Thursday, May 17, 2012

Markets tumble on weak economic news

Dow dropped a very big 156, decliners over advancers 7-1 & NAZ pulled back 60.  Bank stocks led the retreat, taking the Financial Index down 4 to 187 (27 below its peak at the start of the month).  The MLP index sank 5 to the 372s (down almost 40 from its record high at the start of the month) & the REIT index fell a big 7 to the 245s.  Junk bond funds were weak (following the lead of stocks) but Treasuries soared, bringing record or near record low yields. Oil was lower, continuing its plunge in May, but gold found friends, rising $37, in the turmoil of global financial markets.

JPMorgan Chase Capital XVI (AMJ)

stock chart

Click below for the latest market update:

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM12.NYM...Crude Oil Jun 12...92.30 ...Down 0.51  (0.6%)

Live 24 hours gold chart [Kitco Inc.]

Caterpillar, a Dow stock, worldwide retail sales of machines rose 12% in the 3 months ending Apr 12, less than the 18-21% gains in the 3-month periods ending in Mar & Feb.  The strongest gains continued to be in North America, up 32% in the latest period, while Latin America was the only shrinking market, down 13%.  Europe, Africa & the Middle East were in between, up 14%, while the region was up 21% & 13% in the 3-month periods ending in Mar & Feb.  Power-systems sales rose 5%, indicating continued uneven results.  The engines business slipped 1% after rising 13% in the Feb. 12 period.  Engines used in transportation & petroleum have experienced rising sales while ones for electric power & industry have been declining.  The biggest worry is that while Asia remains strong, China is not because it is attempting to slow its economic growth to avoid inflation.  Its astounding growth rate appears to be on the wane.  The stock sank $4.06 to Oct 2011 levels.

Caterpillar shares fall on 3-month sales figures AP

Caterpillar, Inc. (CAT)

stock chart

Mortgage Rates in U.S. Fall to Record Lows With 30-Year at 3.79%

Photo:   Bloomberg

Mortgage rates fell to a record for a 3rd straight week, reducing borrowing costs as the housing market improves & home-loan defaults decline.  The average rate for a 30-year fixed loan dropped to 3.79% in the latest week from 3.83% according to Freddie Mac.  It was the lowest on record dating to 1971.  The average 15-year rate decreased to 3.04%, also a record, from 3.05%.  Record-low mortgage rates, along with job gains & lower-priced homes, are helping to lift housing demand & stabilize the real estate market.  Housing affordability reached a new high in Q1 & sales of previously owned homes rose 5.3% from a year earlier according to the National Association of Realtors.  The share of home loans at least 30 days late dropped to 7.4%, the lowest since 2008, according to the Mortgage Banks Assoc.  Low borrowing costs are encouraging homeowners to reduce their monthly bills.  The mortgage measure of refinancing applications jumped 13% last week.  With Treasury rates continuing to fall, more declines in mortgage rates are expected.

Rates for fixed & adjustable-rate mortgages over the past 52 weeks:
Current avg. Last week Prior week  52-week high
30-year fixed 3.79% 3.83% 4.61% 3.79%
15-year fixed 3.04 3.05 3.80 3.04
5-yr adjustable 2.83 2.81 3.48 2.78
1-yr adjustable 2.78 2.73 3.15 2.70
All values are in percentage points.
Source: Freddie Mac Primary Mortgage Market Survey

Mortgage Rates in U.S. Fall to Record Lows With 30-Year at 3.79%

Wal-Mart Profit Tops Estimates on Lower Prices

Photo:   Bloomberg

Wal-Mart, a Dow stock & Dividend Aristocrat, rose the most in more than 3 years after reporting Q1 profit that topped estimates as its low prices increased customer traffic & boosted sales.  EPS rose to $1.09 from 97¢ a year earlier, beating the estimate of $1.04.  At a time when bribery probes in Mexico threaten growth in the intl operations, CEO Mkie Duke is trying to boost US sales by stocking more items & honoring its promise to keep prices low.  Revenue rose 8.5% to $113B.  Sales in US stores open for at least a year climbed 2.6%, the 3rd straight quarterly gain after more than 2 years of declines.  WMT also said the 2 US federal agencies are investigating the company for possible violations of the Foreign Corrupt Practices Act & that it is cooperating.  Federal & local gov agencies in Mexico also have recently started investigations of these matters, & the company is cooperating with those probes as well.  In Q1, sales at US stores rose 5.9% to $66.3B, the intl operations boosted sales 15% to $32.1% & Sam’s Club sales climbed 7.1% to $12.1B (excluding fuel).  Intl sales rose fastest in Brazil, Mexico & the UK.  Brazil sales climbed 15% as same-store sales in the country grew 8.6%.  Traffic at stores in China declined 6.5%. The stock jumped $2.49 in a down market.

Wal-Mart Climbs Most in Three Years After Profit Tops Analysts’ Estimates

Wal-Mart Stores, Inc. (WMT)

stock chart

Dow had its 11th loss in 12 days & is down almost 1K in May.  Of course, that puts the markets in vastly oversold conditions which could bring a sudden surprise to the upside.  But sellers are in command.  The growing financial mess, between Greece & Spain, is getting everybody's attention & there are no quick fixes.  The CAT numbers were disturbing, showing its rapid growth rate is slowing.  Worse, WMT & CAT business in China is soggy.  This adds strength to other reports about a slowdown in China.  However, even at these levels, Dow is a solid 2K above its lows made last Oct (something the bulls are glad to see).   But all my stocks declined today. 

Dow Industrials

stock chart

Get your favorite symbols' Trend Analysis TODAY!  

No comments: