 246 (just 4 below the 2011 highs). Junk bond funds edged higher, but are still below their 2011 highs. Treasuries are sold again, taking the yield on the 10 year Treasury bond to a 2 month high. Don't forget, QE2 is over which could be contributing to the price declines. Oil fell back & gold took a nasty spill today, bringing it well below $1500.

Alerian MLP Index

Value	372.21
Change	1.62 (0.4%)

Treeasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.486%
U.S. 10-year	3.197%

CLQ11.NYM

...Crude Oil Aug 11

...94.92

...

0.50 (0.5%)

Today's Market Update video, click below:

Photo: Bloomberg

Zynga filed for an IPO hoping to raise up to $1B. The company, which makes popular games that people play on the Facebook, did not say how many shares it was planning to sell or give an expected price range but it is believed that Zynga's IPO could raise $1.5-$2B which would value the company at $15-$20B. By way of comparison, Microsoft (MSFT), a Dow company which pays a dividend, has a market cap of around $200B. Zynga is the company behind FarmVille & Mafia Wars & is the top game publisher on Facebook. While its games are free, its revenue comes mainly from selling virtual items such as tractors & weapons that people use in the games. In Q1,ended Mar 31, Zynga broke even on revenue of $235M compared to $101M last year. During the same period, adjusted earnings before interest, taxes, depreciation & amortization were $112M, up 20% from the prior year. This is viewed as exciting, creating a lot of buzz. But the track record of IPOs this year is spotty at best.

Zynga Files to Raise $1 Billion in IPO

Photo: Yahoo

Gas prices have hit a sweet spot for US based automakers. They've fallen enough to spur pickup truck sales, yet remain so high that newer small cars are selling as well. However, this is not the case for Honda & Toyota. They ran short of small cars because of production problems tied to the Mar earthquake in Japan. Analysts expect overall US sales to rise 13.5% from last Jun, to around 1.1M vehicles. General Motors & Ford said their sales rose 10% & Chrysler sales increased 30%. Honda & Toyota saw their sales drop more than 21%, but their factories are starting to return to normal production. GM said that cheaper gas lured more pickup truck buyers into showrooms. Sales of Ford's F-Series pickups rose 7%, while Chrysler reported a 35% increase in Ram truck sales GM's sales increases were powered by smaller, more fuel-efficient cars. Even with sales rebounding, there is some concern about the strength of the recovery. Don Johnson, GM's VP of US sales, said he now expects industry sales to be at the low a range of 13-13.5M. J.D. Power lowered its full-year sales forecast from 13M to 12.9M. Johnson blamed stubbornly high unemployment. Sluggish hiring in May contributed to that month's sales decline, which broke a string of double-digit monthly increases. Forecasters say the jobs picture will improve only slightly in Jun.

GM, Ford Sales Miss Estimates as Consumers Defer Auto Purchases

General Motors Company (GM)

Ford Motor Credit Company (F)

Toyota Motor Corp Ltd Ord (TM

Everything seemed to break right this week for the markets. Greece may be avoiding default. Other economic news was viewed as good & IPOs are getting exciting. But raising the debt ceiling is still stuck in the mud. Treasuries sold off sharply as money is seeking risky investments again. The holiday weekend will be a much happier time for many stockholders.