Thursday, June 28, 2012

Bank stocks lead a broad decline

Dow dropped 145, decliners over advancers 3-1 & NAZ fell 40.  Banks stocks were hit with selling, taking the Financial Index down 3 to the 189s.  The MLP index fell 3 to the 365s after yesterday's big rise & the REIT index was down almost 2 to the 251s.  Junk bond funds slipped & Treasuries rose as stocks retreated.  Oil & gold fell with gold near its lows for 2012 in the mid $1500s.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLQ12.NYM...Crude Oil Aug 12...79.59 ....Down 0.62 (0.8%)

GCM12.CMX...Gold Jun 12......1,571.60 ...Down 2.40  (0.1%)

Get the latest daily market update below:

Jobless Claims in U.S. Hovered Last Week Near This Year's High

Photo:   Bloomberg

The number of applications for unemployment benefits are hovering near the highest level of the year, showing little improvement in the US labor market.  Jobless claims decreased 6K to 386K last week according to the Labor Dept, in line with the forecast.  The prior week’s reading was revised up to 392K from 387K, matching an Apr figure as the steepest of 2012.  The 4-week moving average decreased slightly to 387K, which was the highest since Dec 3.  Concern about the fallout from the European debt mess & the so-called fiscal cliff that will face the US at the end of this year may prompt employers to keep payrolls lean. 

Jobless Claims in U.S. Hovered Last Week Near 2012 High

Consumer Confidence Climbs

Photo:   Bloomberg

US consumer spending & export growth were not as robust as previously believed in Q1, suggesting less momentum in the economy.  The Commerce Dept confirmed that the economy grew at a 1.9% annual pace in Q1, but the mix of growth was not encouraging.  Consumer spending, 70% of economic activity, increased at a 2.5% rate, rather than the previously reported 2.7% pace.  There are signs that consumer spending slowed in Q2, with retail sales falling in Apr & May.  Exports grew at a 4.2% rate instead of 7.2%.  The loss of momentum in both consumer spending & exports bodes ill for Q1 growth.  The Q2 growth rate is forecast around 2%, but with global demand cooling amid Europe's debt woes & an uncertain fiscal policy path at home forcing households to be cautious, even that estimate might be too optimistic.  Business inventories increased $54.4B, instead of $57.7B, adding only 0.1 percentage point to GDP growth compared with 0.21 percentage point in the previous estimate.  Excluding inventories, the economy grew at a revised 1.8% rate, rather than 1.7% & up from 1.1% in Q4. This data is drab.

U.S. Economy Grew 1.9% in First Quarter on Consumer Spending

The Supreme Court upheld Obamacare in a 5-4 vote.  But the eyes of traders are looking east towards Europe.  EU is having another big summit & there are growing worries that Spain & Italy could lose access to borrowing more funds without help from EU.  Little was expected from the summit & it looks like that low standard will not be met with disagreement among leading countries. Dow is up just 100 in Jun, a month the bulls were hoping would be a recovery month.

Dow Jones Industrials

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