Tuesday, March 13, 2012

Markets rally after FOMC meeting

Dow began the day charging out of the & never looked back.  Dow ended up 217, advancers 4-1 over decliners (tame considering the strength in the markets) & NAZ added 56 (helped by a good day for Apple).  Bank stocks led the charge, taking the Financial Index up 7+ to the 207s, an 8 month high & not far below the 225 yearly high made last Apr. 

The MLP index fell 2+ to 401 (10 below its recent record high) & the REIT index rose 3+ to 249 (4 below its yearly high).  Junk bond funds were mixed.  Treasury yields rose to the highest level this year after Federal Reserve raised its assessment of the economy & refrained from new actions to lower borrowing costs.  Oil rallied, putting it back in the black, & gold fell as risk averse holders sold.

JPMorgan Chase Capital XVI (AMJ)

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CLJ12.NYM...Crude Oil Apr 12....106.67...Up 0.33  (0.3%)

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Bernanke Says Unemployment Rate Still `Elevated'

Photo:   Bloomberg

The Federal Reserve (FED) sketched a mildly brighter view of the economy with a burst of hiring since its last meeting in Jan.  But it took no further steps to aid the recovery & repeated its plan to keep short-term interest rates near zero through 2014.  The FED said unemployment should continue to decline gradually as the economy expands moderately & also noted that consumer spending & business investment have picked up.  It took a more hopeful view of Europe's debt crisis.  Though the crisis still threatens the global economy, the danger has eased, the FED said.  It cautioned that rising oil & gas prices will raise inflation temporarily, but repeated its view that longer-term inflation should remain stable.  The statement was approved on a 9-1 vote.  Atlanta President Lacker dissented for the 2nd straight meeting.  The statement said Lacker doesn't "anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014."  The Fed continues to be in a holding pattern. 

Fed Says Labor Market Improves; Leaves Policy Unchanged

  • <p>               Italian Prime Minister Mario Monti, right, shakes hands with German Chancellor Angela Merkel during a press conference at Palazzo Chigi's government office, in Rome, Tuesday, March 13, 2012. Italian Premier Mario Monti, flanked by German leader Angela Merkel, says European Union focus must be on economic growth, even as the acute financial crisis seems to be easing. Monti, at a news conference with Merkel after the two held private talks in Rome Tuesday, said the EU must give the same attention to growth as it has to the debt crisis. (AP Photo/Alessandra Tarantino)
Italian PM Monti & Chancellor Merkel
Photo:   Yahoo

Italian Premier Mario Monti & German leader Angela Merkel, urged Europe to focus as much on growth as it has on battling debt threats, especially as the financial crisis shows signs of easing.  Italian borrowing rates have fallen in 2012, due to emergency loans that the ECB gave to the financial sector.  But Monti warned the gov needed to press ahead with its wide-ranging program of growth-enhancing reforms & deficit-cutting savings measures.  "We cannot relax at all, both in domestic policies and in European policies," Monti said.  "The European Union must enter in a phase giving the same attention to growth, especially in youth employment," he added.  Merkel stressed that the EU "needs growth and competitiveness" & must "defend itself from emerging powers'" economies.  "Europe has gone a long way down the road, but we haven't reached the summit yet," Merkel said.  Germany "followed with great attention the courageous reforms that Monti carried out," Merkel said (referring to new taxes, pension reform & growth-inducing measures put in place to save Italy as borrowing costs spiraled rapidly upwards). 

Italian leader says EU focus must be on growth AP

Apple is having another one of those days when buyers are failing all over themselves to buy more shares.   There is nothing dramatically new going on.  But the thought of iPad3 hitting the market is hard to resist for its fans.  The stock is up 150 from its lows last year & some believe its only limit is the sky.  Maybe, but I worry about too much, too fast.  The stock shot up $15 to $567, yet another record high.

Apple Inc. (AAPL)

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Buyers were not really sleeping, just waiting for an excuse to return.  Stocks were having a very good day, taking the Dow well past 13K, which had served as a formidable ceiling.  But in the last hour fresh buying came in with a 130 surge even though the news was relatively tame.  The Greek debt mess quieted down (although it has not gone away).  European leaders are busy talking without deciding anything new.  The FED meeting was a non event.  But Dow is already up 250 this week with 3 days of trading left!

Dow Industrials

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