Wednesday, September 7, 2011

Markets rebound on reduced European debt worries

Dow rose 187 (to its highs), advancers 6-1 over decliners & NAZ gained 53.  Banks were leaders again, the Financial Index is having a great day bouncing off its 2+ yearly lows.

S&P 500 Financials Sector Index

Value 171.08 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    5.53     (3.3%)

The MLP index rose 4+, going back over 350, & the REIT index was up 4 to the 223s.  Junk bond funds were about 1% higher while Treasuries retreated, taking the 10 year yield back over 2% (still very close the record lows set this week).  Oil climbed the most in 3 weeks as a weather system threatened to reduce US production from the Gulf, where production shut down from last week’s storm.  Gold plunged as a German court approved funding European bailouts.


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CLV11.NYM....Crude Oil Oct 11...88.94 ......Up 2.92  (3.4%)

GCU11.CMX...Gold Sep 11.....1,806.00 ...Down 63.90  (3.4%)

The number of positions waiting to be filled climbed 59K to 3.2M according to Labor Dept as hiring decreased 74K to 3.98M.  Payrolls were unchanged in Aug, the weakest showing in 11 months.  This is a reflection of weak labor demand & weak hiring.  Job openings increased 1.9% in Jul from a revised 3.17M in Jun (higher than initially reported).  Employers discharged 1.7M workers in Jul, down from 1.77M in Jun.  Total separations, including firings, retirements & those who left their jobs voluntarily, decreased to 3.92M from 3.99M a month before.  In the 12 months ended in Jul, the economy created a net 1.1M jobs, representing 47.8M hires & 46.6M separations.  Compared with the 13.93M who were unemployed in Jul, today’s figures indicate there were more than 4 people vying for every opening, up from 2 when the last recession began in Dec 2007.  The number of jobless rose slightly to 13.97M in Aug.  High unemployment data drones on.

U.S. Job Openings Rose in July as Slower Hiring Signals Lack of Confidence

German bunds dropped the most in a week & stocks rose when the top court backed the gov participation in euro-area bailouts, reducing demand for the region’s safest assets.  Italian & Spanish bonds rallied, with Italy’s 10-year yields falling the most since the ECB began buying the nation’s debt last month. Greek 10-year bond yields climbed above 20% for the first time as finance chiefs from 3 of the region’s AAA rated countries failed to break a deadlock over demands by Finland for collateral in return for aiding the nation.  The Federal Constitutional Court in Karlsruhe threw out suits targeting Germany’s share of the €110B in loans for Greece from euro-region govs & the IMF, as well as a separate €750B rescue fund approved last year to halt the spread of the Greek debt crisis.  The court said the ruling shouldn’t be seen as “blanket” approval for future rescue participation, & the gov must seek approval from the parliament’s budget committee for new guarantees it assumes under the EFSF.   Fans of the bailouts are breathing easier for the time being.

German Bunds Fall as Top Court Backs Euro-Area Rescue; Italian Bonds Rise

Stocks are getting a temporary lift from the German court ruling on European bailout programs.  This does not really solve problems, instead today's problems are solved today & tomorrow will take care of itself.  European sovereign debt problems are not going away.  Speaking of debt problems, the pres will give a speech tomorrow & is expected to call for more of the same (expanded stimulus programs).  Correction, they are not allowed to use the word stimulius any more, forgot what the new word is.  Some are calling for a $1T (that's $1,000,000,000,000) program of increased spending while a select committee from congress is looking at ways to reduce the gov deficit. This glum assessment may affect the markets tomorrow, just prior to the speech.

Dow Industrials (INDU)

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