Markets are having another excellent day in Oct. Dow is up 249 (at its highs), advancers over decliners 10 to 1 & NAZ jumped 53. Bank stocks are leading the way with the European debt crisis settling down. The Financial Index rose 7+ to the 185s, a 3 month high.
The MLP indes rose 1+ to the 373s & the REIT index shot up 6 to almost 230. Junk bond funds were up 1% & Treasuries sold off taking the yield on the 10 year Treausry to the highest in 3 months. The VIX, volatility index, plunged 4 to 26 on easing fears about the markets. Oil rose for the 4th time in 5 days on favorable economic data & as European leaders reached a deal to contain the region’s debt crisis. Gold buyers are not sure what to do.
Get the latest daily market update below:
Photo: Bloomberg
During Q3, the economy grew at its fastest pace in a year as consumers & businesses stepped up spending, though part of the increase came from the reversal of temporary factors that had restrained growth. US GDP expanded at a 2.5% annual rate according to the Commerce Dept, a jump from the 1.3% pace in Q1 & matched expectations. Consumers & businesses appeared to have set aside their fears about the recovery. Consumer spending was the strongest since Q4 2010, while business investment spending was the fastest in more than a year. However,the recovery's pace is still too weak to lower a jobless rate. Consumer spending, 70% of the economy, grew at a 2.4% rate after slowing to a 0.7% pace in Q2 even though consumer confidence has hit levels last seen during the worst of the 2007-09 recession. Similarly, while some business surveys have pointed to a contraction in factory output, corp America increased its investment spending in Q3. Business spending rose at a 16.3% pace as companies splurged on equipment & software, & invested in nonresidential structures. Inventories rose only $5.4B, the smallest gain since Q4 2009, after increasing $39B in Q4. Inventories subtracted 1.08 percentage points from GDP growth. Excluding the drag from inventories, the economy grew at a 3.6% pace, pointing to underlying strength in domestic demand, after expanding 1.6% in Q2. Spending on residential construction rose at a modest 2.4% pace after growing at a 4.2% rate in Q2. Gov spending was flat, reflecting continued budget cuts by state & local govs. All considered, the numbers were fairly good.
U.S. Economy Expands at Faster Pace
Photo: Yahoo
The people above did not participate in the favorable Q3 economic data. The number seeking unemployment benefits dipped slightly last week, though not by enough to suggest that hiring is picking up. Weekly applications for benefits declined 2K to 402K according to the Labor Department, the 4th drop in 6 weeks. Still, the 4-week average rose to 405K after falling to a 6-month 2 two weeks ago. Despite recent declines, applications have been stuck above 400K for all but 2 weeks since Mar. Employers have added an average of only 72K jobs a month in the past 5 months, below the 100K per month needed just to keep up with population growth. That's down from an average of 180K in the first 4 months of 2011. This sobering data needs to be tempered with the GDP data.
Jobless Claims in U.S. Decreased to 402,000
Exxon Mobil, a Dow stock & Dividend Aristocrat, profits rose 41% as higher prices for oil & natural gas made up for lower production. Production dropped with some of the declines resulted from intl deals that limit the amount of oil that XOM can sell as prices rise. Excluding those limits, production was still flat. Exploration & production business increased profit nearly 19% in the US & 61% overseas. The US refineries quadrupled profits as the price of gasoline & other fuels soared, but oil production fell 7% to 2.25M barrels per day while natural gas production slipped 3% to 4.28M cubic feet per day. EPS was $2.13 in Q3, sharply ahead of $1.44 last year. Revenue rose 32% to $125B. Expectations were for EPS of $2.10 on revenue of $118.5B. The stock fell 18¢ on the good news in an up market. It has a P/E under 8X Go figga!
Exxon Mobil profit rises 41 pct on higher prices AP
Markets liked what they heard & buyers came out of the woods today. The GDP news was good, but short of excellent. The economy did not head south, but it's heading north with limited vigor. Unemployment remains stuck at its high levels which will be a big factor in net year's election. Europe leaders patched together ideas which sound good, but fundamental problems have not gone away. It's unclear where all the money needed will come from (maybe China) & a final plan is still 6 months away. But the stock market is saying, solve today's problems today & tomorrow will take care of itself.
The MLP indes rose 1+ to the 373s & the REIT index shot up 6 to almost 230. Junk bond funds were up 1% & Treasuries sold off taking the yield on the 10 year Treausry to the highest in 3 months. The VIX, volatility index, plunged 4 to 26 on easing fears about the markets. Oil rose for the 4th time in 5 days on favorable economic data & as European leaders reached a deal to contain the region’s debt crisis. Gold buyers are not sure what to do.
ALERIAN MLP Index (^AMZ)
DJ REIT INDEXDJR (^DJR)
Treasury yields:
U.S. 3-month | 0.010% | |
U.S. 2-year | 0.289% | |
U.S. 10-year | 2.280% |
| CLZ11.NYM | ....Crude Oil Dec 11 | ...93.11 | ... 2.91 | (3.2%) |
| GCV11.CMX... | Gold Oct 11 | ......1,723.40 | ... 0.70 | (0.0%) |
Get the latest daily market update below:
During Q3, the economy grew at its fastest pace in a year as consumers & businesses stepped up spending, though part of the increase came from the reversal of temporary factors that had restrained growth. US GDP expanded at a 2.5% annual rate according to the Commerce Dept, a jump from the 1.3% pace in Q1 & matched expectations. Consumers & businesses appeared to have set aside their fears about the recovery. Consumer spending was the strongest since Q4 2010, while business investment spending was the fastest in more than a year. However,the recovery's pace is still too weak to lower a jobless rate. Consumer spending, 70% of the economy, grew at a 2.4% rate after slowing to a 0.7% pace in Q2 even though consumer confidence has hit levels last seen during the worst of the 2007-09 recession. Similarly, while some business surveys have pointed to a contraction in factory output, corp America increased its investment spending in Q3. Business spending rose at a 16.3% pace as companies splurged on equipment & software, & invested in nonresidential structures. Inventories rose only $5.4B, the smallest gain since Q4 2009, after increasing $39B in Q4. Inventories subtracted 1.08 percentage points from GDP growth. Excluding the drag from inventories, the economy grew at a 3.6% pace, pointing to underlying strength in domestic demand, after expanding 1.6% in Q2. Spending on residential construction rose at a modest 2.4% pace after growing at a 4.2% rate in Q2. Gov spending was flat, reflecting continued budget cuts by state & local govs. All considered, the numbers were fairly good.
U.S. Economy Expands at Faster Pace
Photo: Yahoo
The people above did not participate in the favorable Q3 economic data. The number seeking unemployment benefits dipped slightly last week, though not by enough to suggest that hiring is picking up. Weekly applications for benefits declined 2K to 402K according to the Labor Department, the 4th drop in 6 weeks. Still, the 4-week average rose to 405K after falling to a 6-month 2 two weeks ago. Despite recent declines, applications have been stuck above 400K for all but 2 weeks since Mar. Employers have added an average of only 72K jobs a month in the past 5 months, below the 100K per month needed just to keep up with population growth. That's down from an average of 180K in the first 4 months of 2011. This sobering data needs to be tempered with the GDP data.
Jobless Claims in U.S. Decreased to 402,000
Exxon Mobil, a Dow stock & Dividend Aristocrat, profits rose 41% as higher prices for oil & natural gas made up for lower production. Production dropped with some of the declines resulted from intl deals that limit the amount of oil that XOM can sell as prices rise. Excluding those limits, production was still flat. Exploration & production business increased profit nearly 19% in the US & 61% overseas. The US refineries quadrupled profits as the price of gasoline & other fuels soared, but oil production fell 7% to 2.25M barrels per day while natural gas production slipped 3% to 4.28M cubic feet per day. EPS was $2.13 in Q3, sharply ahead of $1.44 last year. Revenue rose 32% to $125B. Expectations were for EPS of $2.10 on revenue of $118.5B. The stock fell 18¢ on the good news in an up market. It has a P/E under 8X Go figga!
Exxon Mobil profit rises 41 pct on higher prices AP
Markets liked what they heard & buyers came out of the woods today. The GDP news was good, but short of excellent. The economy did not head south, but it's heading north with limited vigor. Unemployment remains stuck at its high levels which will be a big factor in net year's election. Europe leaders patched together ideas which sound good, but fundamental problems have not gone away. It's unclear where all the money needed will come from (maybe China) & a final plan is still 6 months away. But the stock market is saying, solve today's problems today & tomorrow will take care of itself.
Dow Industrials (INDU)
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