Post Reply
1321-1340 of 2099
Stocks stage advance
Investors welcome signs of optimism in the day's economic news, with bank and tech issues leading the way.
NEW YORK (CNNMoney.com) -- Stocks rallied Thursday, with financial and technology shares spearheading the advance as a report showing surprise growth in the manufacturing sector and gains in overseas markets propelled Wall Street.
The Dow Jones industrial average (INDU) climbed 71 points, or 0.8%. The S&P 500 (SPX) index added 11 points, or 1.1%. The Nasdaq composite (COMP) rose 20 points, or 1%.
A worse-than-expected jobless claims report unnerved investors in the early going, but the surprise rise in manufacturing reversed any losses, giving the market support for the rest of the session.
Financial shares were buoyant, with the KBW Bank (BKX) index gaining 2.9%. Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) were among the stocks boosting the index.
AIG (AIG, Fortune 500) rallied 21% after the insurer's new CEO said he expects the company to pay back the billions in loans it has taken to stay afloat.
Stocks managed to advance Wednesday, in the middle of a choppy week on Wall Street. After topping out at fresh 2009 highs last week, investors have struggled to push stocks higher this week. Between the March 9 lows and last week, the S&P 500 rallied 50%.
But bets that the economy is stabilizing have been undercut lately by worries about the jobs market and its impact on the already hard-hit consumer.
"A lot of what we've seen over the last five or six weeks has been the result of investor anxiety about not having jumped in ahead of the upturn," said Tom Hepner, vice president and financial advisor for Ruggie Wealth Management. "But I think the market, on an S&P 500 earnings basis, is ahead of itself."
He said that absent a big rise in revenue growth in the second half of the year --which doesn't seem to be brewing -- the market is wildly overvalued relative to corporate profit forecasts.
Stocks are likely to "crab sideways" over the next few weeks, before suffering a setback in the fall, he said.
Friday brings reports on July existing home sales and July state-by-state employment. Also, Federal Reserve Chairman Ben Bernanke will speak at the Kansas City Fed's economic symposium in Jackson Hole, Wyo., starting at 10 a.m. ET. His talk is expected to be about the past year in crisis for the financial markets.
Economy: The day brought a mix of economic news, including reports on manufacturing and the labor market.
The Philadelphia Fed index, a regional reading on manufacturing, climbed to plus 4.2 in August from negative 7.5 in July. Economists expected it to improve to negative 2. Any reading that is positive implies expansion in the sector.
Also on the upside, the Conference Board said its index of leading economic indicators (LEI) rose 0.6% in July after rising a revised 0.8% in June. LEI was expected to have risen 0.7%.
But the number of Americans filing new claims for unemployment rose last week versus forecasts for a drop. The Department of Labor reported 576,000 new claims last week from a revised 561,000 in the previous week. Forecasts were for claims to drop to 550,000, according to a Briefing.com survey of economists.
A report from the Mortgage Bankers Association said 13% of Americans are either late on their mortgage payments or in foreclosure, a record-high number.
World markets: Asian markets rebounded Thursday, reassuring investors after a plunge in China's main market Wednesday. The Chinese market has lost about 20% over the last two weeks, raising worries about China's economy. China is a big buyer of American and European products.
European markets rallied.
Oil: U.S. light crude oil for September delivery fell 89 cents to settle at $72.94 a barrel on the New York Mercantile Exchange, after rising nearly 5% Wednesday.
Bonds: Treasury prices gained, lowering the yield on the benchmark 10-year note to 3.42% from 3.45% Wednesday. Treasury prices and yields move in opposite directions.
Other markets: COMEX gold for December delivery fell $2.10 to settle at $942.70 an ounce.
In currency trading, the dollar fell versus the euro and gained against the Japanese yen.
Market breadth was positive. On the New York Stock Exchange, winners beat losers seven to three on volume of 1.05 billion shares. On the Nasdaq, advancers topped decliners eight to five on 2 billion shares. 
Global economic recovery has started, says IMF chief economist
Posted: 18 August 2009 2329 hrs
 |
||||||
 Olivier Blanchard |
||||||
WASHINGTON : The global recovery from recession underway requires a delicate rebalancing of economies -- notably between the United States and Asia -- to sustain it, the chief IMF economist said Tuesday.
"The recovery has started. Sustaining it will require delicate rebalancing acts, both within and across countries," Olivier Blanchard said in an IMF article, released in advance of publication Wednesday.
Blanchard cautioned that predictable models based on past recoveries from recessions would not apply to the worst global slump in seven decades.
"The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.
The United States, the epicenter of the crisis, "is central to any world recovery," he said in the article, titled "Sustaining a Global Recovery."
Blanchard said two rebalancing acts will have to come into play to sustain the global recovery: a switch from public to private spending and the rebalancing of international trade flows.
The latter would require "a shift from domestic to foreign demand in the United States and a reverse shift from foreign to domestic demand in the rest of the world, particularly in Asia," he said.
Pointing to a decline in American household consumption -- which "represents 70 percent of total US demand" -- and a rise in the personal saving rate that is expected to persist for some time, Blanchard estimated a 3.0 percentage point drop in the ratio of consumption to US gross domestic product, a broad measure of economic output.
With the 3.0 percent drop unlikely to be made up by increased investment and the eventual phase-out of the massive fiscal stimulus, "US net exports must increase" for the US recovery to occur, he said.
Key to the rebalancing act will be an increase in foreign demand for US goods, particularly in countries with large current account surpluses, notably in China and other Asian countries.
"From the point of view of the United States, a decrease in China’s current account surplus would help increase demand, and sustain the US recovery. That would result in more US imports, which would help sustain world recovery," the top economist at the 186-nation institution said.
China may be willing to pursue that "because it may well be in its own interest," said the economist, but other emerging market Asian countries that run large current account surpluses have weaker incentives than China to boost internal demand.
Blanchard recalled that in a typical recession model, lower-than-normal growth gives way to higher-than-normal growth for some time, until the economy has returned to its normal growth path.
"The current global recession is far from normal," he said, citing the breakdown in parts of the economic system.
"In advanced countries, the financial systems are partly dysfunctional, and will take a long time to find their new shape," he said.
Emerging market countries may not see dwindled capital inflows return to pre-crisis levels for a few years.
The end result of the global crisis: possibly a permanently lower potential output, he said.
Blanchard said the IMF's upcoming edition of the twice-yearly World Economic Outlook will cover 88 banking crises over the past four decades in a wide range of countries.
"While there is large variation across countries, the conclusion is that, on average, output does not go back to its old trend path, but remains permanently below it."
- AFP /ls
Stocks bounce on consumer hopes
Wall Street rises after two down sessions thanks to Home Depot and Target earnings, but concerns about consumer spending remain.
After the close, Hewlett-Packard (HPQ, Fortune 500) reported lower quarterly sales and earnings that topped analysts estimates.
The Dow Jones industrial average (INDU) added 82 points, or 0.9%. The S&P 500 (SPX) index rose 10 points, or 1%. The Nasdaq composite (COMP) gained 25 points, or 1.3%.
Stocks slipped for two straight sessions, with the major gauges each losing over 3% on worries that a struggling consumer could pressure an already fragile recovery.
But Tuesday brought some better news from the retail sector and investors used it as an opportunity to move back into the market, albeit on light trading volume.
"There's going to be a lot of volatility day-to-day as we try to figure out how much economic growth we're going to have," said Robert McGee, portfolio manager at CS McKee.
A weaker-than-expected consumer sentiment report Friday and Lowe's disappointing profit report Monday sparked the selling, which followed a roughly five-month advance.
But Tuesday brought better profit news from Dow component Home Depot and discount retailer Target, helping to mitigate some consumer worries. On the downside, the morning's housing market report missed growth forecasts but investors sought out some good news when it came to single-home construction.
The S&P 500 is 46% higher since bottoming March 9. Year-to-date, it's just up 9.6% as of Tuesday's close.
"I think the rally is a little ahead of what the economy and fundamentals are indicating," McGee said. "We're probably near the highs of the year and could see some give back through the fall."
Wednesday brings no market-moving quarterly results or economic news. The weekly oil inventories report from the Energy Information Administration is due in the mid-morning.
Retail: Home Depot (HD, Fortune 500) reported earnings of 66 cents per share, versus 77 cents a year ago, as the recession cut into its business. But results were better than expected and the home improvement retailer boosted its full-year earnings outlook. Shares of the Dow component gained 3% Tuesday.
Target (TGT, Fortune 500) reported earnings of 79 cents per share versus 82 cents a year earlier, topping expectations, due to cost cutting and reduced inventories. But revenue and same-store sales slipped, as consumers remained cautious. Shares gained 7.6%.
Economy: Housing starts and building permits both slipped in July, according to a Commerce Department report released Tuesday. The report surprised Wall Street economists who were looking for an improvement.
Housing starts fell to a 581,000 annualized rate in July from a revised 587,000 in June. Economists thought starts would rise to 599,000, according to a Briefing.com survey.
Building permits, which indicate builder confidence, fell to a 560,000 annualized rate in July from a revised 570,000 annualized rate in June. Economists thought it would rise to a 576,000 annualized rate.
On the upside, the report showed that single-family housing construction rose 1.7% in July, advancing for the fifth straight month and at the fastest pace since October.
A separate report showed that inflation at the wholesale level remains in check. The Producer Price Index (PPI) fell 0.9% in July after rising 1.8% in June. Economists thought it would fall to 0.3%. The core PPI, which strips out volatile food and energy prices, fell 0.1% in July versus forecasts for a rise of 0.1%.
General Motors: The automaker is boosting production in the second half of the year and bringing 1,350 of its North American employees back to work as a result of increased demand from the government's Cash for Clunkers program.
Separately, GM (GM, Fortune 500) said it made a deal to sell its money-losing Saab to Swedish luxury sports car maker Koenigsegg.
Other stock movers: Huron Consulting Group (HURN) rallied 37.6% in unusually active Nasdaq trading after the business consultant reported higher quarterly revenue and earnings that topped estimates.
American Axle & Manufacturing Holdings (AXL) rallied 117% in unusually active New York Stock Exchange trading after saying it will get up to $210 million in help from former parent GM. The auto parts manufacturer is trying to restructure its debt outside of bankruptcy court.
Market breadth was positive and trading volume was light. On the New York Stock Exchange, winners topped losers by almost four to one on volume of 991 million shares. On the Nasdaq, advancers topped decliners three to one on volume of 1.77 billion shares.
Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.51% from 3.47% Monday. Treasury prices and yields move in opposite directions.
Other markets: In global trading, European and Asian markets climbed.
U.S. light crude oil for September delivery rose $2.44 to settle at $69.19 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $3.40 to settle at $939.20 an ounce.
In currency trading, the dollar fell versus the euro and gained against the Japanese yen.
Stocks ready to rebound
Investors await housing and inflation reports a day after selloff on consumer concerns.
NEW YORK (CNNMoney.com) -- U.S. stocks were poised for early gains Tuesday, as investors looked ahead to reports on the housing market and inflation.
At 7:04 a.m. ET, Dow Jones industrial average, Nasdaq 100 and Standard & Poor's 500 futures were higher.
Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.
Wall Street kicked off the week on a rough note Monday, with the major gauges losing about 2%. Stocks fell on concerns that the global economy would take longer to recover than previously anticipated.
The roughly five-month rally, fueled by signs that the economy is stabilizing, slowed down last week and hit a roadblock on Friday after a worse-than-expected consumer sentiment report.
Peter Cardillo, chief market economist for Avalon Partners, said the biggest market-mover on Tuesday will be the government report on housing starts.
"Housing is what sunk the economy, housing is what sunk the consumer, housing is the root of the problem," said Cardillo. "Any signs of stabilization that we finally hit bottom serves as a lift to the consumer."
Economy: Investors will get the latest reading on the housing sector at 8:30 a.m. ET, with a reading on housing starts and building permits.
For July, an annual rate of 598,000 was expected for housing starts, according to a consensus of economist opinion from Briefing.com, compared to 582,000 the prior month. For building permits, an annual rate of 576,000 was forecast for July, compared to 570,000 the prior month.
Also due out is a report on prices at the wholesale level. The Price Producer Index was expected to fall 0.3% in July, according to the Briefing.com consensus, compared to a gain of 1.8% in June. Core PPI, which excludes volatile food and energy prices, was expected to edge up 0.1%, compared to a gain of 0.5% the prior month.
Earnings: Home improvement retailer Home Depot (HD, Fortune 500) reported fiscal second-quarter net earnings of $1.1 billion, or 66 cents per diluted share, down from $1.2 billion or 71 cents per diluted share in the year-ago quarter.
Chief executive Frank Blake said, in a press release, that consumers were pressured by "concerns about the housing market, rising unemployment and softness in the overall economy." Nonetheless, Home Depot's earnings beat the 59 cents per share that was expected by Wall Street, according to a consensus of analyst opinion from Thomson Reuters.
On Monday, rival Lowe's (LOW, Fortune 500) reported a 19% drop in quarterly profit and said it was trimming its store expansion in North America.
Retailers Target (TGT, Fortune 500) and TJX (TJX, Fortune 500) also are due to post results.
Companies: GM reached a deal to sell its money-losing Saab unit to Swedish luxury sports car maker Koenigsegg.
World markets: Stocks around the world were in recovery mode, although gains were modest. In Asia, Japan's Nikkei edged higher. Major markets in Europe gained slightly in morning trading.
Money and oil: The dollar slipped versus major international currencies, including the euro, the yen and the British pound. The price of oil jumped $1.03 per barrel to $67.78.
Stocks tumble on consumer fears
Wall Street retreats as worries about the economy cause investors to bail out, after lifting stocks by 50% in five months.
The Dow Jones industrial average (INDU) lost 186 points, or 2%, after having lost as much as 204 points earlier. The S&P 500 (SPX) index fell 24 points, or 2.4%.
Both the Dow and S&P 500 closed at 3-week lows.
The Nasdaq composite (COMP) lost 55 points, or 2.8%, ending at a one-month low.
A roughly five-month rally hit a roadblock last week after a worse-than-expected consumer sentiment report Friday. Signs that the economy is stabilizing -- combined with extraordinary amounts of fiscal and monetary stimulus -- have more or less lifted stocks since March, with the S&P 500 gaining 50%.
In the last month alone, the S&P 500 gained 15%. After such a run, a pullback was predictable, but it's unlikely to signal a bigger retreat, said Stephen Goldman, market strategist at Weeden & Co.
"You have a market that's seen most sectors and stocks rise in tandem and and so we should see a pretty orderly pullback," Goldman said. "We're still only down 2% or 3% from the highs."
As of last Thursday, the Dow was at a nine-month high and the Nasdaq and S&P 500 were at 10-month highs.
Goldman said he sees a continued advance through the fall. But he said the difference is that from now on, it's going to be a lot more choppy, with investors having already anticipated a lot of the economic improvement.
The CBOE Volatility (VIX) index, also known as the Vix, Wall Street's so-called fear gauge, spiked 15%, signaling a bigger stock pullback could be brewing.
"People are worried we've run too far, too fast and that we still have a long way to go in terms of the economy," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "There are concerns about a double-dip recession."
Consumer issues: Meanwhile, concerns about consumers could limit the pace of the economic recovery.
While the housing and manufacturing sectors have started to stabilize, a weak labor market and higher oil and gas prices have kept consumers on the sidelines. With consumer spending fueling roughly two-thirds of economic growth, participation is necessary for a bigger economic recovery to take hold.
Underscoring the weakness in consumer spending, home improvement retailer Lowe's (LOW, Fortune 500) on Monday reported a worse-than-expected drop in second-quarter profit. Lowe's also issued a second-half outlook that is short of analysts' estimates. Shares plunged 10.3% and dragged on other retailers.
Home Depot (HD, Fortune 500) and other retailers are due to report results later in the week.
Stock declines Monday were broad-based, with 28 of 30 Dow stocks sliding, led by IBM (IBM, Fortune 500), Boeing (BA, Fortune 500), Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and 3M (MMM, Fortune 500).
Overseas markets slip: U.S. investors also reacted to a plunge in global stock markets.
In Asia, Japan's Nikkei index plunged 3.1% after a report showed the economy emerged from recession in the second quarter, but analysts said that the outlook was choppy. China's main index slumped almost 6% on worries about a stock market bubble.
In Europe, major markets all fell around 2%.
Manufacturing: The hard-hit sector continues to show signs of improvement. On Monday, the Empire State Manufacturing survey, a measure of activity in the New York area, rose to 12.1 in August versus a reading of negative 0.6 in July, according to the Federal Reserve Bank of New York. Any reading that is positive shows expansion in the sector.
The week brings a slew of economic news. On Tuesday, the government reports on July housing starts and building permits, and July producer prices, a measure of wholesale inflation.
Later in the week, reports are due on leading economic indicators, jobless claims, state-by-state unemployment and existing home sales.
Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.47% from 3.56% Friday. Treasury prices and yields move in opposite directions.
Other markets: U.S. light crude oil for September delivery fell 76 cents to settle at $66.75 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery fell $12.90 to settle at $935.80 an ounce.
In currency trading, the dollar gained versus the euro and fell against the Japanese yen.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by eight to one on volume of 1.22 billion shares. On the Nasdaq, decliners topped advancers by nearly five to one on volume of 1.94 billion shares.