Dow Flirts with 11,000. Gets Number. Never Calls.

Good morning! The stock market is up again today on news that jobless claims fell. By the way, I shouldn’t say that’s the reason. I hate when the financial media lists the reasons why the market rises or falls. It’s more proper to say that the market is up and there’s news that jobless claims fell by 11,000 last week to 445,000.

The report on jobless claims comes out each Thursday and I think it’s one of the least important economic reports. Make no mistake, the big news will be tomorrow’s jobs report. Economists expect that the unemployment rate climbed to 9.7% last month from 9.6% in August.

After the opening bell, Alcoa (AA) will be the first component of the Dow to report earnings. I really don’t have any opinions for or against Alcoa, but it will be interesting to see how the market reacts. Pepsi (PEP) cut the top end of its full-year EPS estimate due to poor currency exchange rates. Wall Street had been looking for up to $4.16 per share. Pepsi said it will be closer to $4.12 per share. The stock is down about 3% today.

The Buy List is trending higher this morning. AFLAC (AFL) broke $54 per share this morning. The stock is at its highest level since May. I’ve been very happy with this stock.

Ryan Fuhrmann at TheStreet listed the 5 most undervalued stocks in the S&P 500 and he included Eli Lilly (LLY):

Eli Lilly has severe top-line issues to deal with in the next few years, given nearly 60% of its drug sales are subject to patent expirations during the next seven years. However, this downside is more than reflected in the stock price and is a key reason I recently pegged the stock as big pharma’s most undervalued stock.(Read Big Pharma’s Most Undervalued Stock.) Better yet, management has committed to keeping the current dividend yield, which is about as high as you’ll find in the S&P 500 today. This should keep the stock as a dividend aristocrat for some time, and investors have a chance for big gains by picking up the shares.

The stock currently yields 5.3%.

Posted by on October 7th, 2010 at 9:59 am


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