Thursday, August 11, 2011

Markets surge but fade into the close

Dow jumped 423, advancers ahead of decliners 7-1 & NAZ rose 111 (100 point swings have been common this week). Banks were leaders, but the Financial Index chart remains lower over the last 12 months.

S&P 500 Financials Sector Index

Value	173.83
Change	10.25 (6.3%)

The Alerian MlP Index shot up 6 to almost 355, bringing its gains from the Mon low to an enormous 39 (not a bad year at other times). Speaking of whopper gains, the Dow Jones REIT Index shot up 11 to 219, don't see that too often! However, the indices also pulled back in the last ½ hour. Junk bond funds were 1-2% higher but Treasuries sold off after a weak auction (because of low foreign interest) of 30 year bonds today. The yield on the 10 year Treasury rose over 25 basis points from just yesterday! Oil advanced as declining jobless claims boosted optimism that US economy is strengthening. Gold fell the most in 7 weeks as equities rebounded & CME raised margins to trade Comex contracts, prompting investor sales after a rally to a record $1800 yesterday.

ALERIAN MLP Index (^AMZ)

Treasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.180%
U.S. 10-year	2.331%

CLU11.NYM

...Crude Oil Sep 11

...85.45 2:

...

2.56

(3.1%)

Get the latest market update below:

Photo: Yahoo

The number seeking unemployment benefits last week fell below 400K, the first time in 4 months. Applications dropped 7K to 395K according to the Labor Dept, after being above 400K for the previous 17 weeks. The 4-week average fell to 405K, its 6th straight decline & the lowest level since Apr, suggesting layoffs have eased. There were fewer layoffs last week in the manufacturing, transportation & service industries, according to the report. Only 9 states reported an increase in applications. The number continuing to receive benefits fell 60K to 3.69M, but that doesn't include nearly 4M additional unemployed people who are receiving extended benefits under emergency programs. About 7.5M received unemployment benefits in the latest week. Improvement is welcome, but hardly the sign of major positive changes.

Jobless Claims in U.S. Unexpectedly Decrease

3 Dems from the House were named to the special committee charged with finding $1.5T in budget savings. The committee “has a golden opportunity to take its discussions to the higher ground of America’s greatness and its values,” said Nancy Pelosi. The lineup is now complete. But doubts are already being raised about the group’s prospects for reaching a bipartisan compromise before next year’s elections. Even if the group were truly bipartisan, it's difficult to imagine that it will come up with cuts of this size when simply reducing the growth rate of spending is considered a big achievement in DC.

Pelosi Names Picks, Filling Out Debt Panel

Wal-Mart, a Dow stock & Dividend Aristocrat, is exploring a bid for Carrefour's Brazilian stores to help boost sales in Latin America. WMT has let Carrefour know of its interest, though the 2 aren’t in formal talks. WMT discussed buying them 2 years ago & interest was ramped up in recent weeks after Carrefour abandoned a proposed plan to combine its business with Cia. Brasileira. An estimate places the value of a deal at €7B ($10B). WMT declined comment. Its interest may extend to all of Carrefour’s business in Latin America, including stores in Colombia & Argentina. WMT rose 1.32 in an up marekt.

Wal-Mart Explores Bid for Carrefour in Brazi

Wal-Mart Stores, Inc. (WMT)

These are the changes for the Dow this week:

635

430

520

423

Today's gain was reduced by 155 with selling into the close. These wild swings based on gut reactions are very discouraging for investors. Gut reactions come from mood swings related to sudden changes on anything coming out of DC, any rumor about European debt problems or spotty data on a sputtering economy in the US. Day traders who guess right must be making a ton of money. But for the rest of us, these are dangerous times! The selling into the close is disturbing. Tomorrow has the makings of a wild day with another triple digit move for the Dow. Just not sure what direction.

Dow Jones Industrial Average (^DJI)