Markets rise after Obama spoke in NYC

Dow began rising at noon when the pres spoke, adding more than 100 which took it back into the black by day's end. Dow gained 9, advancers ahead of decliners 3-2 & NAZ rose 14, helped by Starbucks (SBUX) but hurt by eBay (EBAY) & Qualcomm (QCOM) earnings reports. Banks bounced back in the PM as Obama's speech did not create waves. The Financial Index remains near its highs reached last week.

S&P 500 FINANCIALS INDEX

Value 224.33

Change 1.28

% Change 0.6%

The Alerian MLP Index added pennies remaining at its high (315) since mid 2007. The Dow Jones REIT Index rose 3.37 to the 211s, another high for 2010. REIT buyers were encouraged when Simon Property (SPG) sweetened its offer for General Growth Properties (GGP) by bringing 4 more partners with more capital so that GGP can emerge from Chapter 11. SPG gained 1.40 while GGP slipped 3 pennies. Junk bond funds were mixed, still near their recent highs. The yield on the 10-year Treasury bond rose 3 basis points to 3.77%, petty much flat for many weeks.

Alerian MLP Index --- 1 month




Dow Jones REIT Index - 1 month





With buying in the PM, oil eked out a gain & gold reduced its loss. Neither was meaningful except for day traders.

CLM10.NYM

..Crude Oil Jun 10

..83.75

.. 0.09 ......(0.1%)

GCJ10.CMX

..Gold Apr 10

..1,142.50

.. 5.70 ......(0.5%)

Cost-cutting & an influx of US customers helped Starbucks post a substantial increase in Q2 profits, the first increase in 13 qtrs. SBUX posted a better-than-expected profit of 28¢ per share for the qtr that ended in late Mar, easily beating the 3¢ from last year (weighed down by hefty charges). Revenue rose 9% to $2.53B. Both figures beat forecasts, 25¢ per share on revenue of $2.41B. SBUX also boosted its guidance for the year's adjusted profit. It expects to earn between $1.19-$1.22 per share, up from $1.05-$1.08. Sales in stores open at least a year climbed 7% in the US for Q2 (a 4 year high). However sales at stores that opened or were closed during the last 12 months slid 8% as SBUX cut costs & closed stores to shore up its business. Markets liked the news & bid up the stock 1.86 to 27.25.

•Starbucks' 2Q profit soars, revenue climbs


Starbucks --- 2 years





The pres spoke but said nothing new, exactly what traders like to hear. Surprises scare them. The rally in the Dow after his speech was impressive, indicating it wants to go higher even with the looming specter of increased regulation over banking institutions. Now Dow is essentially at the highs hit last week.

Dow Jones Industrials - 1 month

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Stocks decline on dismal housing data

Dow lost 22, decliners ahead of advancers 2-1 & NAZ fell 10. The S&P 500 FINANCIALS INDEX advanced to another interim high while the Senate debates a major financial overhaul that banks are fighting.

Value 214.09

Change 1.06

% Change 0.5%

The Alerian MLP Index dropped 1+ to the 298s. It's had a bumpy go of it lately. But the REIT index rose 2 to the 202. Junk bond funds are up a fraction. Treasury bonds sold off big time. The yield on the 10-year Treasury bond rose 8 basis points to 3.76%. Oil fell taking it near $80 & gold was off 12 to 1091.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks

Photo: Bloomberg


Sales of new homes fell for a 4th straight month to a record low in Feb. The Commerce Dept reported sales of new single-family homes fell 2.2% to a 308K unit annual rate from 315K in Jan. Sales have barely responded to the extension & expansion of a popular tax credit, which boosted purchases in the 2nd half of 2009, raising concerns over the fragile housing market's recovery just as a key pillar of support is being dismantled. The housing market is struggling & has a bearish short term outlook.

•Sales of New U.S. Homes Drop to Lowest on Record on Job Concerns, Weather


Sales of new homes






Starbucks (SBUX) declared its first div, stockholders will be paid 10¢ quarterly. In addition the company will buy back 15M shares, above the 6.3M it has remaining from a previous authorization. The stock was up 19¢ to $25.61.

Starbucks sets first dividend, new stock buybackReuters


Starbucks --- 2 years






Fitch lowered Portugal's credit rating because it said the country's recovery will be slower than other countries that in the Euro Zone. Greek debt problems drone on. The € sank again, down to $1.33½ on this dreary news. Today's housing data did not help the markets. However, the spike up in Treasury interest rates can be very worrisome. So far this is just mild profit taking.

Dow Jones Industrials --- 2 weeks

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Dow on a 2 day winning streak

Dow is on a 2 day winning streak, up 38 today! But advancers are barely ahead of decliners & NAZ is even. S&P 500 at 1290, held above the important 1270 level so far. Not much happening on this holiday kind of shortened week. A private report shows the number of private sector jobs fell 79K in June, mostly from manufacturing. This sends a signal that the next unemployment report from the Dept of Labor will not be pretty. The Commerce Dept reported that factory orders rose 0.6% in May following a 1.3% rise in the prior month. The macro story remains the same, domestic business is weak while exports are strong. Oil is even (believe it or not!) ahead of the weekly inventory report due in a few hours.

Blockbuster (BBI) pulled its offer to buy Circuit City (CC). Both are $2 stocks, CC pulled back to 2 while BBI rose 32¢. For some a big story, Starbucks (SBUX), up 14¢, is closing 600 US outlets (19% of US company stores). Either they're now a mature business or times are really tough! There should not be much news today leading to volatility, so here's some thoughts about bear markets.

FED announcement disappoints investors

Stocks really wanted to go up today & tried hard, but after digesting the FED's rate cut & what they had to say, sold off. Dow had been flirting with 13K & S&P 500 topped 1400, both important ceilings, but they could not keep the gains. In the last hour, Dow sold off about 175 to 12820. For the day, the averages ended slightly underwater although the internals were a little better with advancers a little ahead of decliners. For what it's worth, volume of 1.44B was slightly higher than in the recent past. The month turned out to be good. Dow was up more than 500 after a lousy start in Q1.

Markets were debating whether this is the end of rate cuts for awhile. Maybe. With low rates & more signs of inflation becoming a bigger problem, they can be expected to proceed cautiously on new rate cuts. "Rates on hold" is a new buzz phrase which seemed to be the thinking driving down stocks in the last hour of trading. For what it's worth, oil fell 2.17 to 113.46. But that remains high enough to drive gas prices up many more notches at the pump.

Starbucks (SBUX) was essentially even on down profits. I don't drink coffee but it's such a well known brand, hard to ignore it. CNBC had an excellent interview with Dr. Eric Schmidt CEO of Google (GOOG) sending the stock up 15.82. Check it out!

Stocks rally on company news

Stocks rallied on better news from companies & earnings reports. Dow was up 86 (after being up 150 earlier), advancers ahead of decliners 3-2 & NAZ was 24. It didn't hurt that commodities pulled back highlighted by oil dropping 2 to 116. Overall a pretty good day but volume continues to drag along at 1.45B. Bloomberg News reported after an interview with the head of troubled AMBAC (ABK) that they were in great shape & expecting to maintain their AAA debt rating. Pretty good trick after losing billions in 6 months, sending the stock down over 90%. Merrill Lynch (MER) said they had ample cash to maintain the div. In addition, the favorable unemployment report this AM helped bring back buyers looking past dreary economic news.

Not all company news has been favorable. The Microsoft (MSFT) - Yahoo (YHOO) dispute drags on. Starbucks (SBUX) is at the lowest level in almost 5 years, maybe that's because I don't drink coffee. Aetna (ET) reported lower Q1 earnings, down 83¢. Sales beat expectations & EPS was up on lower earnings because of fewer shares. They also maintained guidance of $4 for the year. Let's see what tomorrow brings.