Stocks rise on a mixed unemployment report

Buyers bid up markets after losses were less bad than feared. Dow gained 95, advancers 3-1 ahead of decliners & NAZ was up 32. Banks rebounded, bringing the Financial Index to within 8 for their 2009 high set last week.

S&P 500 FINANCIALS INDEX

Value 190.30

Change 0.90

% Change 0.5%

S5FINL:IND





The high yields sectors joined in the rally. The Alerian MLP index was up 2½ to the 237s (although it has been in the mid 230s for a couple of weeks) & the Dow Jones REIT Index gained 1. Junk bond funds rose. But Treasuries sold off badly, the yield on the 10-year Treasury bond shot up 11 basis points to 3.44%. Oil was flat, just under 68 & oil was off 1 to an elevated 995.


Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months





Ford (F) had the credit rating on its debt increased to Caa1 from Caa3 by Moody's. The 7.8% bonds of Ford Motor Credit rose $10 to $948 for a $1000 bond, the highest it's been in 2 years. This yield is only about 200 basis points above the yields on investment grade debt. Ford had been managing its business better than GM & benefited from GM's bankruptcy. The stock lost 8¢.

•Ford Motor Credit Notes Rise to 23-Month High After Parent's Ratings Boost


Ford --- 1 year




There has been very little good news on the dividend front, but here is one. Verizon (VZ), Dow stock, raised the div 3% to 1.90. Their yield is over 6%, an attractive yield for a quality stock. VZ gained 35¢.

•Verizon hikes dividend 3 percent to 47.5 cents
AP

Verizon --- 1 year





Stocks ended the week with a bang. Unemployment rose to its highest level in 26 years, but that did not deter buyers. After a bad day for Dow on Mon, losses for the week were reduced to only 60. The S&P 500 is back over 1K & NAZ is above 2K, each has been straddling their respective resistance levels for the last month.
9496 close on Aug 28


Dow Jones Industrials --- 6 months




S&P 500 --- 1 month




NASDAQ --- 1 month

Happy Labor Day!!

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

Dow has first advance in 5 days

Dow started higher & stayed in the black for most of the day, but just barely until a late day rally made the gain noticeable. Dow rose 63, advancers over decliners 5-2 & NAZ was up 16. S&P 500 made it above 1K again but NAZ remained under 2K.

Banks had a very good day after retreating early in the week from the highs last Fri. The monster, low priced flyers had another good day. AIG (AIG) was up 3.80 (10%), Fannie Mae (FNM) gained 27¢ & Citigroup was up 21¢. This is speculation which is not good for the markets.


S&P 500 FINANCIALS INDEX

Value 189.40

Change 4.24

% Change 2.3%

S5FINL:IND




Citigroup --- 2 months




AIG --- 2 months




Fannie Mae --- 2 months





MLPs rebounded, the Alerian MLP Index gained 2.06 to the 235s while the Dow Jones REIT Index was up 2.74. Junk bonds also did well as Treasuries were sold. The yield on the 10-year Treasury bond rose 3 basis points to 3.33% remaining near the lows in recent months. Oil was down pennies at 68.

Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months





Unemployment benefits are expected to run out by year end for more than 1.3M. The National Employment Law Project said more than 402K will exhaust unemployment benefits by the end of Sep & that will more than triple by Dec 31. This is another reminder that high & growing unemployment can damage any economic recovery.

• 1.3 million to lose jobless benefits by year's end- AP

The Institute for Supply Management’s index of non- manufacturing businesses rose to 48.4 in Aug (the highest level in 11 months) from 46.4 in Jul. Readings below 50 signal contraction in industries that account for 90% of the US economy. Efforts to unlock credit & gov measures including tax incentives for first-time home buyers are reviving demand helping the economy grow this quarter.

•Service Industries in U.S. Contract at a Slower Pace as Recession Recedes



Economic data continues to be mixed, giving bull or bears the kind of signals that want to see. The strong finish (shown in the Bigcharts widget on the right) could bring out more bulls tomorrow. But going into a 3 day weekend, it's always tricky trying to guess how traders want to position themselves on Fri PM.

Dow Jones Industrials --- 6 months

Markets are sloshing around

Stocks began the day higher but fell back staying near break even. Dow is plus 28, advancers ahead of decliners 4-3 & NAZ is up 2. Banks are bouncing back after their sell-off in the early part of the week.


S&P 500 FINANCIALS INDEX

Value 188.05

Change 2.89

% Change 1.6%

The MLP index is up small change in the 233s while REITs were flat. Junk bond funds were a little higher at their lofty levels for 2009. Treasuries were weak, the yield on the 10-year Treasury bond rose 4 basis points to 3.34% (but still near recent low levels). Oil was flat in the low 68s.

Alerian MLP Index --- 1 month




Dow Jones REIT Index --- 1 month





Jobless claims fell slightly in Aug but the number receiving unemployment benefits rose, the job market's recovery will be long & bumpy. The number of applications for benefits dipped to 570K last week, from an upwardly revised 574K in the prior week & weaker than the 560K that was expected. The number receiving jobless benefits totaled 6.23M, up 92K from the prior week. First-time claims have trended down in recent months & are well below the recession's high of 674K in early Apr. However they are running at levels significantly above 325K (considered a sign of a healthy labor market). Tomorrow the key jobless rate will be reported, it's expected to go up to 9½% for Aug from 9.4% in Jul.

•More Americans Than Anticipated File Jobless Claims as Companies Cut Costs

Retailers had sales declines in Aug, shoppers held back on back-to-school purchases & continued to focus on necessities. A monthly compilation of 31 retailers' results showed sales in established stores fell 2.1%, better than the 3½-4% drop expected. About half of the retailers missed expectations, the winners were mainly discounters. Results were viewed as weak but stronger than they have been recently.

• Retailers report mixed sales for August- AP

Not a lot is happening in pre-holiday trading. If the unemployment rate reported tomorrow does not produce a great surprise, the rest of the week should be pretty much a non event for stocks. However, Sep with its bad reputation is getting off to a poor start.

Dow Jones Industrials --- 1 month

Bewildered markets aren't sure what to do

Confusion about economic recovery is keeping buyers away. The popular averages stayed close to break even all day. Dow was down 29 (closing at its lows from late day selling) & NAZ lost 1 while decliners were ahead of advancers 3-2.

Banks have been having a profit taking week after reaching their high on Fri. The Financial Index rose almost 150% from its lows in Mar but has finally encountered significant resistance at just under 200. Today banks were down again.

S&P 500 FINANCIALS INDEX

Value 185.16

Change -1.82

% Change -1.0%

The MLP & REIT indices each fell 2½ on an otherwise undecided day. The Alerian MLP Index is down to the 233s nearing its peak back at the start of Jun. Junk bond funds were mixed & the yield on the 10 year Treasury bond slipped 8 basis point to just below 3.30% taking it back to the levels of late May. Risk averse is becoming a growing factor in the markets again, gold rose 24 to 979.

Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months




Three huge financial institutions which are now "troubled" (meaning the gov has become the largest stockholder) have had a wild month. When low priced stocks are this volatile that's not a good sign. When such big names but low priced stocks become high fliers & behave like this, that should give everybody a moment to pause & reflect.

Citigroup --- 1 month




AIG --- 1 month




Fannie Mae --- 1 month





During this last month of largely sideways movement, the S&P 500 has been hovering around the 1K line. It breached 1K, but not convincingly. Now that we are in Sep, toughest month of the year, it should make a convincing move thru the line but will have to decide whether that is to the upside or downside. During this time NAZ has been clinging to the 2K line with a similar trading pattern, up 50% from its lows but stalling out at 2K resistance. Last year Sep was when weak markets fell off the cliff. This year's movements should not be as dramatic, but could define trends for the rest of the year.

S&P 500 --- 1 month




NASDAQ --- 1 month




Dow Jones Industrials --- 6 months

Markets waffle

Stocks are doing little. Dow was down 3 & NAZ was up 2 while decliners were ahead of advancers better than 2-1. Banks are pretty much treading water after yesterday's big sell-off.

S&P 500 FINANCIALS INDEX

Value 186.18

Change -0.80

% Change -0.4%

MLPs are back on defense, the index is down 1½ to the 234s at a 6 week low. The Dow Jones REIT Index also slipped 1½ but has been behaving better in the last month. Junk bond funds were off, Treasuries are back in demand. The yield on the 10 year Treasury bond fell 4 basis points to 3.34%, its low in the last 3+ months.

Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months




10-Year Treasury Yld Index - 6 months





Oil is lower, bringing it to a 10% decline from its yearly highs.

CLV09.NYM

...Crude Oil Oct 09

...67.81

... 0.24 .......(0.4%)

Fewer private sector jobs were lost in Aug than in Jul & companies planned fewer layoffs, suggesting modest improvement in the labor market. Employers cut 298K jobs last month beating the 360K job losses in Jul. However expectations were for 250K job losses. The cumulative losses rose to 1.07M between Jan - Aug, 60% higher than in the prior year. A good sign is that productivity rose at a 6.6% rate in Q2, faster than the initial 6.4% estimate & the biggest increase since 2003.

•Companies in U.S. Reduced Payrolls by More-Than-Forecast 298,000, ADP Says


Following yesterday's sell-off at Wells Fargo (WFC) on speculation about their financial condition, they announced they plan to repay "shortly" the $25B advanced to them from TARP without having to sell additional stock. The stock rose 29¢. With the Wachovia portfolio of loans, WFC is the largest US home loan lender. They said, "costs tied to troubled loans may be reaching a peak, and loss rates on auto loans in particular are stabilizing." Uh huh!

•Wells Fargo Will Repay TARP `Shortly' Without Raising Equity, Stumpf Says


Wells Fargo --- 1 year




Economic news continues mixed, including something to make anybody happy. The big Aug jobs report comes on Fri & is expected to show some improvement but no dramatic changes. In the meantime, more traders are taking a long weekend holiday.

Dow Jones Industrials --- 2 months

Plunging bank shares lead markets lower

Markets tumbled in the first hour & remained at the low levels for the rest of the day. Dow was off 185, decliners over advancers 4-1 & NAZ was down 40. All averages finished near the lows.

Banks sold off badly on rumors about more failures following news stories on bank failures yesterday. The Financial Index started rising modestly to 198 & then plunged for the rest of the day. A good rule of thumb is that a change of 10+ is a very big deal making this sell-off a very big deal.

AIG (AIG) has had a wild ride in the last week. Starting under 35, it shot up 20 points & has lost most of that in the last 2 days. This is not the type off action that is appreciated in markets which are already greatly overbought.


S&P 500 FINANCIALS INDEX

Value 187.09

Change -10.39

% Change -5.3%

S5FINL:IND




AIG --- 1 week




The Alerian MLP Index lost ground in the market sell off, falling 2¼ to the 235s (lowest since mid Jul). The REIT Index was down 8½ & junk bond funds were weak. Risk averse is coming into play, as it did at the start of 2009. Treasuries were higher, the yield on the 10-year Treasury bond fell 3 basis points to 3.38% near the lowest levels in over 3 months.

Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months




Oil got caught up in the selling taking it below 70 again.

CLV09.NYM

..Crude Oil Oct 09

..68.17

.. 1.79 ......(2.6%)

Selling in bank stocks came from rumors about possible bank failures. A NYSE floor trader on Bloomberg TV said that put positions (betting on lower prices) on Wells Fargo (WFC) were up sharply. WFC was down 1.31 along with all banks. On low volume days, rumors become the biggest stories of the day causing big swings in share prices. This is the same day that Bank of America (Dow stock), down 1.13, is offering to repay part of its $20B loan aid from the gov. Wells Fargo has received $25B in gov aid.

Bank of America Aims to Repay Some US Aid, WSJ Says


Wells Fargo --- 1 year




Bank of America --- 1 year





Cash for Clunkers boosted sales in Aug at Ford (F), Toyota (TM) & Honda while Chrysler & General Motors (GM) suffered sales declines. Ford sales were 18% above last year's depressed numbers. Toyota & Honda Motor Co. posted year-over-year gains of 6.4% & 9.9% respectively. Chrysler sales fell 15% & GM sales fell 20%. Sales made in Aug may cannibalize sales in the fall.

•Ford, Toyota, Honda U.S. Sales Rise on `Clunkers' Program as GM's Decline


American Airlines is laying off more workers, unemployment worries are dragging on.

• American to cut 921 flight attendant jobs- AP

This was a rough day for the markets. It's always tough to figure out how significant the decline was given the light volume. But a such a quick loss of confidence in the bank stocks which have been market leaders is very discouraging.

Dow Jones Industrials --- 6 months

Markets caught in summer doldrums

In another undecided day with low volume, stocks are thrashing around. Dow is down 5, advancers over decliners 3-2 & NAZ is up 7. Banks are getting hit with selling, the Financial Index has a fairly big decline. Flyers AIG (AIG) was down $5 but Citigroup (C) fell only 6¢ taking it below $5.


S&P 500 FINANCIALS INDEX

Value 194.93

Change -2.44

% Change -1.2%

The Alerian MLP Index is down pennies while the REIT Index fell 3½. Junk bond funds are mixed again. Treasuries eased, the yield on the 10 year Treasury bond rose 4 basis points to 3.44% remaining near its low of the last 3 months.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil rebounded taking it towards 71, still near its yearly high of 75.

CLV09.NYM

...Crude Oil Oct 09

...70.99

... 1.03 .......(1.5%)

Pimco, the largest bond holder, is cautious on the outlook for junk bonds. After their enormous rally in 2009, junk bond yields of 13% along with lower yield spreads are more than adequate given risks going forward. They advise being careful, expecting higher defaults rates on these bonds.

•Pimco Says Avoid `Black Holes' in High-Yield Bonds as Recovery Rates Fall


Construction spending edged down slightly in Jul as weakness in nonresidential building & gov projects (stimulus spending is not going all that well!) offset the best showing for home building in 10 months. Construction spending dipped 0.2% in Jul following 0.1% rise in Jun. The decline occurred even though construction of homes & apartments rose 2.3%. It was the best showing for that indicator in a year, further evidence that the housing slump may be bottoming out. This is the mixed kind of news that leaves traders scratching their heads about the recovery. As a result, the Dow has been trading sideways in recent days at 2009 highs.

Dow Jones Industrials --- 2 weeks