Thursday, March 28, 2013

Markets waver as Dow & S&P 500 set new records

Dow rose 43, advancers ahead of decliners 3-2 & NAZ inched up 3. The Financial Index did little in the 244s.  The MLP index jumped 3 to 453, yet another record, & the REIT index was up fractionally to 286 (a post recession high).  Junk bond funds rose & Treasuries were pretty much even.  Oil was flattish & gold slid below 1600.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLK13.NYM...Crude Oil May 13...96.75 Up ....0.17 (0.2%)

GCJ13.CMX....Gold Apr 13.......1,596.80 Down ....9.40  (0.6%)

Customers queue up outside a branch of Laiki Bank as they wait for the reopening of the bank in Nicosia March 28, 2013. REUTERS/Yorgos Karahalis

Photo:   Yahoo

Cypriots lined up at banks as they reopened under tight controls imposed on transactions, but there was no sign of a run on deposits that had been feared after the gov was forced to accept a stringent EU rescue package.  Banks were shut almost 2 weeks ago as the gov negotiated a €10B intl bailout to avert bankruptcy, the first in Europe's single currency zone to impose losses on bank depositors.  Figures published by the Central Bank of Cyprus showed that savers from other euro zone countries withdrew 18% of their deposits in Feb, as talk of a tax on bank accounts gained ground.  Overall private sector bank deposits in Cyprus fell by 2.2% to €46.4B last month, after a similar drop in Jan. Authorities say the emergency rules imposed to limit withdrawals & prevent a bank run will be temporary, initially for 7 days, but it is believed they will be difficult to lift as long as the economy is in crisis.  The IMF defended the agreement to bail out Cyprus, saying it had the support of all parties involved & will help the country develop a healthier economy over the long term.  “The adjustment that the plan will entail as the financial sector downsizes and the economy adjusts accordingly will be a difficult process for the Cypriot people over some period of time -- we are mindful of that,” Gerry Rice, the IMF’s director of external affairs, said.  “But it will ultimately result in an economic model that is more sustainable and growth promoting.”

IMF Defends Cyprus Deal as Country Faces ‘Difficult’ Period

<p> In this Tuesday, Jan. 22, 2013, photo, job seekers meet with employers at a job fair in Sunrise, Fla. The number of Americans seeking unemployment benefits jumped by 16,000 for the week of ending March 23, 2013, the second straight weekly increase. But the longer-term trend in layoffs remained consistent with an improved job market. Applications increased to a seasonally adjusted 357,000 for the week ending March 23, the Labor Department said Thursday. That's up from 341,000 the previous week, which was revised slightly higher. (AP Photo/J Pat Carter)

Photo:   Yahoo

The number seeking unemployment benefits jumped 16K last week, the 2nd straight weekly increase, but the longer-term trend in layoffs remained consistent with an improved job market.  Applications increased to 357K, according to the Labor Dept, up from 341K the previous week (which was revised slightly higher).  The 4-week average rose 2K to 343K.  Even with the gain, the average is only slightly higher than the previous week's 5-year low of 341K.  First-time applications are a proxy for layoffs. They have been declining steadily since Nov.  At the same time, hiring has accelerated, lowering the unemployment rate in Feb to a 4-year low of 7.7%.  The number receiving some kind of unemployment aid is down sharply from the recession peak.  Nearly 5.5M were receiving aid, up roughly 87K from than the previous week but still well below the 7.2M from a year earlier.

Jobless Claims in U.S. Increase More Than Forecast

<p> FILE - In this Dec. 6, 2012, photo, an employee walks through the appliance department at a Sears in North Olmsted, Ohio. The U.S. economy grew at a slightly faster but still anemic rate at the end of last year. However, there is hope that growth accelerated in early 2013 despite higher taxes and cuts in government spending. (AP Photo/Mark Duncan, File)

Photo:   Yahoo

The US economy grew at a slightly faster but still anemic rate at the end of last year.  There is hope that growth accelerated in early 2013 despite higher taxes & cuts in gov spending.  The economy grew at an annual rate of 0.4% in Q4, according to the Commerce Dept, slightly better than the previous estimate of 0.1% growth.  The revision reflected stronger business investment & export sales.  The forecast for Q1 growth is around 2.5%.  Steady hiring has kept consumers spending this year.  And a rebound in company stockpiling, further gains in housing & more business spending also likely drove faster growth in Q1.  But the 0.4% growth rate for the GDP was the weakest quarterly performance in almost 2 years & followed a 3.1% increase in Q3.  Q4 results were hurt by the sharpest fall in defense spending in 40 years.  For 2012, the economy grew just 2.2% after a 1.8% increase in 2011 & a 2.4% advance in 2010.  Since the recession ended in mid-2009, the economy has been expanding at sub-par rates as a string of problems from higher gas prices to Europe's debt crisis have acted as a drag.  The CBO is predicting just 1.5% growth for 2013.

US economy expands at 0.4 percent rate AP

It looks like the popular averages will close Q1 at record levels.  However the gains come without a lot of conviction.  Italy is still struggling with a new, temporary gov trying to fix its mess.  But Italian yields fell today as the Cyprus situation stabilized.  There is not a lot going on in the markets & volume is low.  Many traders will leave early today to get a start on a long weekend with the markets closed tomorrow.  Next week should bring excitement.

Dow Jones Industrials

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