Markets tumble on negative business data

Q3 is closing on a down note. Dow is off 92, decliners over advancers 3-1 & NAZ was off 19. Banks are leading the way down bringing the Financial Index below the important 200 level.

S&P 500 FINANCIALS INDEX

Value 199.87

Change -2.33

% Change -1.2%

The Alerian MLP Index can't break thru the 250 barrier. Today it's down 1+ to the 248s, the chart below shows its 2 month struggle trying to break thru 250. Following a slower start this year, REITs had an excellent qtr in Q3 but may be maxxing out, the index fell back after reaching 180. Junk bond funds continue to trade sideways (for 2 weeks) at yearly high levels. But the yield on the 10-year Treasury bond fell 1 basis points to 3.28%, risk averse is attracting more interest (with negative implications for overbought junk bonds). Oil is sloshing in the 66s (its interim lows) while gold at 995 is back below the important 1K level.

Alerian MLP Index --- 3 months




Dow Jones REIT Index --- 3 months




10-Year Treasury Yld Index - 3 months





In Q2, GDP shrank at a 0.7% annualized rate, less than expected. Businesses & consumers trimmed their spending at a slower pace, adding to beliefs that the economy is growing in Q3. The modest dip in Q2 follows a 6.4% annualized drop in the first 3 months in 2009 (the worst slide in nearly 3 decades). In the prior qtr, the economy sank at a rate of 5.4%. A main reason for the Q2 upgrade is businesses didn't cut back spending on equipment & software nearly as deeply as originally thought. Consumers also didn't trim their spending as much.

• Economy dips at 0.7 percent pace in 2Q- AP

The business barometer decreased to 46.1 in Sep, a much bigger decline than expected (readings below 50 signal contraction). Near-record excess capacity & gains in spending induced largely by gov stimulus programs are likely to limit companies from ramping up assembly lines & hiring more workers. These condition were describers as “very sobering.”

•Chicago Purchasing Managers' Index Unexpectedly Fell to 46.1 in September


CIT Group (CIT) is still struggling to remain alive, seeking capital from Citigroup (C) & Barclays Capital, This business is seen as being extremely important to any recovery because it provides financing to more than 1M small & medium size businesses. Today the stock is down 69¢ to 1.51. This is an interesting speculation for those who like playing with fire.

•CIT Said to Consider Financing From Citigroup, Barclays as Deadline Nears

CIT --- 3 months





Yesterday was the anniversary of the record 777 point drop by the Dow last year. This time the decline was ordinary but it's continuing today. At yesterday's close the Dow was down more than 6% in the last year even after the recent recovery. Markets are reflecting the economy is in a recovery phase but is not recognizing the pace of recovery could be slow & painful.

Dow Jones Industrials --- 3 months