April 1, 2023

Markets Try to Look Past Budget Deal

Stocks in the United States traded slightly lower on Wednesday as traders watched the latest offers in budget negotiations in Washington, while technology shares were lifted by strong results from Oracle.

In morning trading, the Standard Poor’s 500-stock index fell 0.2 percent, the Dow Jones industrial average lost 0.1 percent and the Nasdaq composite index slipped 0.1 percent. European shares were modestly higher in late trading.

The S.P. 500 was on track to extend its best two-day run in a month, a sign that investors were trying to look past the combination of tax increases and spending cuts that many experts fear could push the economy into recession if they take effect next year.

President Obama’s most recent offer to Republicans made concessions on taxes and social programs spending, amid concerns from Senate Democrats. House Speaker John Boehner said he remained hopeful about an agreement, though the offer was “not there yet.”

“Both Obama and Boehner have been making concessions, suggesting a deal will get done before the deadline, resulting in an acceleration in stock buying,” said Adam Sarhan, chief executive of Sarhan Capital in New York.

Tech shares will be in focus a day after Oracle reported earnings that beat expectations on strong software sales growth. Shares rose 2.7 percent.

FedEx reported second-quarter revenue that beat expectations, but said its earnings in the quarter had been impacted by Hurricane Sandy. Shares rose 1.3 percent.

The S.P. has gained 2.3 percent over the last two sessions, the first time it has notched two straight days of 1 percent gains since July. Markets have been supported by any indication agreement might be reached, with banks and energy shares — groups that outperform during periods of economic expansion — leading gains.

“We’ve been breaking above levels of resistance, including the 50-day moving average and the November high, so from a technical standpoint, we’re seeing a lot of improvement,” Mr. Sarhan said. “We’re set up for a strong 2013.”

Trading volume has been light ahead of the holidays and as some caution remains over the budget negotiations. Equities have struggled to gain ground in recent weeks amid signs there was little room for compromise between the two political parties.

The Knight Capital Group climbed 4.1 percent after it agreed to be bought by Getco Holdings in a deal valued at $1.4 billion. The stock, which was devastated by a near-fatal trading error in August, remains down about 76 percent so far this year.

General Mills reported earnings that beat expectations and raised its full-year profit view, citing a recent acquisition which lifted sales. Shares gained 1.5 percent.

Housing starts fell 3 percent in November, impacted by Hurricane Sandy.

Article source: http://www.nytimes.com/2012/12/20/business/daily-stock-market-activity.html?partner=rss&emc=rss

Shares Continue to Slide, Awaiting a Budget Accord

Stocks fell on Friday as another decline in Apple took a toll and investors unloaded some shares because of the uncertainty surrounding the budget negotiations in Washington.

All three major stock indexes ended the week slightly lower, the Nasdaq for the second consecutive week.

Apple’s stock slid 3.76 percent, to $509.79, after the iPhone 5 received a tepid reception in China.

UBS maintained its buy rating on Apple, but cut its price target to $700 from $780 and expressed concerns that iPhone production may be dropping.

Shares of Apple have fallen 27.4 percent since their closing high of $702.10 on Sept. 19.

The S. P. Information Technology Index lost 1 percent as Apple fell and Jabil Circuit fell 5.5 percent, to $17.51, after UBS cut its price target.

Stocks have been treading water as the possibility of not reaching a deal to settle the budget impasse until early next year is rising.

“We’re faced with uncertainty,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston. “And that’s going to continue now into January. It basically puts everybody on hold and just have the markets kind of thrash around.”

President Obama and the House speaker, John A. Boehner, held a “frank” meeting on Thursday at the White House to discuss how to avoid the tax increases and spending cuts set to kick in early in 2013.

The Dow Jones industrial average slipped 35.71 points, or 0.27 percent, to 13,135.01. The Standard Poor’s 500-stock index fell 5.87 points, or 0.41 percent, to 1,413.58. The Nasdaq composite index lost 20.83 points, or 0.70 percent, to 2,971.33.

For the week, the Dow slipped 0.15 percent, while the S. P. 500 fell 0.3 percent and the Nasdaq declined 0.2 percent.

Among other Nasdaq decliners, shares of the chip maker Qualcomm slid 4.7 percent, to $59.83.

Best Buy slid 14.7 percent, to $12.05, after the electronics retailer agreed to extend the deadline for the company’s founder to make a bid.

Among the day’s economic data, consumer prices fell in November for the first time in six months, indicating inflation pressures were muted.

A separate report showed manufacturing grew at its swiftest rate in eight months in December.

Chinese data was encouraging, as Chinese manufacturing grew at its fastest rate in 14 months in December. The news was deemed as helpful for materials companies in the United States, including United States Steel, which rose 6.8 percent, to $23.85.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 8/32, to 99 9/32, and the yield fell to 1.70 percent from 1.73 percent late Thursday.

Article source: http://www.nytimes.com/2012/12/15/business/daily-stock-market-activity.html?partner=rss&emc=rss

Wrangling Over Europe’s Budget Gets Under Way

BRUSSELS — The hotly anticipated battle over the next long-term European Union budget began Tuesday when the European Commission snubbed a suggested cut of at least €50 billion.

The commission’s terse rejection of the proposal made by Cyprus, which currently holds the rotating E.U. presidency, was yet another sign that the hostilities are likely to be protracted as countries including Britain and Sweden call for even deeper cuts.

David Cameron, the British prime minister, has requested a freeze in payments to the Union to keep them at 2011 levels, and he is under pressure from members of his Conservative Party to push for cuts compared with 2011 levels. He has also threatened to veto any budget deal at a summit meeting in November if Britain does not get its way.

“The politics of the E.U. budget are always nasty, but they may be nastier this time partly because of Mr. Cameron trying to be Mrs. Thatcher,” said Stephen Tindale, an associate fellow at the Center for European Reform, a research organization in London.

Margaret Thatcher, the former British prime minister, earned lasting admiration from Mr. Cameron’s party by taking a firm stance in E.U. budget negotiations during the early 1980s and by winning a rebate that still makes up much of the gap between Britain’s share of contributions and receipts.

The E.U. budget is negotiated every seven years and has long been a polarizing issue as each country seeks to get the most from the process. The spending plan amounts to about 1 percent of economic output in the 27-member Union and is used to finance a huge range of policies, including decommissioning power stations, building roads and subsidizing farmers.

But striking a middle ground is expected to be particularly hard this year amid the climate of austerity brought on by the financial crisis.

“It’s like an exercise aimed at squaring the circle,” said an E.U. official who spoke on condition of anonymity because he was directly involved in negotiations. “Nothing is agreed until everything is agreed.”

The commission, the E.U.’s executive body, proposed in June 2011 an upper limit of €1.03 trillion, or $1.33 trillion, in spending for 2014 and 2020, an increase of about 5 percent over the previous seven-year period.

Olivier Bailly, a spokesman for the commission, said at a news conference Tuesday that its proposal “strikes the right responsible balance in times of crisis” and would be “a tool for investment in growth and jobs.”

Under the commission’s proposals, farm spending would still account for about 36 percent of the budget. Funds for projects like roads, railways and supporting small businesses that mainly go to countries more recently admitted to the Union would account for slightly less. Around 6 percent would be for E.U. administration.

Germany is part of a group called the Friends of Better Spending, which includes the Netherlands and Finland, that is focused on improving the effectiveness of spending while capping its growth. But Britain and Sweden have been the most outspoken on the need to rein in spending.

“No deal will be possible on the basis of cuts of only €50 billion,” Birgitta Ohlsson, the Swedish minister for E.U. affairs, said in a statement Tuesday, after the Cypriot proposal. “It is unacceptable that the common agriculture policy is protected from cuts.”

She said Sweden was seeking €150 billion in cuts.

Ms. Ohlsson also criticized the Cypriots for making the largest cuts where the “E.U. needs to invest — in research, foreign policy and cross-border infrastructure.”

The Cypriot proposal is still €54 billion above the baseline set by Mr. Cameron, and would represent 6.1 percent growth compared with the levels of payments in 2011, according to Open Europe, a research group based in London.

The jousting that got under way this week will set the scene for a meeting on Nov. 22, when the Union’s leaders are supposed to finalize a deal setting out spending until the end of the decade.

Herman Van Rompuy, the president of the European Council, a body representing E.U. leaders, has warned that the talks could last three days, but officials fear the haggling could go on longer.

Even then, the European Parliament would still need to agree on the final amount.

This article has been revised to reflect the following correction:

Correction: October 30, 2012

An earlier version of this article misstated the upper limit of spending proposed by the European Commission for 2014 and 2020. It is $1.33 trillion, not $133 trillion.


Article source: http://www.nytimes.com/2012/10/31/business/global/wrangling-over-europes-budget-gets-under-way.html?partner=rss&emc=rss