Stocks waffle, trying to figure out where to go

Dow has been slightly in the red most of the AM. It is down 19, advancers barely ahead of decliners & NAZ was off 7 (hurt by Cisco earnings discussed below). Banks are selling off as investors are getting nervous about the financial regulation bill that will come out of the Senate.

S&P 500 FINANCIALS INDEX

Value 214.61

Change -1.23

% Change -0.6%

On this lackluster day, the MLP index slipped pennies in the 303s & the REIT index fell 2 to the 213s. Junk bond funds edged higher. The yield on the 10-year Treasury bond went down 2 basis points to 3.55%, little changed after the rebound from the 3.4% area late last week. The VIX, volatility index, fell a fraction to the 24s, remaining well above recent lows near 16.


Alerian MLP Index --- 1 week




Dow Jones REIT Index --- 1 week




VIX --- 1 month





Oil fell below 75 on weak demand & gold was subject to profit taking.

Oil	___74.17	...-1.48	..-1.96
Gold	__1,238.30	...-4.80	..-0.39

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The debt crisis in Europe shows its outlook for an extended period of below-average economic growth according to Pimco, the world’s biggest mutual fund for bonds & debt. Pimco uses the phrase “new normal,” after coining it a year ago to describe a world characterized by high unemployment rates, more regulation & a shrinking importance of the US in the global economy. "It is even clearer today than it was a year ago that the global economy has embarked upon a multiyear journey that is subject to many tensions,” El-Erian, the chief executive officer of Pimco, wrote in a commentary on their website. Below is a graph for the € showing how far it has fallen in recent months (the pop after the bailout rally has been wiped out already, it's below $1.26).

•Europe Shows World Won't Skirt `New Normal' of Slower Growth, Pimco Says

New claims for unemployment benefits dipped for the 4th straight week, a sign the job market is improving at a slow but steady pace. The Labor Dept said initial claims dropped last week by 4K to 444K, slightly above analysts' estimates. The 4-week average registered a steeper decline, falling 9K to 451K (close to its lowest level this year reached in Mar). This was the 3rd lowest since Lehman Brothers collapsed in Sep 2008.

•Unemployment Claims in U.S. Decline for a Fourth Straight Week to 444,000


Weekly jobless claims - 1 year





Cisco (CSCO), a Dow stock, reported fiscal Q3 income of 37¢ a share significantly up from 23¢ last year. Adjusted income was 42¢ a share which compares with forecasts of 39¢. Revenue rose to $10.4B from $8.2B last year. "We emerge from this downturn gaining market share, a larger share of the total wallet spend of our customers, dramatically improved customer relations as a trusted technology and business partner," John Chambers, CEO, said in a statement. "It is clear that our game plan for how to handle economic downturns is hitting on all cylinders." For the current quarter (Q4), CSCO expects a 25-28% increase in revenue year-over-year ($10.63-$10.88B). Chambers affirmed his earlier optimism about a recovering economy, but also acknowledged the uncertainties, saying, "While we believe the recovery is accelerating, no one knows for sure how long it will be, how long it will last, how strong it will be or the extent of job creation." CSCO dropped 1.09 (4%).

Cisco posts 63% gain in profit
at MarketWatch


Cisco --- 2 years






Dow has been floating around 10.8K for most of this week & it may continue sideways for the rest of the week. The implications of the European bailout (which has been approved by legislatures from lending countries) are sinking into investors minds.

Dow Jones Industrials --- 1 week

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