Monday, November 5, 2012

Mixed markets ahead of the election

Dow slipped 16, decliners slightly ahead of advancers & NAZ was up by 5 (helped by Apple - see below).  The Financial Index lost 1+ to 214, little changed in the last month.  The MLP index dropped 2 to the 401s (as some MLPs go ex-distribution) & the REIT index was off 2 to the 261s.  Junk bond funds were a little soft on reports that there has been outflows from these funds & Treasuries rose.  Oil is slightly higher as investors remain cautious ahead of the presidential election.  Buyers moved into gold.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG13.NYM...Crude Oil Feb 13...86.09 ....Up 0.09  (0.1%)

GCX12.CMX...Gold Nov 12.....1,682.20 ...Up 8.10  (0.5%)

Global finance bigwigs pressed the US to avoid harming the fragile world economy with excessive austerity, widening their focus on fiscal challenges beyond concerns over Europe’s debt woes.  G-20 finance ministers & central bankers meeting in Mexico City pushed for swift action to prevent the $607B in tax increases & spending cuts that will hit in Jan unless lawmakers act.  The fear of foreign officials is that failure to limit the damage of the fiscal cliff would tip the world’s largest economy into recession & drag their countries down with it.  Europe remained under pressure amid calls to take promised crisis-fighting steps.  A draft of the statement to be issued today identifies the potential for a sharp fiscal pullback in the US & Japan as a danger to an already modest expansion.  While Europe is enjoying some respite from its debt crisis after the ECB pledged to buy bonds, the draft cautions against delaying efforts to deliver a permanent solution.  Don't bet on much coming from this meeting.

G-20 Tells U.S. to Avoid Fiscal Cliff as Focus Widens

ISM Services Gauge in U.S. Fell to 54.2 in October From 55.1

Photo:   Bloomberg

The pace of growth in the US services sector slowed modestly in Oct as new orders slipped, though employment improved to its highest level in 7 months.  The Institute for Supply Management said its services index eased to 54.2 last month from 55.1 in Sep, shy of the forecast for 54.5.  A reading above 50 indicates expansion in the sector.  The forward-looking new orders gauge fell to 54.8 from 57.7, but the measure of employment rose to its highest level since Mar at 54.9 from 51.1.  The vast services sector has fared better than its manufacturing counterpart, which contracted during the summer.  Still, this was the first time since Jun that the rate of growth in services firms has cooled.
New export orders contracted to 47.5 from 50.5 against the backdrop of slower global growth & the euro zone's ongoing debt crisis.  While employment is higher, these jobs are low paying.  Overall, a not very encouraging report.

Apple (AAPL) sold 3M iPads of all kinds in the first 3 days of the new Mini model.  It began selling the Mini on Fri, starting at $329, & is a 1/3 smaller than the full-size iPad.  The sales figure compares with 1½M iPads sold in the first 3 days after it launched the 3rd-generation iPad in Mar & cut the price of the iPad 2.  The full-size iPad got an update as well, with a faster processor & a better front-facing camera.  The launch was in 34 countries, including the US, Japan, Germany & the UK.  The stock rose $9 to $586 but is still down almost $120 from its Sep highs.

Apple sells 3M iPads after Mini launch AP

Apple (AAPL)

stock chart

Not much for the markets to do ahead of the election & there seems to be a feeling that no matter who wins, stocks will benefit. That ignores the fiscal cliff which gets closer day by day.  Dow has been above 13K since early Aug, ignoring a dingy economic outlook around the world.  The markets will probably remain quiet for the rest of the day & into tomorrow.

Dow Jones Industrials

stock chart

No comments: