October 25, 2020

Wall Street Tries to Rebound

Stocks were mostly lower in choppy trade on Monday as the latest data on manufacturing continued to paint a mixed picture on the strength of the economy.

The Standard Poor’s 500-stock index lost 0.1 percent, the Dow Jones industrial average was 0.4 percent higher and the Nasdaq composite fell 0.6 percent.

The S.P. 500 fluctuated between losses and gains but the Dow managed to post a slight gain, helped by a jump in Merck Company.

“We are at all-time highs and the data is not supporting the all-time highs. There is a realization that unless things start to turn around we could be in for a little bit of a correction,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

A measure of manufacturing activity in the United States contracted in May for the first time in six months, as new orders slipped and there was less demand for exports. The Institute for Supply Management said its index of national factory activity fell to 49 points in May from 50.7 in April, short of expectations for 50.7. A reading below 50 indicates contraction in the manufacturing sector.

In a week that will feature the release of several significant reports on the economy, the most important will be the Labor Department’s nonfarm payrolls report for May, scheduled for Friday. A survey of analysts by Reuters shows an expected 170,000 jobs added, slightly higher than the 165,000 in April.

The Fed’s so-called Beige Book survey of regional conditions is to be released on Wednesday.

Trading has been volatile for the past week, with intraday swings of 1 percent up or down on concerns that the Fed may reduce its monetary stimulus earlier than expected. On Friday, Wall Street dived at the end of the session, finishing more than 1 percent lower.

A popular options gauge that measures the level of anxiety in the market also showed a jump. The CBOE Volatility index, or VIX, was up more than 2 percent at 16.64.

In company news, Merck shares rose 4 percent after the company’s drug designed to unmask tumor cells and mobilize the immune system into fighting cancer helped shrink tumors in 38 percent of patients with advanced melanoma in an early-stage study.

But F5 Networks, a network gear maker, fell more than 6.7 percent after Morgan Stanley downgraded the company to equal weight from overweight.

Markets in Asia and Europe were rattled on Monday by data showing that China’s economy lost some steam last month, with factory activity shrinking for the first time in seven months and cooler growth in services.

European markets, however, erased much of their losses through the day, helped by gains in mining companies.

“The overall theme for the coming weeks is going to be a very volatile trading environment and you are going to have the U.S. and Japan being a significant driver to what is happening in Europe,” said a Rabobank strategist, Lyn Graham-Taylor.

A mixed reading in Chinese data kept intact worries about its growth momentum and weighed on oil as Brent crude slipped to $100 a barrel for the first time in a month, though the figures were not bad enough to trigger active selling in other growth-sensitive commodity or currency markets.

In the debt market, German bond futures had a steady start to the week, while there was more selling of euro zone periphery debt amid signs its 10-month rally might be drawing to a close.

Speaking in China, the president of the European Central Bank, Mario Draghi, said the bank’s yet-to-be-tested bond buying program was “designed to keep government bond yields just below ‘panic’ levels,” not to help government solvency, and that the bank would not intervene if spreads were “fundamentally justified.”

The dollar index, measured against a basket of six major currencies, dropped 0.9 percent. That weakness, and a growing view that the E.C.B. was unlikely to cut interest rates again this week, pushed the euro up 1.9 percent, to $1.3096.

The broadly bearish sentiment in Asia took a toll on Japan’s Nikkei stock average again, as it slid 3 percent to a six-week low.

Article source: http://www.nytimes.com/2013/06/04/business/daily-stock-market-activity.html?partner=rss&emc=rss

Beige Book Shows Uneven Economic Growth

Economic activity in the United States continued to grow in April and May, but higher food and energy prices, severe weather conditions and supply disruptions caused by the earthquake and tsunami in Japan put pressure on consumers, according to a survey by the Federal Reserve released on Wednesday.

The central bank’s district-by-district report, called the beige book, said that economic activity “generally continued to expand,” although at different rates across the country. The pace of growth slowed, for example, in the New York, Philadelphia, Atlanta and Chicago districts. The Dallas district accelerated, while other areas showed growth continuing at a steady pace, the survey said.

The beige book also noted that manufacturing in general expanded, and that activity in the nonfinancial service sectors grew steadily, led by the information technology and business and professional services industries.

The report is intended to get beyond the financial statistics to offer economists and market watchers insights into the regional factors affecting the nation’s economy. The report covered a two-month period when the government’s economic indicators were growing progressively weaker.

The survey, issued eight times a year, seemed to support remarks made a day earlier by the Federal Reserve chairman, Ben S. Bernanke, who described the country’s economic growth as slow and uneven.

Compared with the previous beige book, which raised questions about the impact of the March disaster in Japan, this survey suggested that some of the economic headwinds could be receding.

“What we are seeing is that the business community and the banking community out on the ground see this as a transitory thing,” John Canally, an economist for LPL Financial, said. “Businesses in general are seeing through the soft spot.”

The report said that the supply disruptions caused by the events in Japan had resulted in a reduction in the flow of new cars to dealer inventories, which in turn had held down sales. In addition, bad weather and high gas prices hurt casino, retail and agricultural activity in several regions.

Those factors affected growth in consumer spending, with most districts indicating steady to modestly increasing activity, the survey said. “Elevated food and energy prices, as well as unfavorable weather in some parts of the country, were said to be weighing on consumers’ propensity to spend,” the report said.

The Cleveland district noted a sharp drop in auto production, while businesses in the Chicago area said that contingency plans were put into play to deal with supply disruptions. High-tech firms in the Boston and Dallas districts reported shortages of parts that had adverse effects on business, according to the survey.

Business activity related to the agriculture sector was varied because of extreme weather. Cool temperatures delayed crops in the San Francisco Fed district; flooding on the Mississippi River slowed activity for farmers in the St. Louis and Atlanta districts. In the Dallas district, severe drought was expected to hurt the wheat crop, while wildfires led to “significant” agricultural losses, the survey said.

Residential construction and real estate continued to show widespread weakness, the survey said. Labor market conditions improved gradually across most of the country, but some districts said there was a dearth of workers with specialized technical skills. Wage growth was modest, the report said, even though highly skilled workers commanded steeper increases.

In a speech to bankers Tuesday in Atlanta, Mr. Bernanke said he was confident that the pace of growth would increase during the second half of the year, and that he continued to see no signs of broad and enduring inflation despite the recent price rises.

“Over all, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers,” Mr. Bernanke said in his speech.

The Federal Reserve’s policy-making committee next meets on June 21 and 22.

Article source: http://www.nytimes.com/2011/06/09/business/economy/09econ.html?partner=rss&emc=rss

Bank of Japan Reports Broad Downturn Since Quake

The bank’s governor, Masaaki Shirakawa, however, stuck to his view that while Japan’s economy will face strong downward pressure over the near-term, it will eventually resume its recovery as exports rebound and supply constraints ease.

The central bank’s report on regional economies showed that the damage was being felt well beyond the areas directly hit by the March 11 quake, including the Tokai central Japan region, home to the auto giant Toyota.

“Cautious views about the economy have become widespread in many regions, mainly reflecting setbacks in production following the earthquake,” the Bank of Japan said in the quarterly report, issued after a meeting of the bank’s branch managers.

The central bank cut its economic assessment for seven of the nine regions of the country.

It said output fell chiefly in regions closely linked to car manufacturing, as the 9.0 magnitude quake damaged equipment, disrupted supply chains and cut off electricity.

Japan’s top automakers planned to resume work at all domestic plants in stages starting on Monday, but output levels will be at half of original plans and depend on the availability of parts and power.

Sendai Bank, which is based in one of the quake-hit areas, said on Monday that it might seek an injection of public funds to bolster its capital, becoming the first lender to signal that it may tap a government scheme to help banks hurt by the quake.

The Bank of Japan’s regional report, similar to the Federal Reserve’s beige book, showed that the northeast region had been damaged massively, with production and business facilities impaired.

The head of the bank’s Osaka branch in western Japan offered a somewhat upbeat take on output for his region, which is home to several big electronics manufacturers, saying that conditions could improve in May or June.

“Many electronics firms have managed to continue production by making use of parts kept in stock,” the head of the Osaka branch, Hideo Hayakawa, told a news conference.

The assessments of the regional economy will be taken into account when the bank reviews its long-term economic forecasts, to be issued in its twice-yearly outlook report on April 28.

The bank is expected to sharply cut its growth forecast for the fiscal year that began in April, although the dominant view within the bank is that the economy will narrowly escape a contraction for the year.

Article source: http://feeds.nytimes.com/click.phdo?i=01de0303846dcf9597ff3a06cf11a828