Tuesday, May 1, 2012

Dow finished at its highest level in more than 4 years

Dow shot up in early trading & held most of those gains by day's end.  Dow finished up 65, advancers over decliners 5-2 & NAZ gained 4 (although 35 below its highs).  Bank stocks continued strong, taking the Financial Index up 2+ to 210.  The MLP index rose a fraction to the 399s (up 18 off its low 3 weeks ago) & the REIT index index added 2½ to 263, a new multi year high.  Junk bond funds inched higher but Treasuries pulled back.  Oil climbed to a one-month high after US manufacturing increased at the fastest pace in 10 months, signaling that economic growth will accelerate.  Gold fell (a smidgen) for a 2nd straight day as signs of stronger US industrial growth boosted prospects for the economy & eroded the appeal of gold as a haven.

JPMorgan Chase Capital XVI (AMJ)

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CLM12.NYM...Crude Oil Jun 12...106.27 ....Up 1.40  (1.3%)

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  • Workers assemble a pre-production 2013 Dodge Dart during a tour of the Chrysler Belvidere Assembly plant in Belvidere, Illinois February 2, 2012. REUTERS/Frank Polich

Photo:   Yahoo

Manufacturing grew in Apr at the strongest rate in 10 months, easing concerns the economy had lost momentum at the start of Q2.  The Institute for Supply Management index of national factory activity rose to 54.8 from 53.4 in Mar, topping expectations for the reading to decline to 53 & was also above the top end of forecasts.  A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 indicates expansion.  Manufacturing accounts for about 12% of US economic activity & has been a cornerstone of the recovery from the 2007-2009 recession.  The ISM gauge of employment also rose to its highest level since last Jun, to a reading of 57.3 from 56.1.  The forward-looking new orders component racked up its best reading in a year at 58.2, up from 54.5.  The national ISM report was in contrast to some regional manufacturing reports from the industry group, including Chicago that showed the rate of growth slowed last month.  It also bucked the trend of other recent data that suggested the economy lost some steam as Q2 got under way, highlighting the bumpy nature of the recovery.  Yes, very bumpy.

Manufacturing in U.S. Grows at Fastest Pace in a Year: Economy

Photo:   Yahoo

Sears Holdings, the best performer on the S&P 500 in 2012, started May with a big 15% surge.  The retail chain is planning to spin off some of its operations into a company that will be known as Sears Hometown and Outlet Stores which is driving substantial buying interest & putting volume on pace to significantly exceed the normal activity of the past 3 months.  In the first 4 months of 2012, the stock was already up 69% & the stock shot up $8.32 on May 1.

Sears Surges on Spinoff Plan

Sears Holdings Corporation (SHLD)

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Automatic Data Processing, a Dividend Aristocrat, fiscal Q3 net income rose 7% as the number of employees on client payrolls increased & new business was added.  EPS was 92¢, above 85¢ last year & topped the 91¢ forecast.  Revenue rose 7% to $2.92B from $2.74B, meeting the estimate.  Revenue in the employer services unit, which handles payroll services, climbed 7% & revenue in the professional employer organization services unit, which provides human resources & employee benefits programs, rose 15 %.  Vehicle dealer services revenue increased 7%.  The company maintained its guidance for fiscal 2012 EPS to climb 8-9% from $2.52 per share a year ago, implying EPS of $2.72-$2.75.  Revenue is still anticipated to increase 7-9% from 2011's $9.88B, implying $10.57-$10.77B.  Analysts expect full-year EPS of $2.74 on revenue of $10.7B.  Last month, ADP completed its acquisition of the human resources subsidiary of SHPS, an employee benefits administration company.  The stock fell 41¢ on the news.

 Automatic Data Processing 3Q profit tops Street AP

Automatic Data Processing, Inc. (ADP)

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Even after late day selling, the markets still had a good day.  Dow finished at its highest levels in more than 4 years.  But Dow pulled back 55 in the last hour & NAZ also saw late day selling which just about wiped out what had been a big day.  Weakness into the close has to make the bulls nervous, especially after markets reached multi highs.  Fri approaches & that brings the big jobs report for Apr.  Although expectations are for reduced hiring, markets could still be disappointed if the numbers are too low.

Dow Industrial

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