Dow fell 51, decliners 5-4 ahead of advancers & NAZ inched up 1 (helped by a 7+ gain at Apple (AAPL)). The Financial Index was down a fraction to under 197.
The MLP index rose 1+ to 369 but the REIT index fell a fraction in the 261s (close to its yearly highs). Junk bond funds were mixed to higher & Treasuries rose as stocks pulled back. Oil fell after the biggest rally in 3 years on concern economic weakness in the US, Europe & China may reduce demand. Gold is also giving up gains made on Fri.
Chinese manufacturing activity deteriorated at a faster clip in Jun than a month earlier, as new-order bookings & employment declined further. The final reading of HSBC’s China manufacturing Purchasing Managers’ Index dropped to 48.2 from 48.4 in May, indicating that business conditions worsened at Chinese factories, slightly better than HSBC’s preliminary reading of 48.1 but remained below the 50-point level for an 8th month in a row. “It is all about growth and employment. As external demand has weakened and domestic demand hasn’t shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown, hence weighing on the jobs market,” said Hongbin Qu, chief China economist at HSBC. HSBC’s release followed a separate, official version of the manufacturing survey, released yesterday, which put China’s Jun PMI at 50.2, also weaker than an official reading of 50.4 in May. HSBC said lack of demand was behind the latest drop in the monthly PMI, as new order bookings fell at an accelerated rate. New export orders dropped at the steepest rates in over 3 years on weak demand from both North America & Europe. This is a very bad sign of global economic health.
China’s Manufacturing Growth Weakens as New Orders Drop
US manufacturing shrank in Jun for the first time in nearly 2 years, a troubling sign that the economy is faltering. The Institute for Supply Management said that its index of manufacturing activity fell to 49.7, down from 53.5 in May & the lowest reading since Jul 2009, one month after the recession officially ended. Readings below 50 indicate contraction. A measure of new manufacturing orders fell below 50 for the first since Apr 2009 & a gauge of production also fell to its lowest level in more than 2 years. Factories are also reporting much less overseas demand, likely because Europe's financial crisis has lowered demand for US exports. A measure of exports dropped to 47.5, its lowest level since Apr 2009. A gauge of employment edged down but remained at a healthy level of 56.6, suggesting factories may still be adding jobs. Manufacturers have reported job gains for 8 straight months. Factories have been a key source of jobs & growth since the recession, but the sector has shown signs of weakness in recent months. The economic recovery is stalling.
ISM Index of U.S. Manufacturing Decreased to 49.7 in June
Photo: Yahoo
Dell will buy Quest Software for about $2.4B ($28 a share), ending speculation about who was the unnamed bidder. With consumer demand for PCs declining, DELL wants to branch out beyond the business of making personal computers into more lucrative fields. Helped by a recent string of acquisitions of software companies, DELL is trying to grow into advising corps & govs on how to manage technology needs & sell them more software & computing equipment. This will make it more competitive in the server, storage, networking & computing services business. QSFT had agreed to be bought by Insight for $23 per share ($2B) in Mar, followed by a series of increasing bids from Insight & another bidder followed. The deal is expected to close in a few months. Both stocks slipped a few pennies.
Dell Agrees to Buy Quest for $2.4 Billion Adding Software
Markets had a chance to digest the bailout news from Europe & stock buyers are having 2nd thoughts. At best, the European debt mess remains in flux & nobody really knows where it is going. Greece was put on a back-burner for a couple of days, but it is getting more attention now. There has also been a lot of talk about short covering on Fri, accounting for some of the big gains. Meanwhile macro economic data around the world is not looking good. Fri is the big jobs report in the US & expectations are for a meager 90K jobs added. Sluggish US economic growth indicates that the unemployment rate will continue at unacceptable levels for the rest of the year.
The MLP index rose 1+ to 369 but the REIT index fell a fraction in the 261s (close to its yearly highs). Junk bond funds were mixed to higher & Treasuries rose as stocks pulled back. Oil fell after the biggest rally in 3 years on concern economic weakness in the US, Europe & China may reduce demand. Gold is also giving up gains made on Fri.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.086% | |
U.S. 2-year | 0.301% | |
U.S. 10-year | 1.585% |
| CLQ12.NYM | ...Crude Oil Aug 12 | ...83.65 | ..... 1.31 | (1.5%) |
| GCN12.CMX | ...Gold Jul 12 | ........1,590.70 | ... 12.80 | (0.8%) |
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Chinese manufacturing activity deteriorated at a faster clip in Jun than a month earlier, as new-order bookings & employment declined further. The final reading of HSBC’s China manufacturing Purchasing Managers’ Index dropped to 48.2 from 48.4 in May, indicating that business conditions worsened at Chinese factories, slightly better than HSBC’s preliminary reading of 48.1 but remained below the 50-point level for an 8th month in a row. “It is all about growth and employment. As external demand has weakened and domestic demand hasn’t shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown, hence weighing on the jobs market,” said Hongbin Qu, chief China economist at HSBC. HSBC’s release followed a separate, official version of the manufacturing survey, released yesterday, which put China’s Jun PMI at 50.2, also weaker than an official reading of 50.4 in May. HSBC said lack of demand was behind the latest drop in the monthly PMI, as new order bookings fell at an accelerated rate. New export orders dropped at the steepest rates in over 3 years on weak demand from both North America & Europe. This is a very bad sign of global economic health.
China’s Manufacturing Growth Weakens as New Orders Drop
US manufacturing shrank in Jun for the first time in nearly 2 years, a troubling sign that the economy is faltering. The Institute for Supply Management said that its index of manufacturing activity fell to 49.7, down from 53.5 in May & the lowest reading since Jul 2009, one month after the recession officially ended. Readings below 50 indicate contraction. A measure of new manufacturing orders fell below 50 for the first since Apr 2009 & a gauge of production also fell to its lowest level in more than 2 years. Factories are also reporting much less overseas demand, likely because Europe's financial crisis has lowered demand for US exports. A measure of exports dropped to 47.5, its lowest level since Apr 2009. A gauge of employment edged down but remained at a healthy level of 56.6, suggesting factories may still be adding jobs. Manufacturers have reported job gains for 8 straight months. Factories have been a key source of jobs & growth since the recession, but the sector has shown signs of weakness in recent months. The economic recovery is stalling.
ISM Index of U.S. Manufacturing Decreased to 49.7 in June
Photo: Yahoo
Dell will buy Quest Software for about $2.4B ($28 a share), ending speculation about who was the unnamed bidder. With consumer demand for PCs declining, DELL wants to branch out beyond the business of making personal computers into more lucrative fields. Helped by a recent string of acquisitions of software companies, DELL is trying to grow into advising corps & govs on how to manage technology needs & sell them more software & computing equipment. This will make it more competitive in the server, storage, networking & computing services business. QSFT had agreed to be bought by Insight for $23 per share ($2B) in Mar, followed by a series of increasing bids from Insight & another bidder followed. The deal is expected to close in a few months. Both stocks slipped a few pennies.
Dell Agrees to Buy Quest for $2.4 Billion Adding Software
Dell (DELL)
Quest (QSFT)
Markets had a chance to digest the bailout news from Europe & stock buyers are having 2nd thoughts. At best, the European debt mess remains in flux & nobody really knows where it is going. Greece was put on a back-burner for a couple of days, but it is getting more attention now. There has also been a lot of talk about short covering on Fri, accounting for some of the big gains. Meanwhile macro economic data around the world is not looking good. Fri is the big jobs report in the US & expectations are for a meager 90K jobs added. Sluggish US economic growth indicates that the unemployment rate will continue at unacceptable levels for the rest of the year.
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