Dow advances to new 2009 high

Markets began the day with sideways trading following the sharp sell-off in yesterday's last hour. Buyers returned during the day despite a gloomy weekly unemployment report. Dow rose 131, to 10,081 (barely reaching another 2009 high), advancers over decliners 2-1 & NAZ was up 14 (not quite good enough for a new 2009 high). 3M (MMM), Exxon Mobil (XOM), IBM (IBM), McDonald's (MCD) & Travelers (TRV) had big gains taking the Dow to new heights. Banks snapped back strongly after the late day sell-off yesterday but the Financial Index needs to get to 212 for another 2009 high.


S&P 500 FINANCIALS INDEX

Value 206.26

Change 5.85

% Change 2.9%

MLPs continue their winning streak. The Alerian MLP Index gained 1.31 to the 266s. The index rose 10% off its low in the trading band it was stuck in during Aug-Sep. That's not a bad move for an entire year, but this was done in just 3 weeks. The Dow Jones REIT Index had a good day, gaining 4+. The YTD chart for the REIT index better describes the how the US recovery has progressed (compared with the straight up chart for MLPs or the Dow Jones Industrial charts shown at the bottom of the post). Junk bond funds were higher & the VIX, volatility index, slipped in the PM, taking it back near 20 (a 14 month low). The yield on the 10-year Treasury bond was flattish, up 1 basis point to 3.44%.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




VIX --- YTD





Oil buyers returned in the PM to limit the loss for the day to only pennies, essentially at yesterday's yearly high. Buyers also had bid up the price of gold to near yesterday's close. Commodities benefit from the low dollar. The dollar is at its lowest value in over a year. The € is above $1.50 while the Japanese ¥ weakened ever so slightly to more than 91 (needed to buy a dollar). The weak dollar generally helps earnings for multi nation companies.

CLZ09.NYM

..Crude Oil Dec 09

..81.10

.. 0.27 ......(0.3%)

GCV09.CMX

..Gold Oct 09

..1,059.50

.. 4.20 ......(0.4%)

Lavish gov spending & bank lending helped China's growth rate accelerate to an 8.9% rate in Q3, far outstripping other expansions elsewhere & raising questions about whether the rapid rebound can be sustained. That rates puts the economy on track to at least meet the official target of an 8% expansion rate for 2009. China announced that industrial production & investment spending are growing at a faster pace. But this news unsettled local investors on fears Beijing may need to rein in its stimulus policies to avoid asset bubbles & inflation. The Shanghai Composite slipped 19 to 3051.


China's growth rate - 1 year




Shanghai Composite - 1 year





A dreary jobless report was forgotten in the PM as buyers bid up the Dow to a new 2009 high. The first chart below shows that impressive gain.


Dow Jones Industrials --- 2 weeks




Dow Jones Industrials --- YTD

Markets are higher but looking for direction

Stock rose & have been in the green, but only with modest gains. Dow (up 35) is flirting with a new 2009 high, advancers over decliners 5-4 & NAZ was up 10. Banks edged up, the Financial Index is still shooting for a new high at 207.

S&P 500 FINANCIALS INDEX

Value 204.14

Change 0.69

% Change 0.3%

While the averages are mixed, the Alerian MLP Index is up .66 to another yearly high (in the 256s) making for a very pretty short term chart. REITs were mixed while junk bonds funds were generally higher (still at or near 2009 highs). However, the yield on the 10-year Treasury bond shot up 9 basis points to 3.35% (18 basis points in 2 days). The weak auction yesterday for the 30 year Treasury bond is in my mind because there will be many more auctions to finance massive gov spending.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




10-year Treasury Yield Index - 2 weeks





Oil inched up in the 71s & gold finally fell back after its 4 day winning streak (taking it to record highs). Finally the dollar was stronger, a major influence on commodity price changes. It takes 89+ Japanese ¥ to buy a dollar (down from the low 88s yesterday but up sharply from the mid to high 90s earlier this year) & the € is worth 1.47+ (vs under 1.30 earlier this year).

CLX09.NYM

...Crude Oil Nov 09

...71.93

... 0.24 .......(0.3%)

GCV09.CMX

...Gold Oct 09

...1,048.20

... 7.20 .......(0.7%)

The Shanghai stock market had its biggest gain in 5 weeks, up 132 or 4.8%. However it was coming off an 8 day holiday when world markets had been rising. China’s banking regulator said it would be premature to start winding down stimulus efforts in China, the world’s 3rd largest economy.

Shanghai Index - 1 year





There are not a lot of developments in the the markets. Yesterday, Nancy Pelosi mentioned that a Value Added Tax (VAT) may be needed to help pay for expanded medical coverage . The way it would work is when buying something, there would be the state tax plus a 5% VAT tax. Ugh!! So much for the pledge about no new taxes! Not exactly a positive for a struggling economy trying to rebound so more workers can be hired.


Dow Jones Industrials --- 2 weeks

Markets were moved little by August jobs report

Stocks are marking time going into the long weekend. Dow is up 20, advancers ahead of decliners by 10% & NAZ is up 8. Banks remain near their 2009 highs.

S&P 500 FINANCIALS INDEX

Value 189.16

Change -0.24

% Change -0.1%

The MLP index is up pennies while the Dow Jones REIT Index pulled back 1+. Junk bond funds were generally higher. The yield on the 10-year Treasury bond rose 6 basis points to 3.38% ahead of next week's auctions for another $70B in Treasuries.

Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months




Oil fell to the 67s but remains near its high of 75 last week. Gold has been rocketing ahead for the last 5 months on increasing fears, but today it fell from profit taking (still above 990 per ounce) before the long weekend.

CLV09.NYM

...Crude Oil Oct 09

...67.67

... 0.29 .......(0.4%)

GCU09.CMX

...Gold Sep 09

...991.30 Sep 3

... 4.50 .......(0.5%)

Employers cut 216K jobs in Aug, fewer-than-expected, but the unemployment rate rose to a 26-year high. The unemployment rate was 9.7% in Aug & the decline in payrolls was the smallest in a year. Job losses for Jun & Jul were revised to show 49K more jobs lost than previously reported. The labor force increased by 73K in Aug, indicating the return of some jobless workers who had given up looking for work accounting for part of the rise in the unemployment rate. This report confirmed the pace of layoffs was easing from early this year, when nearly ¾M jobs were lost in Jan. Education & health services continued to add jobs, increasing 52K in Aug after rising 21K in Jul.

•Unemployment Rate in U.S. Climbs to 9.7% as Payroll Losses Slow to 216,000



The Shanghai stock market is off 20% from its high one month ago. Maybe nothing, maybe a leading indicator for US markets.

Shanghai Composite --- 3 months





The unemployment report gave mixed & unclear signals about the strength of the economic recovery. Once again, there is something in it for everybody, making either bulls or bears happy. In the absence of an unexpected announcement, markets will probably wind down going into the long weekend.

Dow Jones Industrials --- 2 months

When Shanghai sneezed, Wall Street caught a cold

A slowdown in the Chinese economy impacting the globe caused markets around the world to sell off. But a late day rally trimmed those losses. Dow dropped 47, decliners over advancers 3-1 & NAZ was off 19. Banks held pretty well with only a modest decline. But recent flyers were hit, AIG (AIG) was off 4.90 (buying at day's end cut the loss by $1) & Citigroup (C) fell 23¢. These are available for those who like playing with fire.

500 FINANCIALS INDEX

Value 197.37

Change -0.76

% Change -0.4%

S5FINL:IND





AIG --- 1 month




Citigroup --- 1 month





MLPs & REITs pulled back in line with ordinary profit taking. The MLP Index was off 1 to the 238s & REITs fell 2, both finishing off their lows. Junk bond funds were mixed but Treasuries rose in value. The yield on the 10-year Treasury bond dropped 5 basis points to 3.40%, its lowest level in over 3 months.


Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months




10-Year Treasury Yld Index - 6 months





Oil fell below 70 on worries about less demand from China if their economy slows. They are the biggest buyer of oil after the US.

CLV09.NYM

..Crude Oil Oct 09

..69.63

.. 3.11 ......(4.3%)

Simple worries move stocks in light trading. China has become a major player in the world economy, when it sneezes it gets a lot of attention. Wall Street took China worries in stride.


Dow Jones Industrials --- 6 months

Markets follow Asian markets lower

After the decline in Asian markets, US stocks sold off. Dow dropped 83, decliners over advancers almost 4-1 & NAZ fell 24. Banks were down, but not too badly. Flyers AIG (AIG) & Citigroup (C) were hit with selling, down 4.36 & 18¢ respectively.

S&P 500 FINANCIALS INDEX

Value 196.83

Change -1.30

% Change -0.7%

Joining in the the sell-off, the Alerian MLP Index fell 2+ taking it below 237 & the REIT Index dropped 3. Junk bond funds were also weak. Risk averse may be returning with Treasuries back in demand. But the yield on the 10-year Treasury bond fell only 2 basis points to 3.43%.

Alerian MLP Index --- 1 month




Dow Jones REIT Index --- 1 month




Nervous global stock markets dragged down oil, taking it below 70.

CLV09.NYM

...Crude Oil Oct 09

...69.90

... 2.84 .......(3.90%)

Asian markets are at center stage today after Japan voted in a new gov ending the ruling party's grip which lasted 5 decades. Nikkei, the Tokyo stock market, after rising 200 (2%) ended down 0.4%. Shanghai dropped 7% following a significant sell-off in the last month. Of course, this is a market that has doubled & then dropped 50+% in the last 2 years, but this decline may be a signal that their massive recovery package has its limitations.

Shanghai Composite --- 3 months




With many traders away & no major news events expected, this week should be quiet. Markets are having one of their best years in history, so they are entitled to take a breather which may be the theme for this week.

Dow Jones Industrials --- 1 month

Profit taking sell-off

Markets need a rest. Dow dropped 56, decliners ahead of advancers almost 4-1 & NAZ fell 24. Banks are feeling selling pressure, but not to any great extent given their run up this year.

S&P 500 FINANCIALS INDEX

Value 194.70

Change -1.23

% Change -0.6%

MLPs are taking it easy in Aug, today down 3+ to the 235s. The REIT Index is off 2+ & junk bonds funds are weak while the yield on the 10-year Treasury bond is flattish at 3.45%.


Alerian MLP Index --- 1 month




Dow Jones REIT Index --- 1 month





Slumping oil is following lower stock markets. Like stock markets, it is still very near recent highs for 2009.

CLV09.NYM

...Crude Oil Oct 09

...70.15

... 1.28 .......(1.8%)

The economy shrank at a 1% annualized rate in Q2, a better-than-expected showing & more evidence that the recession is drawing to a close. Many economists believe the economy is growing in Q3, but any rebound will not be accompanied by rising employment. Weekly jobless claims figures just released were better than expected, but remain well above levels associated with a healthy economy.

The new estimate for GDP was unchanged from the initial figure released last month. The drop, while representing a record 4th consecutive decline, was smaller than in the previous 2 quarters. Businesses slashed inventories more than first reported & cut back more sharply on investment in new plants & equipment. These reductions were offset by revisions that showed smaller dips in consumer spending, exports & housing construction.

Meanwhile the Labor Dept reported unemployment claims fell last week to 570K, from an upwardly revised 580K in the previous week. Those continuing to claim benefits dropped to 6.13M from 6.25M, the lowest level since early Apr. However, the weekly figures remain far above 325K consistent with a healthy economy. New claims last fell below 300K in early 2007.

•Economy in U.S. Shrank 1% in Second Quarter, Less Than Economists Forecast
Initial Jobless Claims in US Decreased Last Week Bloomberg



Toll Brothers (TOL), a large luxury home builder, reported another ugly qtr but sees buyers starting to return to the market. The stock fell 35¢.

Toll Brothers 3Q Loss Widens; Sees Signs For Optimism

Toll Brothers --- 1 year





The Shanghai stock market has been behaving better after its recent sell-off. There are concerns that gov stimulus spending may be loosing some of its punch, causing the growth rate to slow further.

Shanghai Composite --- 1 year





Lower markets today are a reaction to their enormous gains this year. In addition, many traders are on holiday.

Dow Jones Industrials --- 1 month

Financials lead markets higher again

Stocks rose at the start & continued to climb during the day ending near their highs at the close. Dow was up 70, advancers over decliners 5-2 & NAZ was up 20. The S&P 500 gained 11 taking it thru 1K again, to 1007. Banks led the way, bringing the Financial Index with a couple of points of its recent high (shown below). The financials were helped by AIG (AIG) saying it would pay back gov loans, stock up 25%. Citigroup (C), another very troubled whopper size financial, rose 35¢ to 4.38 on optimism that it would become profitable after selling troubled assets. The very brave who bought it at 1 earlier in the year are very happy campers!

S&P 500 FINANCIALS INDEX

Value 191.70

Change 4.85

% Change 2.6%

S5FINL:IND






MLPs struggled all day while REITs took off. The Alerian MLP Index was up ½ still in the 238s while the REIT index roared ahead 6. Junk bond funds were mixed as the yield on the 10-year Treasury bond fell 3 basis points bringing the yield down to 3.44% . Bulls are in charge of the Treasury bond market, but their movements tend to be modest day by day.

Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months




Oil was up, bleeding over from higher stock markets. It's near its 2009 highs & looks like it wants take them out.

CLU09.NYM

..Crude Oil Sep 09

..72.54

.. 0.12 ......(0.17%)

The Shanghai market has had a wild week with daily moves of 4-5% being common. Yesterday it rebounded 4½% but is still down 7% for the week. It's longer term track record illustrates the meaning of the word volatility.

Shanghai Composite Index --- 5 years





JD Powers is predicting that more than 1M autos will be sold in Aug, largely because of the success of the Cash for Clunker program. This was written prior to the earlier story that gov is VERY slow in sending rebates to the dealers causing them to pull ads. They trimmed their forecast slightly for auto sales in 2010 to 11½M (still below the "good old days" in the past).

• J.D. Power predicts boost in August auto sales- AP

Stocks have been absorbing punches very well. The Dow started the week with a big sell-off but has climbed back to a tiny gain for the week. The S&P 500 going thru 1K is helpful but it has been lingering around the resistance line all month.

Dow Jones Industrials --- 2 months

Falling Shanghai market drags US stocks lower

Dow plunged almost 100 on the opening after the China market continued its decline. But buyers returned & Dow has recovered to down 12, decliners over advancers 3-2 & NAZ was off 6. Banks are also lower:

S&P 500 FINANCIALS INDEX

Value 185.69

Change -1.26

% Change -0.7%

MLPs & REITs are settling back with the markets. The Alerian MLP Index was down fractionally in the 237s but the Dow Jones REIT Index was off 2+. However, junk bond funds were mixed. Treasuries were in demand again, the yield on the 10 year Treasury bond fell 9 basis points to 3.44%. That yield may be testing the 3¼% yield touched last month.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




10-year Treasury Yld index - 2 months





After declining in early AM trading, oil rebounded to another significant gain. It's overcoming doubts created by the continued fall in the China stock market. Buyers are betting on encouraging news from the weekly inventory report coming out shortly.

CLU09.NYM

...Crude Oil Sep 09

...70.24

... 1.05 .......(1.5%)

World markets have been paying more attention to the Shanghai stock market. Last night it dropped 4.3% (following a bigger drop on Mon) to 2785 & is down 700 from its recent peak. This is the 4th largest & fasting growing economy in the world. They have a whopper stimulus package aimed at the domestic economy & is helping them get thru the global recession. But they are also a major exporter. Worries about their exports could be driving this selling.

Shanghai Composite --- 3 months





Along with the slumping China market, the ¥ was strong (seen as a safe currency). This AM it strengthened to under 94 to the dollar, up from 95+ in recent days. This is more indication of a growing attitude to be "risk averse." Bumps are getting larger in a road which should be quiet with sideways trading in late Aug.

Dow Jones Industrials --- 2 weeks