Thursday, July 11, 2013

Dow jumps to a new record on Bernanke comments

Dow shot up 137, advancers over decliners 6-1 & NAZ gained 38.  The MLP index jumped 4+ to the 464 & the REIT index rose 5 to the 287s.  Junk bond funds were 1-2% higher & Treasuries had a strong gain along with the stock market rally.  Oil pulled back from its lofty levels, but gold had one of its biggest gains in months (bets against Big Ben's moves).

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...102.18 Down .....0.11  (0.1%)

GCN13.CMX...Gold Jul 13.........1,284.60 Up ...37.20 (3.0%)

A woman stands with her paperwork as she speaks with a recruiter while attending a job fair in New York in this file photo taken June 11, 2013. REUTERS/Lucas Jackson/Files

Photo:   Yahoo

The number of Americans filing new claims for unemployment benefits rose last week, although the level still pointed to ongoing healing in the labor market.  Initial claims for unemployment benefits increased 16K to 360K according to the Labor Dept.  But the reading was likely clouded by seasonal factors.  The Labor Dept can have a tough time seasonally adjusting claims in early Jul because many factories shut down during that period for retooling, but the scheduling for the shutdowns varies from year to year.  Even with the increase, the number of layoffs remains in the range of levels seen over the last year, & is consistent with a continued drop in the unemployment rate.  The 4-week moving average of new claims increased by a more modest 6K to 351K.  The forecast called for applications to fall to 340K.

Jobless Claims in U.S. Unexpectedly Rise to Two-Month High

Bernanke Supports Pressing On With Stimulus Amid QE Debate

Photo:   Bloomberg

Big Ben spoke & the markets listened when he called for maintaining accommodation even as the minutes of policy makers’ Jun meeting showed them debating whether to stop bond buying in 2013.  “Highly accommodative monetary policy for the foreseeable future is what’s needed in the US economy,” Bernanke said.  The Fed chairman spoke just after the central bank released minutes of the Jun 18-19 gathering showing that about half of the 19 members of the FOMC wanted to halt $85B in monthly bond purchases by year end.  At the same time, the minutes showed many Fed officials wanted to see more signs employment is improving before backing a trim to bond purchases.  The debate underscores Bernanke’s challenge in affirming that, even after starting to reduce monthly bond buying, policy makers plan to maintain unprecedented stimulus with a record-high balance sheet & near-zero target interest rate.  The markets loved his comments.

Bernanke Supports Continuing Stimulus Amid Debate Over QE

PC shipments dropped for a 5th straight qtr, the longest losing streak on record, as consumers continued to favor touch-screen tablets & smartphones.  Q2 global unit shipments fell 10.9% to 76M, according to market researcher Gartner.  Sales slid from a year earlier in all regions, including a 1.4% drop in the US, Gartner said.  IDC, another research firm, put the decline at 11.4%, narrower than its projected 11.7% contraction.  PC sales have yet to get a bump from the Oct release of Windows 8.  Such new products have traditionally acted as triggers to trade in old machines.  China-based Lenovo posted the narrowest global decline in shipments among the top 5 vendors, helping it supplant Hewlett-Packard (HPQ), a Dow stock, as the largest PC maker, Gartner said.  Lenovo & HPQ have been trading the top spot since last year.  Shipments of desktop & laptop PCs will decline 10.6% in 2013, while tablet sales will increase 67.9%, Gartner etimated last month.  US shipments declined to 15M in Q2.  Still, unit sales gained 8.5% from Q1, & the year-over-year drop was the smallest in the past 7 qtrs, Gartner said.  IDC pegged the US decline at 1.9%, to 15.7M units.  This is a mature industry.

PC Shipments Fall for 5th Quarter Even as U.S. Decline Slows

Traders liked what they heard from Big Ben, keep interest rates low & tomorrow will take care of itself.  But other members of the FOMC are not so sure.  The high yield sectors are doing well while Treasuries & gold, the classic safe haven investment, shot up.  That's confusing.  But Dow is in record territory.  Stay tuned when JPMorgan (JPM), a Dow stock, & Wells Fargo (WFC) report Q2 earnings tomorrow.

Dow Jones Industrials
stock chart 

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