Wednesday, November 2, 2011

Higher markets on hopes for a QE3

Dow shot up 202, advancers over decliners 8-1 & NAZ added 37.  Bank stocks led the way as the Financial Index was able to recover much of the lost ground from the last 2 days.

S&P 500 Financials Sector Index

Value 178.01 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change     5.05   (2.9%)

The MLP index went up 2+ the 368s & the REIT index gained 5+ to the 229s.  Junk bond fudns edged higher while Treasuries fell with the rising stock market.  Oil pared gains after the US Energy Dept said stockpiles advanced 1.83M barrels last week.  Gold is also participating in today's rally.



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U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ11.NYM....Crude Oil Dec 11...93.42 ....Up 1.23  (1.3%)

GCX11.CMX...Gold Nov 11.....1,737.80 ...Up 26.80  (1.6%)

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  • <p>Eric Holland writes his personal information on a sign-up sheet at the Office Depot booth during a job fair at Tellabs in Naperville, Illinois October 27, 2011. REUTERS/Frank Polich</p>
Photo:   Yahoo

US private employers added more jobs than expected in Oct, while planned layoffs dropped sharply.  The ADP National Employment Report showed the private sector added 110K jobs, topping expectations for a gain of 101K jobs.  ADP also increased Sep job additions, to a gain of 116K from the previously reported 91K.  While the data was encouraging, it still points to a sluggish recovery rather than robust growth.  ADP figures come ahead of the gov much more comprehensive jobs report on Fri, which includes public & private sector employment.  That report is expected to show a rise in nonfarm payrolls of 95K last month & a rise in private payrolls of 120K while the unemployment rate holds steady at 9.1%.  This is another report showing that the economy is getting by but not expanding like it should in a recovery from a recession.

U.S. Companies Add More-Than-Expected 110,000 Workers in October, ADP Says

Job cuts announced by US employers increased in Oct from Oct 2010 as dismissals remain a hurdle to faster economic growth.  Planned layoffs rose 13% to 43K from 38K last year, according to Challenger, Gray & Christmas.  Gov agencies & financial companies have cut the most jobs this year. “We have yet to see the full impact of mandated federal spending cuts,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said.  “Meanwhile, the European debt crisis is wreaking havoc on Wall Street.”  Budgetary constraints have induced a wave of gov reductions as financial firms trim headcounts, creating an impediment for American employment prospects.  Compared with Sep, which saw the most layoffs since Apr 2009, job-cut announcements decreased 63%.  Consumer products companies led the Oct job cuts with 7K announced reductions followed by retail companies with 4K planned cuts.  More inconclusive news about an economy that is just getting by.

Announced U.S. Job Cuts Rose 13% From Year Ago, Challenger Says

MasterCard Profit Climbs 38% as Card Spending Increases

Photo:   Bloomberg

MasterCard reported sharply higher Q3 profits, easily beating estimates on double-digit increases in volumes.  The CEO said that consumers were still spending despite economic uncertainty, though growth comparisons will start to get harder from this month.  The company has increased efforts to get US. business from Visa (V), just as Visa is expanding its intl business.  EPS was $5.63, up from $3.94 last year.  Revenue rose more than 27% to $1.8B.  Estimates were for EPS of $4.82 & was the biggest earnings beat in the last 2 years.  MA gross dollar volume rose 18.1%, while transactions processed rose 20.5%.  For the rest of the year, MA said its outlook is consistent with the guidance it gave in Sep & it also maintained its long-term targets.  The stock rose $26 to a new record.

Mastercard Incorporated (MA)

stock chart

The economic news is not there to justify the big rise today.  But hopes are riding high that the Federal Reserve will announce a QE3 program later today.  Sounds good, but I don't think so.  If its does, not sure what is supposed to accomplish other than bring out buyers for stocks.  It would not make any difference in resolving the Greek debt mess & nobody knows where that will lead.  The US economy has only a limited recovery, not enough to reduce high unemployment.  The jobs report is coming on Fri & that is not expected to be encouraging.  If Ben doesn't have any magic tricks, the markets will sell off later today.

Dow Industrials (INDU)

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