Thursday, June 30, 2011

Stock markets extend gains to 4 days

Dow closed H2 with a gain of 152, advancers ahead of decliners 3-1 & NAZ was up 33.  Bank stocks led the way up again, but the Financial Index is still down 14 YTD.

S&P 500 Financials Sector Index


Value206.87One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change  0.79    (0.4%)

The MLP index held the modest gains from the AM.  That gave it a gain of 3 in Jun & up 7 YTD.  It's trying to find its footing, but the increased risk of changes to the tax law will weigh on MLPs for some time.  The REIT index was up a fraction to the 241s.  It's down 8 in Jun, but up 19 YTD.  Junk bond funds were higher today, but off their best levels of the year.  Treasuries were weak again, as they have been all week,  Now that QE2 is over, not a lot of change is expected in these markets, at least from the Federal Resrve (FED).  The FED will continue buying Treasuries to pump money into the economy, using proceeds from holdings that mature   Oil & gold were little changed today but are up YTD with a 6 month chart for gold below.

Alerian MLP Index


Value371.59One-Year Chart for Alerian MLP Index (AMZ:IND)
Change   0.68   (0.2%)  

Treasury yields:


U.S. 3-month

0.015%

U.S. 2-year

0.454%

U.S. 10-year

3.149%


CLQ11.NYM...Crude Oil Aug 11...95.06 ...Up 0.29    (0.3%)

Live 24 hours gold chart [Kitco Inc.]






Here is today's Market Update video:



Gartner (IT), a  leading research firm, raised its 2011 outlook for global spending on tech products & services, saying fears that the Japan earthquake would seriously hurt tech spending appear to have been overstated.  It now predicts that tech spending will climb 7.1% in 2011 to $3.7T, above the previous forecast of 5.6%.  Last year, tech spending rose 5.9% to $3.4T.  "For 2011 as a whole, we expect Japan IT spending to be down in local currency, but we expect a positive growth trend to emerge in the second half of the year and continue into 2012," said Richard Gordon VP.  He expects telecom spending will rise 6.9% to $2.1T, compared with 7.3% growth last year & information technology services should rise 6.6% to $846B, compared with 3.1% growth in 2010.  Computing hardware spending is estimated to rise 11.7% to $419B, compared with 12.1% last year & enterprise software spending will grow 9.5 % to $268B, compared with 8.4% last year.  Cloud computing services, while still a tiny segment of tech spending, will rise to $89B in 2011, compared with $74B last year & spending in this market should climb to $177B by 2015.  This sounds like a pretty good year for tech spending.  IT stock, not well known, is a good way to play the growth in technology, up 48¢ today.

Gartner raises 2011 tech spending forecast AP

Gartner, Inc. (IT)


stock chart


Eli Lilly said the keys to overcoming the expiration of patents for key drugs lies in its labs & emerging markets like China.  33 potential drugs are in mid- or late-stage testing in the development pipeline.  While revenue may dip in the next few years, some of these drugs should fuel growth after 2014.  LLY also expects strong growth from Japan, the company's animal health business & countries like China, which has a growing middle class that will fuel a demand for new treatments.  But it has had pipeline failures that pressure the company into a big acquisition or a reduction in its quarterly dividend of 49¢.  LLY reiterated  it has no plans for a large-scale deal or to diversify outside its core business & said it expects to maintain its dividend "at least at its current level."  Because of this uncertainty, the stock has been lumbering along in the 30s for several years.  Today it rose 26¢.

Lilly pitches plan to overcome key patent losses AP

Eli Lilly and Company (LLY)


stock chart


The markets have been on a run all week.  Dow gained 94 in Q4, thanks to this week's recovery & is up over 800 in H1.  Considering the turmoil in world financial markets, highlighted by Greece & the threat to the credit standing of US Treasuries, stock markets held up well.  This week has seen a relief rally, relieved that Greece didn't fall apart.  But that's still not a done deal.  A rebellious population has to cooperate & there are no signs it will.  Tomorrow is a new month, new qtr & new half in 2011.  But Jul 1 should be quiet going into a long weekend.

Dow Industrials (INDU)


stock chart



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Markets rises after Greek vote

Stocks continue their winning ways this week. Dow rose 140, advancers over decliners better than 3-1 & NAZ is up 30.  Banks are leading the markets higher again with the Financial Index at its highest level in what had been a dreary Jun.

S&P 500 Financials Sector Index


Value 207.21 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    1.13     (0.5%)  

The MLP index hardly budged but the REIT index rose 1½ to 242 & has been able to recover much of its earlier losses in Jun.  Junk bond funds were higher while Treasuries continue to sell off.  The yield on the 10 year Treasury has risen 30 basis points this week (a big move) as the QE2 Treasury buying program winds down (although it will continue buying Treasuries as its holdings mature).  Oil & gold dont' know what to make of the economic data, not to mention end of month & qtr adjusting that is taking place.

JPMorgan Chase Capital XVI (AMJ)


stock chart

Treasury yields:


U.S. 3-month

0.020%

U.S. 2-year

0.485%

U.S. 10-year

3.186%

CLQ11.NYM...Crude Oil Aug 11...95.12 ...Up 0.35  (0.4%)

GCN11.CMX...Gold Jul 11.......1,509.70 ...Down 0.20  (0.0%)


The latest daily market update below:





Jobless Claims in U.S. Decreased 1,000 Last Week to 428,000

Photo:   Bloomberg

The number seeking unemployment benefits was littler changed last week, as the weak economy is struggling to generate jobs.  Unemployment applications ticked down 1K to 428K according to the Labor Dept.  Applications have topped 400K for 12 straight weeks after applications had fallen to 375K in Feb, a level that signals sustainable job growth.  The 4-week average has been stuck at about 426K for a month.  The number receiving unemployment benefits fell 12K to 3.7M, the fewest in about 2 months. But that doesn't include millions who are receiving extended benefits under emergency programs put in place during the recession. All told, about 7.5M are receiving unemployment benefits.  More evidence that the recovery is only sputtering.

 Jobless Claims in U.S. Decline, Top Estimates


Greece bought some time to deal with its debt crisis.  Parliament cleared the final hurdle for crucial bailout funds to be released to prevent the country from defaulting next month.  The EU & IMF had demanded that 2 bills be passed, an austerity law & a 2nd bill detailing how it will be implemented, before approving a €12B ($17B) installment from the €110B ($159B) package of rescue loans.  The 2nd law was passed with a majority vote.  But austerity measures have been met with resistance, 2 days of rioting in the lead-up to the vote.

Greece clears final hurdle to get bailout funds AP


Apple shares dropped 4% this month, capping their worst first-half performance in 3 years, as investors await new products & worry that rivalry from Google (GOOG) will slow growth.  Investors are wary of the stock amid evidence that GOOG is gaining ground in smartphones. It’s also been more than a year since AAPL introduced the original iPad tablet & the next iteration of the iPhone isn’t due until Sep.  Adding to AAPL woes, Verizon (VZ) will probably say sales of its iPhone dropped when it reports Q2 results (according to a leading analyst). AAPL is up a fraction in the 334s & up $12 YTD (thanks to a rally in the last week).

Apple Stock Has Worst First Half Since ’08

Apple Inc. (AAPL)


stock chart


HomeAway, the darling IPO yesterday that vaulted $13, is slipping back.  It's rated as one of the 10 best IPOs this year, but most of them have drifted lower after the initial surge.  The stock is down 74¢ today.

10 Best-Performing IPOs of 2011at TheStreet

HomeAway, Inc. (AWAY)



stock chart


Jun had been a dismal month but the last week allowed the markets to recover losses.  Dow limited its losses in Jun & is up in Q2.  YTD it has a gain of over 800.  The Alerian MLP is down 9 in Q2 following a rough 2 months, but is up 7 YTD. Traders are evening out positions today with it being the end  of month & qtr.  All told, markets have held up well given all the uncertainties they have had to deal with, between Greek debt problems & economies that are not rebounding as many had forecasted.  But the jobless data is another reminder about a cheerless economy.

Dow Industrials (INDU)


stock chart




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Wednesday, June 29, 2011

Greek hopes push markets higher

Dow gained 72, advancers over decliners 5-2 & NAZ was up 11.  Banks led the way today.  The Financial Index is up 10 from its low 2 weeks ago.  However bank earnings in Q2 maybe glum.

S&P 500 Financials Sector Index


Value206.08One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change   4.23    (2.1%)


The MLP index had an excellent day, able to reach its highest level in a month, & the REIT index rose 2½ to over 240.  Junk bond funds slid & Treasuries were lower with the yield on the 10 year Treasury rising over 3.1%.  Oil was up on a favorable inventory report (lower investories).  The swift rebound in oil means that motorists won't see as big of a discount at the gas pump as expected, after dropping to $3.54 yesterday. The chart below shows gold has been rising as investors are willing to accept more risk.

Alerian MLP Index


Value370.91One-Year Chart for Alerian MLP Index (AMZ:IND)
Change    4.13    (1.1%)


Today's Market Update video below:


Treasury yields:


U.S. 3-month

0.015%

U.S. 2-year

0.465%

U.S. 10-year

3.109%

CLQ11.NYM...Crude Oil Aug 11...94.98 ...Up 2.09  (2.3%)

Live 24 hours gold chart [Kitco Inc.]


S&P  would cut the US debt rating to D, the lowest on its scale, in the event of a default after a failure to raise the debt limit.  The US credit grade, following even a short-lived default after which the gov resumed making debt payments, would be determined by the company’s sovereign rating committee & would “be dependent on facts on the ground.”  However, S&P said, “We believe the debt ceiling will be raised and the government won’t default, otherwise we wouldn’t have a AAA rating on the U.S. government.”  S&P continued, “It’s evolving as we expected.”  The costs for insuring against default for one year have risen to 51 basis points as of yesterday, up from 24 basis points on May 16 (when the US reached its borrowing limit)  The US would risk not winning back its top Aaa credit rating soon if the nation’s debt limit causes even a short-term default, Moody’s said earlier  this month.  S&P put the US gov on notice in Apr that it risks losing its top AAA rating unless there is a plan to reduce budget deficits & the national debt by 2013.  There's little more than a month left to increase the debt ceiling & talks between the Reps & Dems are dead in the water.

 S&P Would Cut U.S. Rating to Lowest on Default, Expects Debt-Limit Rise


HomeAway (AWAY), the vacation rental website, rose more than a half on its market debut.  8M shares were priced at $27, the top end of its previously announced range, raising $216M. The company offers fully furnished, privately owned homes, condos, villas & cabins that can be rented on a nightly, weekly or monthly basis. AWAY was founded in 2005 & has more than 560K paid vacation rental home listings in more than 145 countries but has been posting losses over the past few years.  AWAY will use the proceeds to redeem shares of preferred stock, issue dividends & for corporate purposes.  The stock popped after it began trading & remained up $13, around $40 for the rest of the day (not too shabby for those who bought at the IPO price).  Speculative juices are running high in the stock market.

HomeAway shares rise in market debutat Reuters


News Corp sold social media site Myspace for about $35M to online advertising company Specific Media.  News Corp will retain a minority stake in the website that it purchased 6 years ago for $580.  "There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest," said Tim Vanderhook, CEO of Specific Media.  NWS was up 23¢.

News Corp. selling MySpace to Specific Media: WSJat MarketWatch 

News Corporation (NWS)


stock chart


Markets are feeling good.  Dow is up 325 this week, bouncing off the 12K bottom area.  But there are plenty of obstacles out there.  The Greek debt crisis is getting the most attention & that is still iffy, at best, especially with a rebellious Greek population.  There was one more reminder from S&P about the US needing to get its "debt" house in order.  Meanwhile the economy is just sloshing around.  Earnings season will start when Alcoa (AA), a Dow stock, releases earnings after the close on Jul 11.  Markets this week are betting earnings will be great.  We'll see if that optimism is justified.

Dow Industrials (INDU)


stock chart


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Markets continue rising ahead of a 2nd Greek vote

Stocks are charging  ahead.  Dow rose 78, advancers ahead of decliners 3-1 & NAZ gained 13.  Banks are leading the way up, with the Financial Index having one of its best days in some time.

S&P 500 Financials Sector Index


Value 205.14 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    3.29    (1.6%)


The Alerian MLP Index rose 3+ to 370, its best level in almost a month, & the REIT index gained 2+ to 240.  Junk bond funds edged higher & Treasuries were weaker as investing money is embracing risk again.  Oil & gold also were recovering from recent lows.

JPMorgan Chase Capital XVI (AMJ)


stock chart

Treasury yields:


U.S. 3-month

0.025%

U.S. 2-year

0.461%

U.S. 10-year

3.058%

CLQ11.NYM...Crude Oil Aug 11...93.78 ....Up 0.89  (1.0%)

GCN11.CMX...Gold Jul 11.......1,508.90 ...Up 9.20  (0.6%)


The latest latest market update below:



Papandreou Wins Budget Vote as Risk of Default Recedes

Photo:   Bloomberg

The Greek Parliament voted to back a package of deep spending cuts to help clear a path for the release of funds & potentially a 2nd bailout by the EU & IMF.  The EU & IMF had made the release of a €12B ($17.3B) portion of last year's €110B bailout contingent on the passage of the bill to stave off a sovereign default.  In his speech ahead of the vote, Prime Minister George Papandreou said there was "no plan B." "We must avoid the country's collapse at all costs. Now is not the time to step back," he said.  A 2nd vote on the implementation of the law is due tomorrow. The main opposition party said that it would vote against the package & several members of the ruling party were known to be opposed to cuts.  Unions began a 48-hour strike as protests outside the parliament building & turned violent as MPs debated the austerity package.Stayed tuned.

Papandreou Wins Budget Vote as Risk of Default Recedes


Pending Sales of U.S. Existing Homes Rise 8.2%

Photo:  Bloomerg

The number of people who signed contracts to buy homes rose sharply in May, pushed higher by an influx of spring buying.  The National Association of Realtors said its index of sales agreements for previously occupied homes rose 8.2%, to a reading of 88.8 following a 7-month low of 82.1 in Apr.  Signings are 17% above the Jun reading of 75.9, the lowest figure since the housing market went bust nearly 4 years ago. Contract signings are typically an indicator of where the housing market is headed.  But the Realtors group also said a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid.   The trade group said the report "implies that home values in many localities are or will soon be stabilizing."  These days, a mixed message in housing is viewed as good.

Pending Sales of U.S. Existing Homes Rise 8.2%




Photo:   Yahoo

General Mills Q4 income rose 51% on stronger sales abroad, but rising ingredient & fuel costs remain a concern as it gave a 2012 earnings outlook below expectations. GIS started raising its prices to help cope with climbing ingredient costs & escalating fuel costs.  GIS anticipates 2012 EPS of $2.60-$2.62 with revenue growth in the mid single-digits. Forecasts were for EPS of $2.68.  This guidance assumes "significantly higher costs for ingredients and energy," costs are assumed to rise 10-11% & the outlook assumes that developed markets will remain challenging over the next year. In Q4, GIS benefited mostly from strength overseas, with intl revenue up 16%. Its bakeries & foodservice segment also posted an 11% revenue gain.  Results for the US retail division were weaker, it posted a 2% revenue decline as higher prices were offset by a 6% drop in volume.  For the year, EPS was $2.70 compared with $2.24 in the prior year. Adjusted EPS climbed to $2.48 from $2.30.  Annual revenue improved to $14.88B from $14.64B.  The stock rose 18¢.

General Mills 4Q profit climbs on higher sales AP

General Mills, Inc. (GIS)


stock chart


Monsanto said higher sales of genetically engineered seeds helped Q3 profits nearly double.  EPS was $1.26 for the qtr ended May 31, compared with 70¢ last year.  Revenue increased 21% to $3.6B.  The results easily beat expectations of $1.10 on revenue of $3.4B. Total seeds & traits revenue rose to $2.65B from $2.36B last year. Corn seed sales jumped 10% from last year to $1.12B & soybean sales rose 10% to $605B.  MON raised its 2011 outlook for ongoing EPS to $2.84-$2.88, from the prior estimate of $2.72-$2.82.  The stock was up 2.33.

Monsanto posts $680 million profit in 3rd quarter AP

Monsanto Company (MON)


stock chart



The IMF said the US should raise the debt ceiling to avoid a global shock.  Nobody is arguing with the thought, but getting it done is another thing.  Negotiations in DC are dead in the water & the clock is ticking.  Greece has another big vote coming tomorrow, it's still hard to see how its debt problem will be resolved with protests in the street.  However stocks are having a good day & the Dow hopes to make it 3 days in a row of triple digit gains after waffling around 12K for 3 weeks 

Dow Industrials (INDU)


stock chart




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