Markets rally on jobless claims & earnings

Dow had its best rally in 2 months. But at lunchtime buyers went home & it drifted, just holding onto its gains for the rest of the session. Dow rose 122, advancers over decliners 3-1 & NAZ posted an impressive 40 point gain. Banks had another very good day. The Financial Index has recovered most of its 11 point loss in the first 2 days of the week, it's just 3 below where it began the week.

S&P 500 FINANCIALS INDEX

Value 223.06

Change 5.42

% Change 2.5%

The Alerian MLP Index gained 1.43, still in the 312s, but down 2 from its highs in the AM. The Dow Jones REIT Index rose an amazing 9½ to the 218s, a new yearly high. Junk bond funds were generally higher at their lofty levels. Buying returned to the 10-year Treasury bond, its yield fell 5 basis points to 3.73%.


Alerian MLP Index -- 2 months




Dow Jones REIT Index - 2 months





Oil had another good day, but once again the bulls have to show they can take it significantly above its 6 month trading range (i.e. the 85 ceiling). Gold was just resting.

CLM10.NYM

..Crude Oil Jun 10

..85.33

.. 2.11 ......(2.5%)

GCK10.CMX

..Gold May 10

..1,167.40

.. 1.70 ......(0.2%)

Germany is the main player in bailing out Greece & they are quibbling internally. A bill proposed by lawmakers for assistance would involve banks in the rescue. But Chancellor Angela Merkel is refusing to back down in her opposition, saying that would send a “fatal signal” to markets. Meanwhile the Greek Prime Minister is trying to sell the need for austerity (budget cuts which most will feel), but that is not & has not gone down well. The Greek drama plays on! The € at $1.324 is still near its its yearly lows (having reached $1.45 earlier this year).

•Merkel Is Pressed by Opposition to Enlist Banks in Greek Rescue Financing
•Papandreou Makes Austerity Pitch as Unions Slam Cuts Tied to Bailout Plan


BreitBurn Energy, an MLP which suspended its distribution in Q3 2009, restored a distribution. It will pay $.0375 ($1.50 annualized) in May. The intention had been announced recently, but unit-holders were glad to receive official word. The units gained 46¢ to 15.51.

BreitBurn Energy Partners L.P. Declares Cash DistributionBusiness Wire


BreitBurn Energy --- 2 years






Palm (PALM) agreed to be bought out by Hewlett-Packard (HPQ), a Dow stock, for about $1.4B in cash. HP will pay $5.70 for every Palm common share & certain preferred shares. Palm shot up 1.21 to 5.84 while HP was down 40¢ to 52.88.

•HP is Palm's Silicon Valley savior in $1.4B deal
AP


Palm --- 2 months




Hewlett-Packard --- 2 years






Stocks liked what they heard today. By now, they must have written off Greece & its debt problems. The jobless report wasn't all that great, especially when large numbers of laid off workers are facing expiration of their extended unemployment benefits. If Dow would have been able to extend its AM gains, it could have gone over 11.2K taking into the black for the week. It needs to do that tomorrow to keep its winning streak going (at 9). The streak feels good to stockholders, but all good things have to come to an end. And the end, after such a long run, could be unpleasant.

Dow Jones REIT Index - 2 months

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Dow inches over 11,000

Dow broke into the black at the start of trading today, but then failed to get traction. It ended with a modest gain, good enough to break 11K (the first time in 19 months) but that was all it could manage. Dow rose only 8, advancers over decliners 4-3 & NAZ gained 3. Hardly an inspiring day! Bank stocks are still in demand. The 2 month run for the Financial Index in the chart below tells it all for bank stocks.

S&P 500 FINANCIALS INDEX

Value 223.83

Change 1.01

% Change 0.5%

The Alerian MLP) Index continued strong all day, ending with a gain of .90 to the 314s. However, the REIT index dropped 1½ to the 205s. Junk bond funds were higher to levels not seen in a very long time. Treasuries were strong, driving the yield on the 10-year Treasury down 4 basis points to 3.85%.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD





Like the stock markets, oil & gold had modest changes. Only in their case it was to the downside.

CLK10.NYM

..Crude Oil May 10

..84.46

.. 0.46 ......(0.5%)

GCJ10.CMX

..Gold Apr 10

..1,156.00

.. 4.40 ......(0.4%)

The Treasury said the deficit for Mar totaled $65B compared to $192B last year. However, $115B of that improvement occurred because the administration lowered its estimate of costs for TARP. The deficit through the first 6 months of this budget year totals $717B, a drop of 8.2% from the same period last year. The administration is also projecting that the deficit for all of 2010 will hit an all-time high of $1.56T, up from last year's record of $1.4T. Higher spending comes from the costs of the bailout to help financial firms, auto companies & homeowners facing foreclosure. The spending has also soared because of the economic stimulus program passed in Feb 2009 with an original price tag of $787B plus the added demands on such programs as unemployment benefits & food stamps. For the first 6 months of the current budget year, gov receipts total $954B, down 3.6% from last year. Massive gov borrowings will continue for what seems like forever!

• March budget deficit declines to $65.4B- AP

Palm (PALM) shares jumped more than 20% after announcing it hired advisers to explore several options, including a sale of the company. The company has not done well against its rivals like the iPhone & Blackberry. It is projected that PALM could fetch more than $1B. The stock, which had been under $4 on Wed, closed today up 88¢ at $6.04. Speaking of speculation, troubled Ambac (ABK), doubled today, taking it over $2. Great for speculators, but bad for the markets.

Palm --- 2 years




Ambac --- 1 week






Greece got a promise of as much as €45B ($61B) in loans from the euro-region & IMF to help cover its financing needs & avoid a default. The agreement may remove a concern that helped drive the € lower against the dollar this year. Even though the € rallied to $1.36 in recent days, it remains far below $1.51 reached months ago. Buyouts like a possible one for Palm & China Petroleum & Chemical, Asia’s biggest refiner, agreeing to buy ConocoPhillips’s stake in oil-sands producer Syncrude Canada for $4.65B, send positive signals to stock buyers. But buyers did not respond today. Alcoa (AA), Dow stock, kicks off earnings season after the close. Markets are nervous.


Dow Jones Industrials --- YTD

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