Monday, August 1, 2011

Lower markets before vote to raise debt ceiling

Dow dropped 127, decliners slightly ahead of advancers & NAZ fell 29. Bank stocks led the way again again as the Financial Index is just above its yearly lows.

S&P 500 Financials Sector Index

Value	197.60
Change	-158 (-0.8%)

The MLP index shot up 4 to the 366s but the REIT index fell 3 to 240. Junk bond funds were stronger & Treasuries were very strong on the confusion coming out of DC. Oil climbed the most in more than 2 months after a deal to raise the debt ceiling was announced & gold pulled back from record levels.

JPMorgan Chase Capital XVI (AMJ)

Click below to get the latest market update:

Treasury yields:

U.S. 3-month	0.081%
U.S. 2-year	0.344%
U.S. 10-year	2.728%

CLU11.NYM

...Crude Oil Sep 11

...96.82

...

1.12 (1.2%)

GCQ11.CMX

...Gold Aug 11

....1,623.00

...

5.30

(0.3%)

Auto Sales Stall as Unemployment Puts Peak Out of Reach

Photo: Bloomberg

Auto sales have stalled, casting doubt on a rebound this year. Deliveries in Jul will be released tomorrow & are expected to run at an 11.8M annual rate, trailing the 12½M rate in H1. The economy isn’t picking up as fast as anticipated & the drag may continue beyond this year Toyota (TM) deliveries may drop from a year earlier through at least Aug, said Bob Carter, VP for US sales, citing weak consumer confidence. “That’s the most important thing for us, and right now the consumer doesn’t seem to be that confident about jobs and the overall economy,” Carter said last week. Ford (F) is sticking with a full-year industrywide forecast at 13-13½M vehicles. “We probably feel closer to the bottom end of that,” CFO Lewis Booth said last week.

U.S. Auto Sales Stall, Casting Doubt on Rebound

Photo: Bloomberg

The Institute for Supply Management said manufacturing barely grew in Jul, falling to the weakest level since just after the recession ended. The index of manufacturing activity fell to 50.9% in Jul from 55.3% in Jun, the lowest reading in 2 years. Any level above 50 indicates growth. The index topped 60 for 4 straight months earlier this year but manufacturing has stumbled in recent months. Manufacturers are facing stagnant consumer spending, raising the risk that production will be tempered further even as parts shortages from Japan's earthquake dissipate & commodity costs ease. In addition, manufacturing indices in Asia & Europe fell in Jul as demand weakened & the global recovery from recession lost momentum.

U.S. ISM Manufacturing Index Drops More Than Estimated to 50.9 From 55.3

There is a fair amount of confusion in the markets after a debt deal was announced last night. Among other things, it has to be approved & that is a little iffy, especially in Congress. Then there is the risk of the downgrade of the AAA credit rating. My column was pinched today when the internet went down, but it's back up & should behave better.