Tuesday, January 24, 2012

Markets weighed down by Greek debt concerns

Dow fell 33, advancers 5-4 ahead of decliners & NAZ was flattish.  Bank stocks were a little lower on the turmoil over European debts.

S&P 500 Financials Sector Index

Value190.88One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    -0.38    (-0.2%)

The MLP index fell from yesterday's record close & the REIT index was up 1+ to the 242s.  Junk bond funds & Treasuries were mixed.  Oil fell as concerns about Europe's beleaguered economy focused again on Greece's massive debt.  Gold dropped $12, the most in a week, as the dollar rebounded from a 2 week low, reducing demand for the precious metal as an alternative asset.

Alerian MLP Index

Value398.05One-Year Chart for Alerian MLP Index (AMZ:IND)
Change   -1.09    (-0.3%)

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CLH12.NYM...Crude Oil Mar 12....99.07 ....Down 0.51  (0.5%)

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IMF Cuts Global Growth Forecast

Photo:   Bloomberg

The IMF cut its forecast for global growth & warned that the European debt crisis threatens to derail the world economy.  “The epicenter of the danger is Europe but the rest of the world is increasingly affected,” said Oliver Blanchard, the fund’s chief economist, said.  “There’s an even greater danger, namely that the European crisis intensifies. In this case the world could be plunged into another recession.”  Its estimate for global growth this year was lowered to 3.3% from a Sep forecast of 4%.  Expansion next year will be 3.9%, down from 4.5% previously forecasted.  The € area may enter a “mild recession” in 2012 as it shrinks 0.5% but the US outlook was unchanged at 1.8% growth.  The forecasts hinge on increased efforts in the € area to fight the financial turmoil.  It called on European policy makers to increase the size of the region’s rescue fund & for the ECB to continue support of the region to limit contagion to other countries.  “The near-term outlook has noticeably deteriorated,” the IMF said in its report. “The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere.”

BofA: Investment Bankers Face 25% Pay Cut

Photo:   Bloomberg

Bank of America, a Dow stock, will cut compensation packages an average 25% below last year for its investment bankers.  The compensation cut includes salary & bonus.  Investment banks are curbing pay as the companies succumb to revenue & regulatory pressures.  CEO Moynihan is scouring for expenses to cut after a 58% stock plunge last year.  It is believed that these people may earn from $500K into “the millions,”  Fees from investment banking declined 35 % in Q4, to $1.1B & the the bank said the market was “challenging” because of Europe & the fallout from the US credit rating.  This message does not suggest a strong economy & these are the 1%'s who were supposed to pay for more of the federal deficits with higher taxes!

BofA: Investment Bankers Face 25% Pay Cut

Bank of America Corporation (BAC)

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Not a lot was decided again, on very low volume.  Negotiations over refinancing the massive Greek debt have been well advertised & they are stuck in neutral.  Earnings reports have been getting mixed reviews, not as magnificent as some were hoping for,  Tonight the pres gives his state of the union speech with no surprises expected.  It will talk about taxing the rich to finance continuing deficits.  Along those lines, Congress has to deal with extending tax cuts & unemployment benefits which expire at the end of Feb.. The speech tonight should give markets a negative bias at tomorrow's opening (unless a miracle happens in Greece). 

Dow Industrials

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