Dow jumped 185

Dow has biggest gain since June 1 but on light volume. Dow rose 185, advances 4-1 over decliners & NAZ gained 37. On an analyst recommendation, banks had their day in the sun (plus 10 is a very big daily gain):

S&P 500 FINANCIALS INDEX

Value 159.06

Change 9.73

% Change 6.5%

Value for S5FINL:IND




MLPs have outperformed the market all year, including this month. But today they were left behind with a modest 1.73 gain. That put the index within 6 of its yearly high made last month. The REIT index popped 5 off a low level. Junk bonds were higher but Treasuries sold off digesting recent gains. The yield on the 10 Year Treasury bond went up 5 basis points to 3.35%.

Alerian MLP Index --- 3 months





Oil rebounded in the PM, bringing it back to near even for the day. But it remains at a 2 month low & down 87 from the peak last year at this time.

CLQ09.NYM

..Crude Oil Aug 09

..59.73

.. 0.16 ......(0.3%)

Tomorrow earnings season begins in earnest with Goldman Sachs (GS), up 7½ in anticipation. The gov reported that the budget deficit already topped $1T with 3 months left in the fiscal year. This is what $1T looks like in numbers:

$1,000,000,000,000

• Budget deficit tops $1 trillion for first time- AP

Dow Jones Industrials --- 3 months

Dow plunges 297 as stimulus bill is signed

Two consecutive days of lower stock markets around the world were too much for the US markets to overcome. Dow tried for a recovery rally late in the day, but that fizzled. Dow sank 297, decliners over advancers 9-1 & NAZ fell 63. The BigCharts widget on the right tells it all. Dow plunged on the opening & pretty much sat there for the rest of the day & closed at the lows.

Meanwhile Treasuries went up on aggressive buying. The 10 year Treasury bond rose sharply, reducing the yield 22 basis points to 2.66%. The yield had dropped to nearly 2% early this near, but climbed up to 3% a week ago.


S&P 500 FINANCIALS INDEX had a dreary day, sinking to a new low. The previous low close was not in Nov as I said in the prior post, instead Jan 20 at 108.

Value 106.39

Change -11.59

% Change -9.8%

Another big financial, now a bank, American Express (AXP), a Dow stock, fell to a 12 year low, taking it below 14, on larger than expected credit card defaults. AXP, never known as a yield stock, now yields over 5%.

•American Express Falls Most in Two Months as Credit-Card Defaults Worsen

American Express --- 29 years





The Alerian MLP Index fell 7.27 taking it under 200 to 197.91. After getting used to 200 as a floor, now it has become the ceiling again. Sudden weakness after such strength all year as a bad sign. The Dow Jones REIT Index drooped 8 to 103½, heading for the sub 100 low set last Nov. Junk bonds after their nice recent rally, sold off today. VIX popped 5 to the 47s on all this negative news coming out.

Oil continued weak closing near 35, another low for this contract (down 80% from its peak last summer)

CLH09.NYM

..Crude Oil Mar 09

...34.96 ... 3:12pm ET

2.55 (6.8%)

The drama in DC for the GM & Chrysler is only a dress rehearsal for the final showdown on Mar 31. Today's show will give Congress an idea about progress made in their attempt for a recovery. No actions are expected. GM needs another $5B from the program which they will get. The Bloomberg story below says that the administration won't rule out a controlled bankruptcy for the autos, although for the time being they should be allowed to play out this hand. Their future looks near hopeless given they are trying to turn around a failing business in an economy that is sputtering (at best).

•General Motors, Chrysler Bankruptcies Can't Be Ruled Out, Obama Aide Says


Dow managed to close (7552) just above the 7½K low set in Nov. That's close. The S&P 500 closed at 789, 800 was considered an important psychological floor. If the massive gov spending package can't excite the markets, it's hard to figure what will!

Confused markets muddle along

Dow & NAZ are about even while decliners are slightly ahead of advancers. In the Dow 30, General Motors (GM) & Citigroup (C) are under 10 while Alcoa (AA) is just over 10. In the old days, under 10 signaled a very speculative stock. Speaking of down on their luck, American Express (AXP), another Dow stock, is at a 12 year low & probably headed even lower:


American Express --- 37 years




S&P 500 FINANCIALS INDEX is down pennies, the Alerian MLP Index is down 3½ to 189, Dow Jones REIT index is down pennies at a multi year low under 131. The VIX, Volatility Index, dipped slightly to under 66.

Oil rebounded a little, but the fundamentals continue bearish on expectations of lower worldwide demand:

CLZ08.NYM

Crude Oil Dec 08

....57.61

.... 1.45 (2.58%)

• Oil rises above $57, OPEC lends support- Retuers

The Labor Dept reported jobless claims jumped 32K last week to 516K, higher than expected & almost matched 517K claims in 2001. This is only the second time in 16 years that claims exceeded 500K. An important sign of a recession is when jobless claims are above 400K.

• Jobless claims jump unexpectedly to 7-year high- AP

Almost 280K homes received a foreclosure notice last month, 5% over last year's figure. The number of homeowners with foreclosures in Oct grew 25% above last year.

• Foreclosure rates up 25 percent year-over-year- AP

Wal-Mart (WMT), a Dow stock, feels good about THEIR holiday sales. Their guidance for 2008 EPS is $3.42-3.46, up from $3.16 last year. But this projection is down from the prior guidance of $3.43-3.50. Analysts are estimating $3.48 for 2008. The stock fell 73¢ on the reduction in earnings guidance.

•Wal-Mart Says It's `Optimistic' About Holiday Sales; Earnings Advance 9.8%


I feel sorry for the Treasury & Federal Reserve trying to solve seemingly impossible problems for the financials. But that's the world we live in & markets are reacting. More grim news on the economy, etc. will keep coming.

Markets crumble, Dow down 411

Just another down day for the Dow, down 411, near the lows of the day, taking it below 8300, after starting the month at 9336. Decliners were ahead of advancers 10-1 & NAZ dropped 43.

S&P 500 FINANCIALS INDEX set another new multi year low:

Value 166.99

Change -12.39

% Change -6.9%

The indices I follow got slammed very hard. The Dow Jones REIT Index is touching a new multi year low, falling 10¼ to 131. The Alerian MLP Index dropped 9½ to 192. This is an unusually large drop for it, even on a terrible day like today & it's solidly below 200, probably headed to test the lows of 155 (which were aggravated by forced selling after the demise of Lehman). The VIX shot up 5.16 to 66.60, fears rose sharply.

Oil keeps falling on continued worries about a severe global recession:

CLZ08.NYM

Crude Oil Dec 08

....55.89

.... 3.44 (5.8%)

A quickie auto $25B bailout package received White House approval, it will be folded into the $700 bailout program the Federal Reserve is working with.

•Frank Plan Would Give Automakers Extra $25 Billion Through Treasury Funds


American Express (AMX), a Dow financial company, became a bank yesterday (i.e. on a moment's notice). It looks like they are getting hit hard with bad debts from the cardholders, requiring a $3½B investment from the gov. This is now a $20 stock, hard to believe:

• American Express shares plunge on bailout reportAP(Wed 2:14pm)

General Electric (GE), another Dow stock, will guarantee $139B of the debt for GE Capital . Can you spell, "Uh-oh?"

•GE Says U.S. Will Guarantee Up to $139 Billion in Debt for Lending Unit


Las Vegas Sands (LVS) received a big financing package from Asia plus over ½B loan from the Adelson family to remain alive for the time being.

The Treasury had plans to buy troubled mortgages yesterday but that had to be abandoned after complaints that it wouldn't help. Hello!!! What's going on here? Maybe I'll have to check in with Chicken Little tonight, it seems like the sky is really falling. OK, we'll get thru this mess but over the short term life is brutal which is causing stocks to sell off.

The level of redemptions at mutual & hedge funds is important, I have a feeling they are running very high again which means fund managers will throw more stock out the window, maybe they were doing it today. When confusion & chaos are in charge, stocks get hit hard. The Dow low on Oct 27 was 8175, that needs to be tested & probably tomorrow.

Up, Up & Away

This was one of those days, seems like nothing could go wrong short of negative guidance. Dow was up 138, advancers over decliners 2-1 (seems like a lot more) & NAZ was up 24. NYSE volume approached 1.4B, up from 1.2B yesterday, not too bad. The VIX (volatility index) pulled back 1.87 to 21.18, high but not as extreme as in recent days.





While banks/financials dominated a lot of thinking, oil's drop of 3 bringing its recent decline of almost 20 is dramatic:

CLQ08.NYM	Crude Oil Aug 08	127.95 3:32pm ET	3.09 (2.36%)

Financials are leading the markets. The clearest example is Wachovia (WB) reporting a $9B loss, a little worse than expected. There is a belief that they have turned the corner because they are closing the mortgage business bought last year. WB shot up 3.61, don't see that to often. Troubled Washington Mutual (WM) reported an ugly loss, far worse than expected, but rose 34¢ (not bad for a $5 stock). All financials were flying today as shown in Bloomberg's S&P Financials Index. Maybe not all. The 3 negative reports after yesterday's close got hammered, including American Express (AXP):

S&P 500 FINANCIALS INDEX Value 296.60, UP 18.340, Change 6.6%

AAPL
162.02 down 4.27 (2.57%) 66,894,998

TXN
24.35 down 4.17 (14.62%) 74,038,510

AXP
37.99 down 2.91 (7.11%) 48,346,955


After hours Yahoo reported lower profits & sales below expectations, but the stock was little changed after declining 27¢ earlier.

This was one of those days when just about all problems were ignored (except for those mentioned above). The bulls are in charge with banks & financials giving them encouragement. Macro economic reports are due later this week. Let's see what they have to say.

Mixed earnings reports

Markets decline on a variety of news stories. Dow & S&P 500 are down slightly but decliners lead advancers almost 3-2 & NAZ is down 17. Gloomy reports by Texas Instruments, Apple & to some extent American Express (each is getting clobbered today) are weighing on NAZ. Oil tumbled 4 to 127, as Dolly may not cause supply problems. The Alerian MLP index pulled back 1 after yesterday's strong gain. REITs are doing well today.

Caterpillar (CAT), a Dow stock, reported excellent earnings, stock up 1.85. Sales & earnings were ahead of last year & easily beat forecasts. They pointed out that the US market is depressed, there is a softening in Europe & Japan while business in emerging economies is very strong, a common theme among multi-nationals. DuPont (DD), another Dow company, reported excellent sales & earnings, stock up 1.21. However, they did say they face a "challenging environment." Wachovia (WB) reported an ugly loss requiring a cut in the div to a token 5¢. They are being dragged down by the unfortunate acquisition last year of a Cal mortgage company just before the mortgage collapse plus general tough sledding for banks. Analysts had been forecasting ugly numbers so the stock is only down 25¢. After the strong rebound for bank stocks, reality is sinking in causing a pull-back. For example, Bank of Americas (BAC) after rising 12½ in 3 days lost 30% in the last 24 hours.

Sec Paulson asked again for congress to reform the rules for GSEs (FNM & FRE). Unfortunately he said help could cost tax payers as much as $25B. Ugh!! Their problems spread around the world. It is estimated that foreigners own 1½T (that's T as in trillion) of their borrowings, with China & Japan accounting for 40%. They are waking up to reality that instead of holding AAA bonds, they are only junk type of bonds with vague gov promises for guarantees. Hopefully they will remain calm & tough out this uncertain period.

Indecisive attitude drags on

Asian & Australian markets are weak to slightly up, nothing dramatic. Bank stocks are down 2-4%, profit taking after yesterday's big gains. Big stories include LG Electronics, a huge company, reporting excellent earnings yesterday but selling off today on worries about the global market going forward. They are also concerned about dreary earnings reported after hours by Apple (AAPL), Texas Instruments (TXN) & American Express (AXP), a Dow stock. AXP is the most disturbing as they have a good "feel" for the economy, Tomorrow, Wachovia (WB) & Washington Mutual (WM) will report. Also, IBM sold more shares in Lenova taking its interest below 5% meaning they will not have to report future stock sales.

Dow Jones futures are trading down 100 with NAZ & S&P 500 each down about 1%. The negative tone comes from after hours trading for AAPL - down 16, TXN - down 3¼ & AXP - down 3.65. Hang on tomorrow.

Bank of America day

Markets started the week indecisive. Dow is off 21, advancers ahead of decliners 1¼ to 1 while NAZ slipped 5. The biggest news today was the pre-trading announcement by Bank of America (BAC), a Dow stock, of Q2 earnings. As has so commonly been reported, earnings were down from last year but beat lowered expectations & are good enough to not only earn the div but also support a slight increase later in the week. BAC is up 2 to 29½, down from an earlier high of 31. The rest of the Dow is not doing so well. Only 4 are up including 2 big gains by BAC & beaten up AIG. The other financials are: Citigroup (C) - up 41¢, JP Morgan (JPM) - down 1.18 & American Express (AXP) - down 1.10. Financials had an extraordinary run late last week, they will have to come up with more tricks this week to continue attracting buyers.

Meanwhile oil is up a little:

CLQ08.NYM

Crude Oil Aug 08

129.18 11:32am ET

0.30 (0.23%)

Otherwise, markets can't decide what to do. The Alerian MLP index is up 5 from its 52 week lows & REITs are a little higher. Stanley Works is down 2½ on a downgrade, increasing its yield to nearly 3%. Swiss Roche is offering to buy Genentech (DNA) for 89, the stock rose 10+ to over 92 anticipating an even higher bid. Buyouts are generally good for the stock market but not today. Stocks already had a big run late last week.

Apple (AAPL) earnings, among others, will come out after the close, expectations are for a pretty report. Markets have much to evaluate: BAC & other financial earnings. Look for troubled Wachovia, up 67¢ to 13.64, later this week.

Fed leaves rates, stocks generally up

The Federal Reserve bank left rates alone plus lower oil sent many stocks up. Dow was essentially even, but advancer led decliners 5-2 & NAZ put in a good showing, up 33. Dow was held back by United Tech (UTX), Boeing (BA) & American Express (AXP) with major declines. AXP is more troubling since they said they're having trouble collecting on their cards. Uh-oh! Dow was also held back by financials. They had been up nicely by midday, but pulled back to break even after digesting the FED announcement. The FED talked about higher energy limiting grow & resulting in inflation. Oil had a very wild day, ending down 2.41. Higher inventories won the day amidst all the confusing reports for oil.

Oracle (ORCL) came out with nice earnings after the close, up 32¢ & another 35¢ after hours, which should help tech stocks start off on the right foot tomorrow while the rest will try to assess the FED's words.

Stagflation worries sink stocks

Stagflation worries sank stocks. Dow was down 108, decliners ahead of advancers 3-2 & NAZ was down 17 on just 1.1B volume. The ugly word, Stagflation, is back. That refers to a time 30 years ago when the US economy had high unemployment, high inflation & no growth. Times are a lot less ugly today, but the word is being used a lot. Banks were especially weak on an ugly forecast from Goldman Sachs. It talks about a rebound coming early next year & the need for banks to raise $65B more in capital. Raising capital is associated with div cuts, tough to hold divs flat when asking others to invest. Oil had a relatively good day for the stock market, pulling back only 60¢ in an unusually quiet day of trading. Energy shares had a great day, as investors saw them as a good place to park money. The Alerian MLP index rose a point to 292, the 290 as the support level continues to hold.

Dow is trading at the low end of the 12K range & may be testing to see if the floor can hold. Banks are getting hammered & more selling may be ahead. The Dow has Bank of America (BAC), JP Morgan (JPM), Citigroup (C), plus related financials, American Intl Group (AIG) & American Express (AXP) which are feeling the selling pressure.