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The stock market rallied last week on upbeat earnings in the
financial and tech sectors. Credit card issuers were among the stars of
the party.
They grabbed center stage on reported declines in their delinquency
rates for June. Delinquencies -- loans up to 180 days past due -- are
treated as precursors of defaults, which companies write off as
uncollectible. Is it time to put money on the credit sector? Don't trust this trend any more than you would believe some come-on low-rate teaser offer in the mail.
Stocks such as American Express, Capital One, JPMorgan Chase and Bankof America have picked up momentum, reaching levels they last saw early in the
year. AXP is the best stock in the Dow Jones industrial average.
Analyst upgrades have fed the trend, with Stifel, Nicolaus & Co.
researchers raising earnings estimates across the sector and a Jeffries
& Co. analyst saying he expects loan losses for credit cards to
peak in the fourth quarter.
However, unemployment rates are still rising and retail spending
lags. Real estate markets are delivering word of more foreclosures down
the pike.
Look harder at the dip in delinquencies and you see the one-time
effect of federal tax refunds and government stimulus checks that were
issued in the spring.
Read the rest at http://www.suntimes.com/business/1672739,CST-FIN-curious19.article
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