Market Talk

US stocks mixed, and it looks like yesterday’s rally was an outlier among the general wave of selling that’s seen the DJIA fall for two straight weeks, the first time it’s happened since early March.

DJIA slips 34 (0.4%) to 8439, down 1.2% on the week. S&P 500 loses 1 to 919, Nasdaq Comp adds 9 (0.5%) to 1838. Big Board volume’s very low. Still can’t say the rally’s over, but it’s clearly in some kind of consolidation phase. The upcoming 2Q earnings season can break that logjam, one way or another. (If we had to guess, we’d expect earnings to beat expectations, but still be down pretty sharply from a year ago. How Wall Street reads that, harder to say.)

Video wrap’s here; China’s call for a new reserve currency is something to keep an eye on.

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Michael Jackson’s sudden death Thursday rocked Twitter and news Web sites as people swarmed the Internet looking for the latest developments and analysis surrounding the death of the pop-music icon.

Twitter, the popular microblogging service that’s experienced exponential growth in the last year, was flooded with thousands of Jackson-related messages immediately after reports of his death circulated. Demand was so overwhelming that performance slowed considerably, and Twitter said it had to disable temporarily the search field on its users’ home pages.

“We saw an instant doubling of tweets per second the moment the story broke,” Twitter co-founder Biz Stone told the New York Times. He added that the volume of Jackson-related messages hit 5,000 per minute at its peak.

“This particular news about the passing of such a global icon is the biggest jump in tweets per second since the U.S. presidential election,” Stone told the paper.

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Income and spending were up in May, but read the data with a hint of skepticism.

Aid rushed out by Washington to revive the economy helped push personal income up at a rate of 1.4% compared to April. Spending increased 0.3%, while the saving rate rose to 6.9%, the highest in 15 years.

Of course when reading this data people must remember that the government’s “moved heaven and earth to keep the economy afloat,” James Picerno writes at The Capital Spectator.

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Okay, we're gonna need about 10,000 more of these.

“Welcome to the new Banana Republic of America,” John Rutledge of Rutledge Capital says after parsing the latest CBO long-term budget projections.

Between entitlements, bailout money and the spending under the Obama budget, the federal debt will rise to four times recent levels, he says. The problem with that is, of course, that it will bury the nation under a mountain of debt.

The CBO concluded the budget is on an “unsustainable path,” (a phrase that goes back at least as far as 2006) with federal debt growing much faster than the economy over the long run.

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When we saw the personal income numbers flash across the Tape, we were immediately suspicious. Headlines said income rose far above expectations. Why would incomes be up sharply when more and more Americans every day find themselves out of work, and thus, without a steady source of personal income?

Of course, as Dow Jones noted in the lede, incomes were up because Uncle Barry’s sticking an extra fiver in our billfolds these days. As Jeff Bater wrote, “The income of Americans soared in May because of the government’s economic stimulus, leading them to increase spending modestly and boost the saving rate to the highest in 15 years.”

Yesterday, when the buy signals were flashing, news like this would’ve probably driven the Dow up 500 points. But today, when the jig seems to be up, the market gives the news the proverbial Bronx cheer.

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Bulls reassert themselves after bears have mostly had their way during the past couple weeks. Volume wasn’t too convincing, however, and with little indication of a bottom in the housing market, unemployment marching unyieldingly toward 10%, and oil climbing again, it’s hard not to look askance at any rally led by retailers and homebuilders, which was the case yesterday.

May personal income and spending due at 8:30 a.m.; Reuters/Univ of Michigan final reading on June consumer sentiment due at 9:55 a.m.

Loaded calendar of economic data next week, capped Thursday (Friday’s a holiday) with June employment report.

S&P futures down 2.00; DJ futures down 19. Ten-year down slightly yield at 3.55%.