Dow shot up 132, advancers over decliners 4-1 & NAZ gained 35. Bank stocks led the way again, taking the Financial Index up 2+ to the 214s (not seen since May).
The MLP index was up a fraction in the 397s & the REIT index rose 2+ to the 252s (within spitting distance of its yearly highs). Junk bond funds & Treasuries were mixed to lower, still digesting the recent run-up in yields. Oil was flattish but gold advanced the most in 4 weeks on speculation that investors will buy more bullion as an alternative to the slumping dollar.
Photo: Yahoo
Contracts to purchase previously owned homes unexpectedly fell in Feb, suggesting a further pull back in sales as the housing market struggles to regain its footing. The National Association of Realtors said its Pending Home Sales Index slipped 0.5% to 96.5 (from a 2 year high). Expectations were for signed contracts to advance 1% after a previously reported 2% rise. Contracts signed were up 9.2% in the 12 months to Feb. Contracts fell in 3 of the 4 regions, but jumped 6.5% in the Midwest. Data last week showed sales of previously owned homes fell in Feb & the decline in signed contracts suggests home purchases could be weak again in Mar. More mixed message about the housing recovery struggling to gain traction
Pending Sales of U.S. Existing Homes Hold Near Two-Year High
Photo: Bloomberg
Ben Bernanke says the job market remains weak despite 3 months of strong hiring & that the Federal Reserve's (FED) existing policies will help boost growth. Further job gains will likely require more robust consumer & business demand, Bernanke said. These comments suggest the FED is prepared to keep interest rates near zero unless the economy improves substantially. While the job gains have led to some increase in consumer confidence & incomes, "we have not seen that in a persuasive way yet," Bernanke said & added that the FED needed to "remain cautious" in deciding what its next moves should be. He offered some reasons for the unexpected decline in unemployment. Employers may be hiring rapidly because they cut too many jobs during the recession. He also said that gov revisions may later show stronger economic growth over the past year. But Bernanke cautioned that he doesn't expect the unemployment rate to keep falling at the current pace without much stronger growth. He also noted that the rate is still roughly 3 percentage points higher than its average over the 20 years preceding the recession. "Despite the recent improvement, the job market remains far from normal," Bernanke said. "The number of people working and total hours worked are still significantly below pre-crisis peaks."
Photo: Bloomberg
After putting $17B into a bailout of Ally Financial, the Treasury has indicated it would prefer a breakup & sale of the lender fearing an IPO may not succeed because of the company’s high cost of capital relative to other banks, the potential bankruptcy of a mortgage unit & its recent performance in Federal Reserve stress tests. Instead, the Treasury is pushing for Ally to split into at least 2 pieces, one part would be the auto finance unit (one of the largest in the US) & the other would be its online depository franchise, with $28B in retail deposits. But Ally CEO Michael Carpenter & its board have resisted the call for a split. The Treasury owns 74% of Ally (the Detroit- based former finance arm of GM). Ally is likely to put its Residential Capital mortgage into bankruptcy in the next few weeks & sell some assets in a court-supervised sale. The firm also may lose its preferred auto-lender agreement with automaker Chrysler, which is seeking other banks to potentially replace Ally. All bailouts have not worked out well.
U.S. Treasury Said to Urge Sale of Ally Financial as Prospect for IPO Dims
Big Ben is making his presence known. Easy money sounds good & more easy money sounds even better. Following a sluggish week, the bulls have returned. The chart below only tells half the story of the 6 month bull run. If it reaches 13.4K, that would be a 3K advance, one of its biggest in history over that time span, not to mention more than double the recession lows 3 years ago. But this may be a wishy washy year with Europe in recession, China growth slowing, high US unemployment & looming tax hikes next year.
The MLP index was up a fraction in the 397s & the REIT index rose 2+ to the 252s (within spitting distance of its yearly highs). Junk bond funds & Treasuries were mixed to lower, still digesting the recent run-up in yields. Oil was flattish but gold advanced the most in 4 weeks on speculation that investors will buy more bullion as an alternative to the slumping dollar.
JPMorgan Chase Capital XVI (AMJ)
Treasury yields:
U.S. 3-month | 0.071% | |
U.S. 2-year | 0.348% | |
U.S. 10-year | 2.262% |
| CLK12.NYM | ....Crude Oil May 12 | ...106.99 | ..... 0.12 | (0.1%) |
| GCH12.CMX | ...Gold Mar 12 | .........1,679.70 | ... 17.40 | (1.1%) |
Get the latest daily market update below:
Photo: Yahoo
Contracts to purchase previously owned homes unexpectedly fell in Feb, suggesting a further pull back in sales as the housing market struggles to regain its footing. The National Association of Realtors said its Pending Home Sales Index slipped 0.5% to 96.5 (from a 2 year high). Expectations were for signed contracts to advance 1% after a previously reported 2% rise. Contracts signed were up 9.2% in the 12 months to Feb. Contracts fell in 3 of the 4 regions, but jumped 6.5% in the Midwest. Data last week showed sales of previously owned homes fell in Feb & the decline in signed contracts suggests home purchases could be weak again in Mar. More mixed message about the housing recovery struggling to gain traction
Pending Sales of U.S. Existing Homes Hold Near Two-Year High
Ben Bernanke says the job market remains weak despite 3 months of strong hiring & that the Federal Reserve's (FED) existing policies will help boost growth. Further job gains will likely require more robust consumer & business demand, Bernanke said. These comments suggest the FED is prepared to keep interest rates near zero unless the economy improves substantially. While the job gains have led to some increase in consumer confidence & incomes, "we have not seen that in a persuasive way yet," Bernanke said & added that the FED needed to "remain cautious" in deciding what its next moves should be. He offered some reasons for the unexpected decline in unemployment. Employers may be hiring rapidly because they cut too many jobs during the recession. He also said that gov revisions may later show stronger economic growth over the past year. But Bernanke cautioned that he doesn't expect the unemployment rate to keep falling at the current pace without much stronger growth. He also noted that the rate is still roughly 3 percentage points higher than its average over the 20 years preceding the recession. "Despite the recent improvement, the job market remains far from normal," Bernanke said. "The number of people working and total hours worked are still significantly below pre-crisis peaks."
After putting $17B into a bailout of Ally Financial, the Treasury has indicated it would prefer a breakup & sale of the lender fearing an IPO may not succeed because of the company’s high cost of capital relative to other banks, the potential bankruptcy of a mortgage unit & its recent performance in Federal Reserve stress tests. Instead, the Treasury is pushing for Ally to split into at least 2 pieces, one part would be the auto finance unit (one of the largest in the US) & the other would be its online depository franchise, with $28B in retail deposits. But Ally CEO Michael Carpenter & its board have resisted the call for a split. The Treasury owns 74% of Ally (the Detroit- based former finance arm of GM). Ally is likely to put its Residential Capital mortgage into bankruptcy in the next few weeks & sell some assets in a court-supervised sale. The firm also may lose its preferred auto-lender agreement with automaker Chrysler, which is seeking other banks to potentially replace Ally. All bailouts have not worked out well.
U.S. Treasury Said to Urge Sale of Ally Financial as Prospect for IPO Dims
Big Ben is making his presence known. Easy money sounds good & more easy money sounds even better. Following a sluggish week, the bulls have returned. The chart below only tells half the story of the 6 month bull run. If it reaches 13.4K, that would be a 3K advance, one of its biggest in history over that time span, not to mention more than double the recession lows 3 years ago. But this may be a wishy washy year with Europe in recession, China growth slowing, high US unemployment & looming tax hikes next year.
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