Tuesday, September 27, 2011

Early strength in stock market pared in the last hour

Stocks were soaring until selling into the close.  Dow rose 146 (but 180 below its highs), advancers over decliners 4-1 & NAZ was up 30.  Bank stocks led the way up but were sold off in the PM.  The modest gain for the Financial Index was 4 below its earlier highs.

S&P 500 Financials Sector Index

Value165.10One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change   0.67   (0.4%)

MLPs & REITs had strong gains during the rally, although some was given back in late day trading.  Junk bond funds were up around 1% while Treasuries gave up recent gains.  The yield on the benchmark 10 year Treasury went back over 2%.  Oil rose more than 5% on hopes that European leaders are closer to drafting a plan to contain the region's debt crisis.  Gold has had an unusually volatile 2 months (shown in the graph below), but bulls returned for a $62 gain. 

Alerian MLP Index

Value348.08One-Year Chart for Alerian MLP Index (AMZ:IND)
Change   5.19   (1.5%)

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CLX11.NYM...Crude Oil Nov 11...84.46 ...Up 4.22  (5.36%)

Live 24 hours gold chart [Kitco Inc.]

Greek lawmakers approved a new property tax that aims to boost revenue as the country struggles to obtain a critical installment of intl bailout loans to prevent it from default.  The financial inspectors are expected to return to Athens this week.  Greece must receive an €8B ($11B) rescue loan before mid-Oct to stave off bankruptcy.  But creditors have demanded more efforts to raise revenue.  The new tax will be charged through electricity bills to make it easier for the state to collect, instead of going through the unwieldy & inefficient tax system. Those who refuse to pay risk having their power cut off.  The extra charge has deeply angered Greeks, who have already been through more than a year of sharp austerity that has seen salary & pension cuts & increased taxes.  State electricity company unionists have threatened not to collect the tax.  Finance Minister Evangelos Venizelos acknowledged the new tax was harsh on some, but stressed the gov had no choice but to impose it as it fought to reduce its budget deficit.  "Clearly there will be categories of people who will not be able to pay this housing charge and this is a situation that will be resolved," he said.  "But the most important thing is that we achieve the targets agreed to in 2011 and 2012."  This is only one more step in a long journey for Greece.

Papandreou Wins Vote on Property Tax

Apple to Introduce New IPhone at Oct. 4 Event in California

Photo:   Bloomberg

Apple, with the largest market cap in the world, will unveil its much-awaited new iPhone, which which is expected to have a bigger screen & work better with remote computing services.  AAPL invited media to a "special event" called "Let's talk iPhone" on Oct 4 at its headquarters.  No additional details about the event were mentioned but it is assumed to be the launch of iPhone 5,  This would be the first major launch under Tim Cook, who took over full-time as CEO after Steve Jobs resigned last month.  It was unclear if Jobs will take the stage at the event.  It has been reported that suppliers were told to gear up capacity for up to 45M units.  But investors are nervous.  The stock dropped 3.91, going below 400.

Apple Inc. (AAPL)

stock chart

Chevron, a Dow stock, rose as investors cheered progress on a huge Australian natural gas project.  Yesterday CVX said it will build the Wheatstone field platform 140 miles off the Australian coast & pipe 8.9M tons of gas & liquid a year to a processing plant on shore.  The first phase will cost $29B & the first gas is expected to be shipped in 2016.  Capacity could expand to 25M tons a year.  This is expected to position CVX to supply the growing energy demand in the Asia-Pacific region.  Wheatstone is a joint venture operated by Chevron, which has a 73.6% stake & other partners which include Apache (APA) with 13%; Kuwait Foreign Petroleum Exploration (7%) & Royal Dutch Shell (RDS.A) with 6.4%.  CVX rose 2.05.

Chevron shares rise on project progress AP

Chevron Corporation (CVX)

stock chart

When the markets were rising, it seemed like European financial problems were going to vanish.  But now so fast!  Greece remains a long way away from resolving its messy situation & other countries which are getting less attention, remain fragile.  Reality hit the overbought markets in late day trading.  The VIX, volatility index, was improving (going lower) until selling in the last hour.  At the end of the day, the VIX was a little lower than where it started & the trend was for higher values.  Investors were growing more nervous, not good for the markets.

Volatility Index (^VIX)

Dow Industrials (INDU)

stock chart

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