Thursday, December 15, 2011

Nervous market edge higher

Dow added 61 (but off the highs at the opening), advancers over decliners 3-2 & NAZ eked out a gain of 1.  Hardly a convincing rally.  Bank stocks are higher, but again pulling back from earlier highs.

S&P 500 Financials Sector Index

Value 169.58 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    1.13    (0.7%)

The MLP index was up 1+ to the 371s & the REIT index gained 1+ to 220.  Junk bond funds were fractionally higher & Treasuries were little changed with the yield on the 10 year bond at a short term low of 1.9%.  90 days bills are so much in demand that the yield is barely negative, not a good sign for the stock market.  Oil fluctuated near the lowest level in more than 5 weeks as the jobless claims unexpectedly declined.  Gold is having a difficult time finding friends. 

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF12.NYM...Crude Oil Jan 12...94.97 ....Up 0.02  (0.0%)

GCZ11.CMX...Gold Dec 11....1,577.90 ...Down 6.40  (0.4%)

Click below for the latest market update:

Jobless Claims in U.S. Unexpectedly Drop to Three-Year Low

Photo:   Bloomberg

Fewer people are seeking unemployment benefits than just 3 months ago, a sign that layoffs are falling. The number applying for benefits fell last week to 366K, the fewest since May 2008 (prior to the financial meltdown).  If the number stayed that low consistently, it would likely signal that hiring is strong enough to lower unemployment.  The 4-week average of weekly unemployment applications dropped to 387K, the lowest 4-week since Jul 2008.  The 4-week average has declined in 10 of the past 12 weeks.  There is a feeling that labor market conditions have taken a turn for the better in recent weeks.  However, about 6.7M are receiving unemployment benefits & 2M will lose benefits by Feb if the emergency program expires.

Jobless Claims in U.S. Drop to Three-Year Low

  • <p>Handlers scan and affix a courier route label onto packages moving down the belt at the Marina Del Rey, California FedEx station December 12, 2011. REUTERS/Fred Prouser</p>
Photo:   Yahoo

FedEx reported a higher-than-expected profits & is updating its fleet with 27 new fuel-efficient Boeing (BA) aircraft to cut costs.  However, the company also said it is deferring delivery of some Boeing freighter aircraft, adjusting for slowing volume out of Asia.  FDX expects continued moderate economic growth, with trade flows staying volatile.  It delivered 17M packages on Dec 12, its busiest day in history & twice the average daily shipments, driven by online holiday orders.  EPS was $1.57, up from 89¢ last year & above expectations of $1.52.  FDX also affirmed fiscal 2012 guidance for $6.25-$6.75, after trimming it in Sep on tepid global economic growth & high fuel costs.  "Our improved performance was largely a result of effective yield management programs and strong demand for FedEx Home Delivery and FedEx SmartPost services," CEO Frederick Smith said. "With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services."  Revenue rose 10% to $10.59B, beating expectations of $10.61B.  The stock rose 3.71 (5%).

FedEx Profit Beats Estimates, Orders 27 Jets

FDX   FedEx Corp.

  • Investment bank Morgan Stanley is pictured in New York City, September 17, 2008. REUTERS/Mike Segar/Files
Photo:   Yahoo

Not all news is good.  Morgan Stanley will cut 1600 employees in Q1 as it trims costs in a difficult period for trading & banking revenue.  The job cuts will come across all staff levels & geographic areas including investment banking, trading & back-office functions.  Other banks, including Goldman Sachs (GS), JPMorgan (JPM), Bank of America (BAC) & Citigroup (C) have already outlined plans to cut thousands of jobs.  MS had kept layoffs limited to several hundred underperforming financial advisers earlier in 2011, but is now extending the cuts to banking & trading.  The cuts represent less than 2% of the workforce & comes as the European debt crisis continues to add stress to the markets.  The stock was up 13¢ after a tough time in 2011.

Morgan Stanley to Cut 1,600 Jobs Globally as Volatility Bites Into Profit

MS   Morgan Stanley

Is this what is called a rally?  I don't know.  While the news was fairly good today. the real driving force for the up market was a lack of negative news coming from Europe.  The debt mess has not gone away & is expected to get worse.  The US economy is showing signs of mending, but big decisions are being made in DC that will affect the recovery next year.  Extending the lower levels of Social Security taxes is a major one that will affect about half of the population.  Dow is bumbling along hoping to break thru 12K (again) & the 12.2K ceiling seems far away.

Dow Jones Industrial Average

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