Monday, August 22, 2011

Mixed markets in uncertain trading

Stocks started strong but were not able to hold onto those gains. Dow rose 37, decliners ahead of advancers 5-4 & NAZ added 3. Bank stocks were a drag all day & the Financial Index is at a its lowest level in over 2 years.

S&P 500 Financials Sector Index

Value	160.97
Change	-2.07 (-1.3%)

The Alerian MLP Index had another whopper size decliner, down 8+ to the 228s (30 below its highs last week) while the REIT index was up a fraction in the 211s. Junk bond funds were mixed to lower while Treasuries were in demand. The yield on the 10 year Treasury is just below the 2.1% yield used at the auction 2 weeks ago. Oil was higher on bets that the Libyan rebellion will not bring much supply to market over the short term. Gold is pushing $1900, a price that was difficult to imagine a month ago!.

ALERIAN MLP Index (^AMZ)

Treasury yields:

U.S. 3-month	-0.005%
U.S. 2-year	0.201%
U.S. 10-year	2.088%

CLU11.NYM

...Crude Oil Sep 11...

84.30

...

2.03

(2.5%)

Click below for the latest market update:

Photo: Bloomberg

Bank of America, a Dow stock, tumbled on worries about the impact of market volatility on banks. It led decliners in the S&P 500 after China Construction Bank said BAC will keep at least half its stake & there was an analyst downgrade. Some analysts had estimated the bank would divest all of its shares. BAC has been selling businesses & assets as it seeks to comply with new intl capital standards set by the Basel Committee. Last week it announced it was exiting credit-card markets outside the US & will continue to pursue such sales. BAC has lost about half its market value this year as costs tied to the 2008 acquisition of Countrywide Financial weighed on capital & sparked speculation that the firm would have to issue new stock. The stock fell 55¢ to 6.42, not too far above its recession lows in the 4s.

BofA Drops Most in S&P on China Construction Stake

Bank of America Corporation (BAC)

Evangelos Venizelos, Greece's finance minister, said that the economy will shrink more than expected this year, putting further pressure on the ambitious deficit-cutting effort. The ministry forecasts annual output to shrink in 2011 4.5%- 5.3% of GDP. The gov has forecast a timid return to growth in 2012, but that now seems very unrealistic. "All the measures we are taking ... are aimed to stem the recession, " Venizelos said. EU & IMF officials will be in Athens this week to monitor progress -- on which continued disbursement of the rescue loans depends. "We (are approaching) the last quarter, the budget must be executed, we must achieve our fiscal targets -- and this has become very difficult due to the deeper recession," Venizelos said. The gov has committed to cutting budget overspending from 10.5% of GDP in 2010 to 7.5% this year. The Greek drama plays on.

Greece expects recession to deepen AP

Lowe's plans to buy back $5B its shares over the next 2-3 years. However, it's unclear if the repurchase (about one fifth of LOW market value) will prop up its stock that has fallen 23% YTD. Home Depot (HD), a Dow stock, announced a $1B share repurchase in late Mar, but it's down 15% since as home improvement chains found it harder to sell their wares to homeowners. US companies had bought back $305B in shares this year (thru Aug), eclipsing the $300B total for all of 2010 & 2½ times the 2009 amount. In addition, the regular 14¢ was declared. The stock gained 22¢.

Lowe’s Authorizes Plan to Repurchase $5 Billion of Shares Over Three Years

Lowe's Companies, Inc. (LOW)

This was supposed to be a rebound kind of day after all the selling last week. But times are tough. European debt problems drone on & the US economy needs help. Banks are hurting although they are far removed from the terrible days 3 years ago. MLPs are getting hit with another wave of selling & the index may test the 315 low from earlier in Aug. Markets are on defense.

Dow Jones Industrial Average (^DJI)