Tuesday, May 28, 2013

Dow surges to new record on higher consumer confidence

Dow shot up 184, advancers over decliners 3-1 & NAZ gained 46.  The MLP index rose 3+ to the 466s & the REIT index rebounding from recent losses, recovered 2+ to the 303s.  Junk bond funds were higher & Treasuries sank as stocks rose.  Oil joined in the rally but gold pulled back.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN13.NYM...Crude Oil Jul 13....95.55 Up ...1.40 (1.5%)

GCK13.CMX...Gold May 13...1,380.80 Down ...6.00  (0.4%)

Consumer Confidence in U.S. Rises to Highest Since February 2008

Photo:   Bloomberg

Consumer confidence surged to a 5-year high in May, fueled by increased optimism about an improving job market.  The Consumer Confidence Index, which gauges how consumers feel about the economy each month, rose to 76.2 in May, its highest reading since Feb 2008, according to The Conference Board.  Consumer confidence has been on the rise for the past 2 months after plummeting in Mar as Americans worried about the effects of automatic gov budget cuts.  Fueling the increase: consumers feel more positive about current business & job-market conditions, & are considerably more upbeat about future prospects of economic & job growth, said Lynn Franco, The Conference Board's director of economic indicators.  "Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining traction it lost due to the fiscal cliff, payroll-tax hike and sequester," Franco said.

Home Prices in U.S. Increase in March by Most in Seven Years

Photo:   Bloomberg

US home prices jumped 10.9% in Mar compared with a year ago, the most in 7 years.  A growing number of buyers are bidding on a tight supply of homes, driving prices higher & helping the housing market recover.  The Standard & Poor's/Case-Shiller home price index also showed that all 20 cities measured by the report posted year-over-year gains for the 3rd straight month.  Prices rose in 15 cities in Mar from Feb, up from only 11 in the previous month.  The index covers roughly half of US homes & the Mar figures are the latest available.  The supply of available homes jumped in Apr, but was still 14% below its level a year earlier.

Home Prices in U.S. Rise by Most Since 2006 in March

Rajoy Awaits Reprieve as Spanish Recession Evidence Mounts

Photo:   Bloomberg

Spain will probably secure 2 more years to tame the largest budget deficit in the EU as Q1 data show the effects of the toughest austerity measures in its democratic history.  The European Commission will decide tomorrow whether to grant Spain until 2016 to bring its deficit back within the EU limit of 3% of GDP.  Its verdict is due as a series of releases this week including mortgage lending, GDP & inflation may underline that the construction slump that triggered the nation’s economic crisis in 2008 is far from over.  Prime Minister Rajoy is struggling to reorder public finances & haul the 4th-largest economy in the euro region out of recession as EU leaders back off austerity-first policies without embracing funded stimulus.  Rajoy himself has ruled out lowering taxes.

Rajoy Sees Reprieve as Spanish Recession Evidence Mounts

Markets have returned to the "What can go wrong" thinking, so stocks are soaring.  I keep thinking that late comers are piling in.  If that's the story, it won't last & when their enthusiasm ends, there will be a major correction.  Until then, enjoy higher portfolio values.

Dow Jones Industrials

stock chart

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