Friday, March 30, 2012

Higher markets as stocks close out Q1

Dow rose 49, advancers ahead of decliners 2-1 but NAZ fell 2 as Apple (AAPL) dropped 7 on worries about its Chinese suppliers.  The Financial Index was up a fraction in the 212s.

The MLP index was flat but the REIT index rose 1 to the 252s (just below its yearly highs).  Junk bond funds were mixed as were Treasuries.  Oil was up a fraction & gold rebounded after recent selling.

JPMorgan Chase Capital XVI (AMJ)

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CLK12.NYM...Crude Oil May 12...103.24.....Up 0.46  (0.5%)

GCJ12.CMX....Gold Apr 12.........1,662.30 ...Up 10.10  (0.6%)

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  • <p>               FILE - In this Feb. 28, 2012 file photo, Laurie Hanson looks over clothing at the Adorn clothing store in Montpelier, Vt. U.S. consumers boosted their spending in February by the most in seven months. But Americans' income barely grew, and the saving rate fell to its lowest point in more than two years, according to the Commerce Department, Friday, March 30, 2012. (AP Photo/Toby Talbot, File)
Photo:   Yahoo

Consumers boosted spending in Feb by the most in 7 months.  But income barely grew & the saving rate fell to its lowest point in more than 2 years.  The Commerce Dept said that consumer spending rose 0.8% (ahead of 0.6% forecasted) but income grew 0.2%, matching the weak increase in Jan.  After taking inflation into account, income after taxes fell for a 2nd straight month.  Still, consumers are spending more after the best 3-month hiring stretch in 2 years.  Some of the higher spending reflected surging gas prices.  But consumers also spent more on other goods & services.  Excluding inflation, which was due mainly to gas prices, spending rose 0.5%.  The saving rate dropped to 3.7% of after-tax income, the lowest level since Aug 2009.  The saving rate had been 4.3% in Jan & has averaged 4.7% for all of last year.  More inconclusive news about the economy.

Consumer Spending in U.S. Climbs 0.8%, More Than Forecast

Confidence among consumers unexpectedly rose in Mar for a 7th straight month.  The Thomson Reuters/University of Michigan’s final index of consumer sentiment rose to 76.2, the highest since Feb 2011, from 75.3 in Feb.  A reading of 74.5 was projected after a preliminary Mar figure of 74.3.  Employment & income gains are helping sustain an improvement in confidence that may help lift consumer spending, which accounts for about 70% of the economy.  Estimates for the confidence measure ranged from 72-78.  The index averaged 64.2 during the last recession & averaged 89 in the 5 years before the 18-month economic slump that ended in Jun 2009.

Consumer Sentiment in U.S. Climbed in March to One-Year High

3 of the biggest banks are preparing for fallout from a possible cut in their credit ratings.  Moody's said it will decide in mid-May whether to lower its ratings for 17 global financial companies.   Morgan Stanley (MS)  appears to be the most vulnerable with Moody's threatening to cut its ratings 3 notches (well below the rating of a rival like JPMorgan (JPM).  Bank of America (BAC) & Citigroup (C) may also fall to the same level, but those are helped by having higher-rated subsidiaries.  Credit ratings are important for financial companies, which greatly depend on the confidence of their creditors & the companies they trade with.  A high credit rating enables banks to put up less money, which they can borrow cheaply, while a lower credit rating can mean they have to put up more money & perhaps pay more for their loans.  The 3 banks said that they would have to put up $B more in collateral to back trading contracts. The 3 bank stocks were off only fractionally after having an excellent Q1, rebounding from depressed levels.

Three Major Banks Prepare for Possible Credit Downgrades

Stocks aren't doing a lot as Q1 winds down.  This is shaping up as the best qtr since Q3 2009 & the best Q1 since 1998.  NAZ is also doing well, closing above the important milestone of 3K.  The biggest driver of the gains was that the economy didn't fall apart & the European debt mess was dealt with, postponing long term solutions.  Next Fri will give the big jobs report which will be followed by earnings season (& investors are nervous).

Dow Industrials

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