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Gloom in Commodities Markets Ends a Rally

April 12, 2013 by Leave a Comment

A four-day rally in the stock market came to an end on Friday as signs of a slowing economy rattled commodity markets, weighing down energy and mining companies.

The price of crude oil dropped 2 percent, to $91 a barrel, as weak United States economic reports followed forecasts for diminished demand for oil.

Gold plunged $64, to $1,501 an ounce, reaching its lowest level since July 2011.

One cause for the latest plunge was a government report that wholesale prices in the United States fell the most in 10 months in March. Traders tend to sell gold when inflation wanes. Traders also pushed gold prices lower on reports that Cyprus may sell some of its gold reserves, possibly prompting other weak European countries like Italy and Spain to do the same.

Compared with the commodities markets, the stock market looked stable. The Dow Jones industrial average dropped just 0.08 of a point to close at 14,865.06. The Standard Poor’s 500-stock index lost 4.52 points, or 0.3 percent, to 1,588.85.

The two major indexes finished the week with strong gains: The Dow rose 2.1 percent, and the S. P. 500 rose 2.3 percent.

David Joy, the chief market strategist for Ameriprise Financial, said it was as if the stock market was telling a different story from the bond and commodity markets.

Copper and other industrial metals slid along with gold on Friday, while Treasury yields sank near their lows for the year. He said the moves implied that traders in those markets were more worried about an economic slowdown.

“It gives me pause,” Mr. Joy said. “Commodities and bonds are telling stock investors: don’t be in such a hurry to say the U.S. economy is in great shape.”

The sharp drop in gold futures tugged down mining companies. Barrick Gold shares lost 8.5 percent, to $22.62, Newmont Mining stock fell 5.9 percent, to $36.37, and Freeport-McMoRan shares fell 2.7 percent, to $31.92.

Materials and energy stocks fell the most of the 10 industry groups in the S. P. 500, with materials stocks down 1.5 percent and energy shares off 1.3 percent.

The Nasdaq composite dropped 5.21 points, to 3,294.95, a fall of 0.2 percent.

A handful of reports issued Friday heightened concerns. Sales at retailers fell in March, and companies restocked their shelves at a much slower pace in February than in the month before. That is usually a sign that companies expect weaker spending from consumers and businesses. A measure of consumer sentiment from the University of Michigan also slumped.

Still, the stock market has held up well, leaving “a lot of investors scratching their heads,” said Lawrence Creatura, a fund manager at Federated Investors.

This earnings season will most likely determine which direction the market takes, Mr. Creatura said. Next week, when Bank of America, Google and other big names turn in their quarterly results, could make the difference.

Wells Fargo reported stronger quarterly profits on Friday, but its revenue fell short of Wall Street’s forecasts. The bank’s stock lost 0.8 percent, to $37.21.

Treasury yields were near their lows for the year. The yield on the 10-year note dropped to 1.72 percent, from 1.79 percent late Thursday. The low point of the year, 1.69 percent, was reached April 5. The price rose

21/32, to 102 17/32.

Article source: http://www.nytimes.com/2013/04/13/business/economy/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Food and Gasoline Drove Consumer Prices Higher in September

October 20, 2011 by Leave a Comment

The report, from the Labor Department, showed that the overall Consumer Price Index rose 0.3 percent last month compared with a 0.4 percent increase in August. Gasoline prices rose at a faster pace, while the increase in food prices slowed.

The core C.P.I., which strips out such volatile categories, increased 0.1 percent in September, its smallest rise since March, compared with 0.2 percent in August. It was kept in check by some of its crucial components, like rents, which rose moderately, and automobiles, which did not rise at all. Apparel, used cars and recreation declined.

The report, which reflects seasonally adjusted figures, showed that inflationary pressures had been largely contained despite a rise in wholesale prices. And some commodity prices are expected to moderate in the months ahead as lower energy costs start to filter through the data, according to Russell Price, a senior economist with Ameriprise Financial.

“That is the lagging impact of petroleum prices,” he said.

The overall consumer index was 3.9 percent in the 12 months through September compared with 3.8 percent in August. Gasoline rose 2.9 percent in September, compared with 1.9 percent the month before. Food prices were up 0.4 percent, compared with 0.5 percent in August.

In the 12 months through September, the core index was up 2 percent, the same rate as in the 12-month period through August.

“The core prices are starting to show that they are easing,” said Chris Christopher, the United States economist for IHS Global Insight. “So hopefully, for consumers in particular, prices will start moderating significantly.”

The report also showed that the Consumer Price Index for urban wage earners and clerical workers increased 4.4 percent over the last 12 months. That measure is used as a basis, in the third quarter, for cost of living adjustments in Social Security payments. The government said on Wednesday that those monthly benefits would increase 3.6 percent starting in January, the first adjustment since 2009.

Mr. Christopher noted that actual net checks to retirees would probably not rise that percentage amount because of increases in Medicare premiums.

“At least it is mitigating,” he said.

Government reports released on Wednesday also provided a glimpse of other areas of the economy, including the job market and the housing market, which continues to be challenged by financial pressures on households and a large supply of homes.

The Federal Reserve said in its beige book, a survey of regional economic conditions, that overall economic activity was expanding, according to information collected through Oct. 7, although many of its 12 districts described growth as modest or slight.

The beige book reported limited demand for new employees. Some districts noted difficulties finding skilled workers or said hiring had been hampered by an uncertain outlook for business or lower expectations for growth.

Residential construction remained at low levels, it said, particularly for single-family homes, while there was a moderate increase in the building of multifamily dwellings. In contrast, the report said, rental demand continued to rise.

Those observations were consistent with government statistics showing that housing starts, which reflect the commitment of builders and suggest that consumer spending on durable goods could follow, were up 15 percent, mostly for multiple family units. But there was no significant increase in the trend for the start of construction on single-family units.

“This is consistent with reports that home builder confidence remains severely depressed,” Joshua Shapiro, chief United States economist at MFR, said in a research note.

Celia Chen, a senior director at Moody’s Analytics, said uncertainty about jobs and problems with foreclosures have affected the single-family housing market. Home values have fallen, and it is still difficult for many people to get a mortgage.

“Many of the households forming right now are just not going to have the wherewithal to purchase a home,” Ms. Chen said.

“The ownership market faces many headwinds,” she added. “All the strength we are seeing is on the multifamily side.”

Article source: http://feeds.nytimes.com/click.phdo?i=4646092dcf68de732b08a2c2d934bc0b

Filed Under: Business News Tagged With: , ,

Markets Stumble on Debt and Deficit Worries

July 18, 2011 by Leave a Comment

In Europe, the euro weakened and the bond yields of indebted nations climbed as investors worried about the degree of political will to overcome the region’s debt crisis.

Investors also remained concerned about events in the United States, where President Obama is trying to get lawmakers to agree to a deficit-reducing package before an Aug. 2 deadline for increasing the debt ceiling.

“People are very concerned about the length of the process in the debt-ceiling debate,” said Russell Price, a senior economist with Ameriprise Financial, adding that there were also concerns about contagion in the euro zone debt crisis.

On Wall Street in late afternoon, the Dow Jones industrial average was down 124.31 points, or 1.00 percent, to 12,355.42 and the Standard Poor’s 500-stock index lost 13.80 points, or 1.05 percent, to 1,302.34.

Stocks also may have been reacting to a Goldman Sachs report Friday that cut the outlook for real United States economic growth in the near term. Goldman Sachs economists cut their forecasts to 1.5 percent in the second quarter from 2 percent, and to 2.5 percent in the third quarter from 3.25 percent.

In Europe, the market jitters marked the start of an important week for the European Union as its leaders attempt to stem full-blown market contagion.

The leaders will hold a special summit meeting Thursday, but there appears to be no agreement yet over the terms of a second bailout for Greece, especially on the nature of a private sector contribution.

The lack of clarity along with recent investor sales of Italian and Spanish bonds have led analysts to become increasingly pessimistic.

“The euro zone crisis has recently worsened significantly, exacerbated by disagreements between the E.U.’s key politicians,” said Ruth Lea, an economic adviser to the Arbuthnot Banking Group in London. “It is becoming increasingly clear that there will have to be major steps towards fiscal union or the euro zone will begin to disintegrate.”

She added that the “debt crisis can fairly be described as having morphed into a political crisis.”

Further complicating the latest Greek rescue, the European Central Bank’s president, Jean-Claude Trichet, reiterated during an interview with The Financial Times Deutschland published Monday that the bank would not accept bonds from any defaulting country as collateral. That could leave Greek banks without financing if credit agencies deem a restructuring, even a voluntary one, to be a default.

The Euro Stoxx 50, a benchmark index of blue-chips stocks in the region, closed down 1.98 percent in late afternoon trading, and the CAC 40 in Paris lost 2.04 percent for the day. The euro weakened to $1.4044 from $1.4157 late Friday.

Perceived as a haven, the Swiss franc surged to a record high against both the euro and the dollar Monday. The euro declined to 1.14848 francs and the dollar dropped to 0.8177 francs. The price of gold for August delivery also touched a new nominal high, rising above $1,600 a troy ounce, as investors sought safer assets.

Further clouding the picture were the stress tests on the region’s banks carried out by regulators . The results were released after markets closed Friday. The threshold to pass the test was set at a core Tier 1 capital ratio, which encompasses safe assets, at 5 percent.

Of the 90 banks, eight failed, with an aggregate capital shortfall 2.5 billion euros. But the exercise left unanswered many questions about how many healthier lenders would survive a deepening of the debt crisis, given their exposure to Greek, Italian and Spanish bonds. A sovereign default case was excluded from the tests.

Also on Monday, the European Central Bank made no use of its program to buy government bonds last week despite market speculation that it had weighed in to support Italian and Spanish bonds, The Associated Press reported. The bank said in a statement Monday that it purchased no bonds. It’s the 11th consecutive week the bank has left the program idle.

Yields on riskier Italian 10-year bonds pushed higher — up 0.20 percentage point, at 5.941 percent — alongside rising yields on Spanish, Portuguese and Greek equivalents.

Last week, Italy accelerated a deficit-cutting plan, aware that investors had been selling its debt fearing it might need outside support.

Matthew Saltmarsh reported from London and Christine Hauser reported from New York.

Article source: http://www.nytimes.com/2011/07/19/business/Daily-Stock-Market-Activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,