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Dec. 11 (Bloomberg) -- After three years of record earnings, the best may have already come and gone for Wall Street.
Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. will be hard-pressed in 2007 to match this year's profits with the U.S. economy growing at the slowest pace in a year and interest rates rising in Europe and Japan. The companies also have to contend with a decline in trading of stocks on the Standard & Poor's 500 Index, a 15 percent drop in sales of mortgage derivatives and concerns about the record amounts of debt being used to finance takeovers.
``It's going to be harder and harder going forward for these firms to show the same rate of growth,'' said Frederick Lane, chairman and chief executive officer of Boston-based investment bank Lane, Berry & Co. and a former co-head of mergers and acquisitions at Donaldson, Lufkin & Jenrette Inc., which is now part of Credit Suisse Group.
Goldman, Morgan Stanley, Merrill, Lehman and Bear Stearns probably will report a 43 percent increase in combined net income this year to $29.1 billion, according to analysts' estimates compiled by Bloomberg. Profits at the top five New York-based firms may slip 0.1 percent in 2007, the first decline in six years. Analysts have underestimated earnings for the past five quarters.
S&P 500 futures rose 2.50 points at 1,424.70 and Nasdaq 100 futures advanced 1.50 points at 1,809.50. Dow industrial futures advanced 20 points to 12,416.
since Billywow's not around, maybe you can get it going for us...
anyway they are outofdate... maybe housekeeping by webmaster... :)
All gone?... all Billywow's... Dow reports?..
what happen to the earlier threads?
???
NEW YORK (CNNMoney.com) -- Investors hoping that early 2007 brings both a so-called "soft landing" for the economy and lower interest rates could be disappointed after Tuesday's Fed policy meeting.
That doesn't mean these things won't happen next year. It's just that most analysts expect the Federal Reserve to hold interest rates steady for the fourth time in a row and to continue to trumpet the threat of inflation over the threat of recession.
In other words, if e Fed is thinking it might cut rates early next year, it isn't likely to tell the markets Tuesday. (Full story)
"The financial markets have recognized that the Fed's inflation concerns haven't panned out," said Michael Strauss, chief economist at Commonfund. He said that this has been suggested in recent reads on core inflation, labor costs and the inflation component of the recent November jobs report.
In addition, other reports - such as Friday's employment report - have suggested that maybe the economy is not slowing as rapidly as had been feared.
All of which raises the question of whether "we get a glimmer of a hint that the Fed recognizes this," Strauss said.
He said he doesn't think the Fed will be as forthcoming as the recent data have been.
"I would be extremely surprised to see any change in the language," said Michael Swanson, senior economist at Wells Fargo.
How stock investors will react is a matter of some debate.
Rallying on
Stocks have been more or less on the rise since late July, with no big hiccup until the end of November, when a barrage of discouraging readings on housing and the manufacturing sector sent stocks lower.
Yet the recent economic news has been more good than bad, allowing stocks to resume their upward move.
Year to date, the Dow Jones Industrial average (Charts) is up 14.6 percent, the S&P 500 (Charts) index is up 12.7 percent, the Nasdaq composite (Charts) is up 10.1 percent and the Russell 2000 (up 0.27 to 792.56, Charts) is up 17.7 percent.
"Until a few weeks ago, stock investors were looking for a drop in interest rates sometime in the first quarter of 2007," said Chris Johnson, chief investment officer at Johnson Research Group.
Johnson said that recent stronger readings on the economy have lowered expectations of an interest rate cut as soon as the first quarter. In addition, Fed chair Ben Bernanke said as recently as last week that he was worried about inflationary pressures.
Nonetheless, "some of the rally this year has been about expectations for rate cuts," Johnson said. So should the Fed meeting fail to hint at that, "we could see some selling."
Alternately, with the mood on Wall Street still so upbeat - even after four months of gains - investors may not take the news too badly.
"I think the fog will start clearing in the first quarter and we'll begin to see whether the economy is headed for a soft or hard landing," said Hugh Moore, founder and partner at Guerite Advisors.
But for the time being, "the optimism in the market is such that stocks can probably keep rising through the end of the year," Moore added.
In addition to the Fed meeting, next week also brings a slew of other economic news that's "mostly about inflation and consumer spending," said Swanson.
Haven't been partying much these days after a fren was posted to HK, iPunter .... Missed those regular shiok friday nites out with my buddies! Below next week on US market:
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MARKET SNAPSHOT
Volatility to ramp up after FOMC issues outlook
Fed's outlook is key after U.S. jobs report; rates seen unchanged at 5.25%
By Carla Mozee, MarketWatch
Last Update: 6:03 AM ET Dec 9, 2006
A heavy slate of government economic reports will be released next week, including retail sales and consumer inflation data, but the bulk of them will come after the central bank meets on Tuesday, likely adding to the volatility.
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Maybe the bull was missing you last night, so it put on a good show so you won't forsake it. The bull must have really missed you... anyway how was the party? :)
US market closed Positive .... No bloody Monday liao!
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MARKET SNAPSHOT
U.S. stocks close higher after jobs report
November jobs top expectations; Citigroup up 2% on rumors
By Nick Godt, MarketWatch
Last Update: 4:51 PM ET Dec 8, 2006
Citigroup Inc. was the biggest gainer among blue chips Friday, advancing 2.3%.
The S&P 500 Index gained more than 2 points to 1,409 points. For the week, the broad average rose 13 points, or 1%, also marking its first weekly gain over the past three weeks.
The Nasdaq Composite Index rose nearly 10 points to 2,437. It finished the week with a gain of 24 points, or 1%.
The market got an early boost after the Labor Department said that the economy added 132,000 jobs in November, while the unemployment rate rose to 4.5% from 4.4%.
Economists polled by MarketWatch expected the economy to add 112,000. The report soothed investors concerned that the U.S. economy is headed for a "hard landing."
"Overall, the number was positive in that it was stronger than expected, but it was not so positive as to keep the [Federal Reserve] on a tightening course," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank.
The market has found comfort in expectations that the Fed will cut interest rates early next year to try and stave off an economic slowdown.
The November jobs data, meanwhile, somewhat scaled back those expectations.
Federal funds futures indicate the market sees a 36% chance that the Fed will cut rates by March, down from 48% on Thursday. For its part, the central bank is widely expected to keep rates unchanged at 5.25% at its meeting on Tuesday.
Mostly, "we've got the biggest [economic] numbers now behind us," added Fitzpatrick. "That can help push equities a little bit higher as we finish the year."
News that consumer sentiment eroded slightly in December according to researchers at the University of Michigan first damped enthusiasm for stocks early Friday.
"There's still a lot of cash on the sidelines and it keeps filtering into equities either directly or with [mergers & acquisitions]," the Deutsche Bank equity executive said. "Every weekend, we've had positive announcements on the M&A front, so we'll see what this weekend brings."
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Dow +43pts now
Dow + 35pts now
Dow + 35pts now
Dow +25pts now
Dow up 10pts
Dow -10pts now.
DOW playing yo-yo.