Friday, December 7, 2012

Bank stocks rally, lifting the Dow

Dow rose 81, advancers barely ahead of decliners & NAZ fell 11, hurt by another decline for Apple (AAPL).  The Financial Index gained 1+ to 215.  Higher bank stocks helped the Dow.  An oversold MLP index rebounded all of 1+ to the 385s & the REIT index was up a fraction to the 263s (near its sideways trend line for months).  Junk bond funds were soft & Treasuries pulled back after recent gains.  Oil slipped & gold edged over $1700.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


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U.S. 10-year


CLF13.NYM...Crude Oil Jan 13....85.93 ....Down 0.33  (0.4%)

Live 24 hours gold chart [Kitco Inc.]

Greek Banks Agree to Debt Buyback as Nation Races to Free Up Aid

Photo:   Bloomberg

The 3 biggest banks in Greece said they participated in the gov €10B ($13B) buyback of sovereign debt, the 2nd hit to their bond holdings this year as the nation rushes to cut a debt load that threatens further intl aid.  National Bank of Greece, the largest lender, Alpha Bank & Eurobank Ergasias said that their boards agreed unanimously to join the offer, which ended at 7PM Athens time.  Greece is using a €10B loan from Europe's bailout fund to buy back bonds issued earlier this year & unblock aid from the EU & IMF.  The buyback was part of a package of measures approved by euro-area finance ministers last week to cut the nation’s debt to 124% of GDP in 2020 from a projected 190% in 2014.  The banks got a promise that they won’t be subject to any legal proceedings from shareholders for participating in the offer.  Hellenic Postbank & Attica Bank also said they would participate, while Piraeus Bank, Greece’s 4th- biggest lender, declined to comment.  The prices offered for bonds maturing from 2023 to 2042 averaged 33.1% of face value, which compares with the average price of 28.1% of face value on Nov 23.

Greek Banks Agree to Debt Buyback as Nation Races to Free Up Aid

Consumer Credit in U.S. Increased More Than Forecast in October

Photo:  Bloomberg

US consumer credit increased more than forecast in Oct, led by another jump in borrowing for student loans & autos.  The $14.2B gain followed a revised $12.2B advance in Sep, according to the Federal Reserve.  The forecast called for a $10B Oct rise.  The report doesn’t track debt secured by real estate, such as home equity lines of credit & home mortgages.  Non-revolving debt, such as that for college tuition or auto purchases, climbed $10.8B in Oct after surging $14.4B in Sep.  Revolving debt, which includes credit cards, rose $3.4B after a $2.2B decrease the prior month.  Revolving credit has declined in 3 of the 5 months thru Oct.

  • <p>               FILE - In this Tuesday, Aug. 21, 2012, file photo, the Apple logo is shown on a stock ticker at the Nasdaq MarketSite, in New York. Apple is entering the home stretch of what will likely be its best holiday season yet as shoppers snap up iPhones and iPads in record numbers in December 2012. Yet the world's most valuable company has lost its luster among investors, causing Apple's stock price to plunge by more than 20 percent from a peak reached less than three months ago when the latest iPhone went on sale. (AP Photo/Mark Lennihan)
Photo:   Yahoo

Apple, with the largest market cap in the world, began selling the iPhone 5 on Sep 21, the same day the company's stock hit an all-time peak of $705.  Since then, the stock has plunged more than 20%, trimming the market value more than $150B.  The sell-off has had broad impact because the company is the largest component in the S&P 500 & NAZ composite index, 2 benchmarks that are tracked by widely held mutual funds & exchange traded funds (ETFs).  AAPL comprises 4% of the S&P 500 & nearly 12% of  NAZ which has shed 6% since the stock price peaked while the S&P 500 has declined 3% (the same as the Dow).  The stock's abrupt descent is fueling a debate among market-watchers & disagreements are contributing to unusual volatility in the stock.  On Wed, its stock fell 6.4%, the biggest one-day drop in more than 4 years.  Just 2½ weeks ago, the stock surged 7.2%, its biggest one-day gain in 3 years.  Weak AAPL stock will hold back any market advance.  The stock dropped another $14 to $533 today.

Why Is Wall Street Losing Its Appetite for Apple?  AP

Apple (AAPL)

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Stocks keep plodding along, waiting for direction from DC.  Dow was up 125 this week, largely due to today's advance which was not supported by other measures of strength.  The fiscal budget debate rages on with no sign of either side  giving in.  But the markets are taking the mess in stride, maybe encouraged by strength coming from Europe (which is in a recession & still has to manage its debt mess).  If the budget debate drags into Jan, a definite possibility, the harm to the US economy could be serious.  Even with some compromise, damage has already been done.  Let's see what next week brings to the stock market.

Dow Jones Industrials

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