Dow shot up 176, advancers over decliners a relatively mild 3-1 & NAZ gained 34. The Financial Index added 2 to 194. The MLP index rose 1+ to go over 390 & the REIT index was up 2+ to the 263s. Junk bond funds were mixed & Treasuries pulled back after recent strength. Oil rose for a 3rd day as US reports on jobless claims reduced concern that economic growth is slowing & the head of the ECB pledged that the € will survive. Gold also rose.
Photo: Bloomberg
The number applying for unemployment benefits dropped by 35K last week, but that may have been distorted by seasonal factors. The Labor Dept said that applications fell to 353K, down from a revised 388K in the previous week & the biggest drop since Feb 2010. The 4-week average declined 8K to 367K, the lowest level since the end of Mar. Applications surged 2 weeks ago, reversing a big drop the previous week. But the gov struggles every Jul to account for temporary summer shutdowns in the auto industry & the adjustments have been unusually difficult this year because some automakers skipped their shutdowns in the face of stronger sales, resulting in fewer temporary layoffs. Weekly claims are averaging 374K this year, down from 409K last year with just over 6M receiving some type of unemployment aid, down from 7.6M a year ago. The unemployment picture remains dismal.
Jobless Claims in U.S. Decrease, Extending July Volatility
Photo: Bloomberg
ECB head Mario Draghi is raising expectations the central bank might step in & help lower the high borrowing costs that are putting pressure on gov finances in Europe. Draghi said that the bank would "do whatever it takes to preserve the euro" and added, "believe me, it will be enough." He discussed the high borrowing costs being imposed on some countries' bonds, saying that "they come within our mandate" — but only if those costs are stopping the ECB's interest rate policies from being implemented throughout the 17-country eurozone. The ECB has already used similar reasoning to make limited purchases of gov bonds in the past with the aim of driving down a gov's borrowing costs. However Spain's bond yields are at record highs. Words are cheap, action is needed & previous attempts have accomplished little.
Draghi Says ECB Will Do What’s Needed to Preserve Euro: Economy
Exxon Mobil, a Dow stock & Dividend Aristocrat, posted lower-than-expected quarterly earnings on as its oil & gas output sagged & its chemicals business struggled. Weaker global oil prices have weighed on earnings across the sector, & XOM also felt the sting of decade-low US natural gas prices. The company, which has pledged to spend a record $37B this year as it brings new projects on line, said oil & gas output fell 5.6% to 4.15M barrels oil equivalent per day in Q2. EPS was $3.41, up from $2.18 last year. Profit was boosted by a $7.5B gain related to the sale of a stake in its Japanese refining & chemicals business, & tax items. Excluding those one-time gains, EPS was $1.80 per share, below the $1.95 forecast. Excluding one-time items, earnings from the company's chemical operations totaled $820M, less than estimates for the unit. The stock gained 39¢ on a strong day for the stock market.
Exxon Mobil Profit Rises 49%
After the pledge to save the €, it seems like all fundamental problems will be solved. But these are very big problems & even the ECB has just so much money to throw at them. Yields on Spanish gov debts remain at record & unsustainable levels. Greece is a horrible mess while little attention is being paid to Italian debt problems. Dow is still 100 below its recent highs, stuck in a sideways trading range. This rally may not last as breadth remains weak.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.096% | |
U.S. 2-year | 0.219% | |
U.S. 10-year | 1.419% |
| CLU12.NYM | ....Crude Oil Sep 12 | ...90.29 | ... 1.32 | (1.5%) |
| GCQ12.CMX | ...Gold Aug 12 | .....1,617.80 | ..... 9.70 | (0.6%) |
Get the latest daily market update below:
The number applying for unemployment benefits dropped by 35K last week, but that may have been distorted by seasonal factors. The Labor Dept said that applications fell to 353K, down from a revised 388K in the previous week & the biggest drop since Feb 2010. The 4-week average declined 8K to 367K, the lowest level since the end of Mar. Applications surged 2 weeks ago, reversing a big drop the previous week. But the gov struggles every Jul to account for temporary summer shutdowns in the auto industry & the adjustments have been unusually difficult this year because some automakers skipped their shutdowns in the face of stronger sales, resulting in fewer temporary layoffs. Weekly claims are averaging 374K this year, down from 409K last year with just over 6M receiving some type of unemployment aid, down from 7.6M a year ago. The unemployment picture remains dismal.
Jobless Claims in U.S. Decrease, Extending July Volatility
ECB head Mario Draghi is raising expectations the central bank might step in & help lower the high borrowing costs that are putting pressure on gov finances in Europe. Draghi said that the bank would "do whatever it takes to preserve the euro" and added, "believe me, it will be enough." He discussed the high borrowing costs being imposed on some countries' bonds, saying that "they come within our mandate" — but only if those costs are stopping the ECB's interest rate policies from being implemented throughout the 17-country eurozone. The ECB has already used similar reasoning to make limited purchases of gov bonds in the past with the aim of driving down a gov's borrowing costs. However Spain's bond yields are at record highs. Words are cheap, action is needed & previous attempts have accomplished little.
Draghi Says ECB Will Do What’s Needed to Preserve Euro: Economy
Exxon Mobil, a Dow stock & Dividend Aristocrat, posted lower-than-expected quarterly earnings on as its oil & gas output sagged & its chemicals business struggled. Weaker global oil prices have weighed on earnings across the sector, & XOM also felt the sting of decade-low US natural gas prices. The company, which has pledged to spend a record $37B this year as it brings new projects on line, said oil & gas output fell 5.6% to 4.15M barrels oil equivalent per day in Q2. EPS was $3.41, up from $2.18 last year. Profit was boosted by a $7.5B gain related to the sale of a stake in its Japanese refining & chemicals business, & tax items. Excluding those one-time gains, EPS was $1.80 per share, below the $1.95 forecast. Excluding one-time items, earnings from the company's chemical operations totaled $820M, less than estimates for the unit. The stock gained 39¢ on a strong day for the stock market.
Exxon Mobil Profit Rises 49%
Exxon Mobil (XOM)
After the pledge to save the €, it seems like all fundamental problems will be solved. But these are very big problems & even the ECB has just so much money to throw at them. Yields on Spanish gov debts remain at record & unsustainable levels. Greece is a horrible mess while little attention is being paid to Italian debt problems. Dow is still 100 below its recent highs, stuck in a sideways trading range. This rally may not last as breadth remains weak.
Dow Jones Industrials
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