Thursday, June 7, 2012

Markets edge higher on jobless claims data

Dow added another 66, advancers ahead of decliners 3-2 but NAZ was up only 2.  The Financial Index hardly budged, just under 188.

The MLP index was fractionally changed in the 364s following its 2 day run-up & the REIT index also moved little (above 250).  Junk bond funds inched higher as did Treasuries.  Oil is having a good after after its pullback in Q2 & gold is trading sideways.

JPMorgan Chase Capital XVI (AMJ)

stock chart

Treasury Yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN12.NYM....Crude Oil Jul 12...86.86 ...Up 1.84  (2.2%)

GCM12.CMX...Gold Jun 12...1,625.30 ...Down 7.50  (0.56%)

Get the latest daily market update below:

Initial Jobless Claims in U.S. Fell Last Week to 377,000

Photo:   Bloomberg

First-time claims for jobless benefits fell 12K to 377K in the latest week from a revised 389K the prior week, according to the Labor Dept.  The estimate was 378K.  The number of people receiving extended payments plunged.  The 4-week moving average climbed to 377K, the highest in a month, from 376K.  The number continuing to receive benefits increased 34K in the latest week to 3.29M.  Continuing claims do not include the number of workers receiving extended benefits under federal programs.  Those workers collecting emergency & extended payments slumped 105K in the latest week to 2.83M.  In Q2, the weekly claims figure has been pretty much going sideways above 350K, real progress is difficult to measure.

Initial Jobless Claims in U.S. Fell Last Week to 377,000

China Cuts Interest Rates to Boost Growth as Inflation Eases

Photo:   Bloomberg

China cut its benchmark lending rate for the first time in nearly 4 years, adding to efforts to reverse a sharp economic downturn.  The interest rate on a one-year loan will be cut 25 basis points to 6.31%, the first rate cut since Nov 2008 (after the Lehman collapse).  China has rolled out a series of measures to stimulate the economy after growth fell to a nearly 3-year low of 8.1% in Q1 & Apr factory output grew at its slowest rate since the 2008 crisis.  Q2 growth is expected to fall further.  The gov said it will pump $B into the economy thru spending on building low-cost housing, airports & other public works.  It also has approved a wave of major investments by state companies.  However, leaders are moving cautiously after their huge stimulus in response to the 2008 financial crisis fueled inflation & a wasteful building boom.  After spending 2 years tightening lending & investment curbs to cool an overheated economy, the gov reversed course in Dec when exporters were hit by a plunge in global demand for Chinese goods.  On May 12, regulators cut the reserves Chinese banks are required to hold in another effort to boost lending.  This is the kind of news bulls like to hear, although small interest rate cuts may not have a major effect on the economy.

Bernanke Will School Congress on the Economy: Don Hays

Photo:   Yahoo

Ben Bernanke said the Federal Reserve (FED) is prepared to take further steps to lift the US economy if it weakens, but didn't signal any imminent action in testimony today.  He said the European debt crisis poses significant risks to the US financial markets & noted that US unemployment remains high & the outlook for inflation subdued.  "As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," Bernanke said.  Further moves at the next policy meeting on Jun 19-20 are not expected, despite some signals from other FED members in recent days.

Bernanke: Fed Could Act if Economy Weakens  AP

Markets are digesting gains after the 2 day rally from oversold conditions.  Now they are no longer oversold, so further advances will have to come from conviction by buyers.  The interest rate cut by China is a small step in providing help, although it may make the FED less inclined to make bold moves at its Jun meeting.  Fundamental problems remain, led by the euro debt mess which is stuck in the mud & the US economic recovery is only sputtering.  Weekly jobless claims have to come down a lot more to have an impact on reducing the unemployment rate.

Dow Industrials

stock chart

Get your favorite symbols' Trend Analysis TODAY!  

No comments: