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Little Change in Wall Street Indexes

May 31, 2013 by Leave a Comment

For the first time since November, the Standard Poor’s 500-stock index posted a loss in consecutive weeks. Investors seemed willing to take money off the table after several months of gains.

The S. P. 500 ended May up 2.1 percent, its seventh straight month of gains — the longest streak since 2009. The index is up 14.3 percent in 2013, scoring its best five-month start to a year since 1997. Over the last seven months, it has climbed 15.5 percent.

Trading has been volatile for most of the week on concerns that the Federal Reserve will retreat from its monetary policy, the main engine behind the strong rally in equities this year.

Data on Friday pointed to a soft American economy but failed to quell speculation about possible action by the Fed. Consumer spending fell in April for the first time in almost a year, and inflation pressures were subdued.

But a separate report showed manufacturing rose more than expected in May, reflecting an expansion of business activity after a contraction in April.

“The economic data we have seen over the last week or so has been quite positive,” said Peter Kenny, chief market strategist at Knight Capital in Jersey City. He added: “It also speaks to the fact that tapering or a shift in monetary policy is more likely — the more positive it is. As a result, people are more than happy to ring the register — you never go broke ringing the register on a winning trade.”

Selling accelerated near the market’s close with the rebalancing of the MSCI indexes at the end of the day. Credit Suisse forecast $19 billion in total trading as a result of the rebalancing, with $15 billion related to developed markets.

“What’s happened in the last hour here, there’s some index and month-end rebalancing that accelerated the downturn,” said Bucky Hellwig, senior vice president of BBT Wealth Management in Birmingham, Ala.

The Dow Jones industrial average slid 208.96 points, or 1.36 percent, to close at 15,115.57. The S. P. 500 lost 23.67 points, or 1.43 percent, to finish at 1,630.74. The Nasdaq composite fell 35.39 points, or 1.01 percent, to end at 3,455.91.

For the week, the Dow fell 1.2 percent, the S. P. 500 lost 1.1 percent, and the Nasdaq dipped 0.1 percent. For May, the Dow rose 1.9 percent and the Nasdaq gained 3.8 percent.

The stock market’s advance this year has come largely on supportive monetary policies from central banks around the world, which helped the markets ignore the Wall Street adage of “sell in May, go away” — a historical trend of seasonal weakness. In May 2012, the S. P. 500 fell 6.3 percent.

Energy and health care stocks were among the session’s worst performers, with Pfizer and Exxon Mobil the two biggest drags on the S. P. 500. Pfizer lost 3.6 percent to $27.23, while the S. P. health care sector index dropped 2.2 percent. Exxon Mobil slid 1.8 percent to $90.47. The S. P. energy sector index lost 2 percent.

Palo Alto Networks shares lost 10.8 percent to $48.52 after the company gave an outlook that was below expectations.

The benchmark 10-year Treasury note fell 4/32 on Friday, to 96 19/32, as its yield rose to 2.13 percent, from 2.12 percent late Thursday evening.

Article source: http://www.nytimes.com/2013/06/01/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Wall Street Shares End Flat

February 14, 2013 by Leave a Comment

Stocks were steady on Thursday as renewed worries about Europe overshadowed an encouraging report on jobs in the United States.

Germany’s economy, the largest in Europe, shrank more than expected late last year, and the slowdown deepened the region’s ongoing recession. The report was a troubling sign for the United States because sales to Europe have been a boon for American companies.

The Dow Jones industrial average fell 9.52 points to close at 13,973.39.

After a strong start, the stock market has been steady over the last week with few major events to sway investors. That calm could disappear soon, Doug Cote, the chief market strategist at ING Investment Management, said Thursday.

With recessions in Europe and Japan and weak growth in the United States, he is bracing for some turbulence. “Everybody is too complacent,” Mr. Cote said.

Cisco Systems, the world’s largest maker of computer networking equipment, reported earnings late Wednesday that surpassed Wall Street’s expectations, but the company predicted sales growth that was weaker than previous estimates and its stock fell 15 cents, or 1 percent, to $20.99 a share.

The Standard Poor’s 500-stock index edged up 1.05 points to 1,521.38. The Nasdaq composite index rose 1.78 points to 3,198.66.

The S. P. 500 index has climbed 1.6 percent this month and has gained 6.7 percent for the year.

The number of people applying for unemployment benefits fell to 341,000 last week, the lowest level in three weeks, according to the Labor Department. Besides a few weeks last month that were affected by seasonal trends, that is the lowest level in nearly five years.

Among deals announced Thursday, American Airlines and US Airways agreed to merge, creating the country’s largest airline. Warren E. Buffett and 3G Capital, a private equity firm, also plan to buy the food maker H. J. Heinz for $23 billion. US Airways sank 67 cents to $13.99, while H. J. Heinz rose $12.02 to $72.50.

Constellation Brands was up 37 percent, the biggest gain in the S. P. 500, after reaching a deal with Anheuser-Busch InBev. InBev agreed to sell a brewery in Mexico and rights for Corona and Modelo beer in the United States to Constellation for $2.9 billion. Constellation Brands gained $11.87 to $43.75 a share.

In the market for United States Treasury debt, the yield on the 10-year Treasury slipped to 1.99 percent, down from 2.03 percent late Wednesday.

The 10-year Treasury yield, used to set a variety of borrowing rates, began the year around 1.70 percent and has climbed steadily since then. As worries about a recession ease, traders have shifted money out of the Treasury market, driving yields up.

Whole Foods Market, the grocery chain, slumped 10 percent after trimming its forecasts for sales and earnings this year as a result of its plans to open more stores and put more lower-priced goods on its shelves. Whole Foods lost $9.40 to $87.50.

General Motors fell 3 percent after saying it made money in North America and Asia and nearly doubled last year’s fourth-quarter profit.

Article source: http://www.nytimes.com/2013/02/15/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Pessimism About Fiscal Gridlock Extends a Losing Streak

December 28, 2012 by Leave a Comment

Stocks fell for a fifth day, the longest such streak since July, on concern that lawmakers in Washington would fail to reach a budget deal before a year-end deadline.

The Dow Jones industrial average dropped 158.20 points to 12,938.11, with losses accelerating in the last 20 minutes of trading as reports circulated that President Obama would not be making a new budget proposal in a meeting with Congressional leaders.

The Standard Poor’s 500-stock index fell 15.67 points to 1,402.43, its longest losing streak in three months, and the Nasdaq composite index fell 25.59 points to 2,960.31.

“The reality, late in the day, is that a deal is just not going to get done,” said Ryan Detrick, a senior technical strategist at Schaeffer’s Investment Research. “We could be greeted by a big sell-off at the start of January.”

President Obama returned from a Christmas break in Hawaii to meet with Congressional leaders at the White House in the hopes of preventing across-the-board tax increases and government spending cuts beginning Jan. 1. Economists have said that if those measures are put in place, it could push the economy back into recession.

Traders have been focusing on Washington and the budget negotiations since the Nov. 6 elections returned a divided government to power. Stocks closed lower Thursday but erased most of an early loss after Republicans said they would reconvene the House of Representatives on Sunday.

“I can’t wait till this is done, so we can start talking about markets again and not just about politics,” said Doug Cote, chief market strategist at ING Investment Management.

Mr. Cote said that he expected that lawmakers would not reach a deal before the deadline and that when people assessed the extent of tax increases on the way, “the market is going to reel.” Mr. Cote also expected slowing earnings growth to drag down stocks.

Despite the fiscal gridlock in Washington, major stock indexes are holding on to gains for the year. The Dow is up 5.9 percent, the S. P. 500 is 11.5 percent higher, and the Nasdaq is up 13.6 percent.

Stocks rose in 2012 on optimism that a recovery in the housing market, coupled with an improving job market, would support economic growth. The Federal Reserve had also extended its bond-buying program, which is intended to lower borrowing costs and encourage spending and investment.

While stocks declined on Friday, reports suggested the outlook for the economy was improving.

A measure of Americans who signed contracts to buy homes increased last month to its highest level in two and a half years, the latest sign of improvement in the once-battered housing market. The National Association of Realtors said Friday that its seasonally adjusted pending home sales index rose to its highest reading since April 2010.

The Institute for Supply Management’s Chicago-area purchasing managers index for December came in at 51.6, beating estimates for a gain to 51.

Bond prices rose as investors moved money into defensive investments. The Treasury’s benchmark 10-year note rose 9/32 to 99 10/32 and the yield fell to 1.70 percent from 1.73 percent late Thursday.

Stock in Hewlett-Packard, the computer and printer maker, fell 36 cents, or 2.6 percent, to $13.68 after the company said the Justice Department was investigating its software unit Autonomy. H.P. bought Autonomy for $10 billion in 2011 and has accused the company’s former management of falsifying its accounting before the acquisition.

H.P. has lost almost half of its market value this year, making it the biggest decliner among the 30 stocks in the Dow average.

Barnes Noble shares rose 62 cents, or 4.3 percent, to $14.97 after the British publishing and education company Pearson said it was making an $89.5 million investment in the company’s Nook Media division.

Article source: http://www.nytimes.com/2012/12/29/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Fundamentally: A Stock Slide That Resulted From Rational Decisions

November 25, 2012 by Leave a Comment

SOME people say it’s a post-election slump. Others call it the fiscal-cliff sell-off.

But no matter how you characterize the recent stock slide — which shaved more than 700 points off the Dow Jones industrial average in a matter of days, before the market recovered last week — one label that doesn’t fit is “panic selling.”

John Stoltzfus, chief market strategist at Oppenheimer Asset Management, points out that in previous market pullbacks in recent years, like the 2011 correction that sent the Standard Poor’s 500-stock index down more than 19 percent, “the markets seemed overly exuberant to the down side,” Mr. Stoltzfus said.

This time, he said, “the selling appears to be extraordinarily rational and levelheaded.”

How he can tell? For starters, if this were a classic, fear-driven, “risk off” trade, investors would have rushed into the most conservative investments — like Treasury securities and defensive stocks that pay high dividends.

Yet one of the worst-performing groups in this sell-off has been the high-dividend telecommunications sector. Since the downturn began about a month ago, it has lost 4 percent, on average, while the overall S. P. 500 is off about 3 percent.

Mr. Stoltzfus says one reason for the poor performance of telecoms may have to do with valuations.

Telecommunications shares, like dividend-paying stocks in general, have grown in popularity in recent years — so much so that the average telecom stock now trades at a historically high price-to-earnings ratio of 22, based on the trailing 12 months of earnings. By comparison, the P/E ratio for the overall S. P. 500 is below 14.

IT’S not just telecoms. Utility stocks, another defensive group, are down 9 percent over the past month. Like telecoms, utilities have been trading at historically high valuations.

What’s more, utilities are one of just three sectors where profits are down in the third quarter, compared with the period a year earlier. The other two are energy and basic materials — and they also happen to have performed worse than the broad market over the past month.

In the meantime, “you haven’t seen massive selling among the deep cyclical stocks like Caterpillar,” said Pat Dorsey, president of Sanibel Captiva Investment Advisers. “People haven’t taken them out to the woodshed, which indicates a degree of rationality.”

James W. Paulsen, chief investment strategist at Wells Capital Management, agrees. “The performance of cyclicals and defensive stocks is almost the opposite of what you’d expect to see in a risk-off market,” Mr. Paulsen said. It shows that this time around, investors are reacting more to the fundamentals than to sheer fear.

He added that after posting spectacular gains over the past 12 months, “the market was simply looking to consolidate.” The S. P. is still up nearly 30 percent since last October.

And with the crisis in Europe having quieted down, at least for the moment, and with signs that China’s economic slowdown may be stabilizing, Mr. Paulsen said, investors have used the timing of the fiscal-showdown debate in Washington to take some profits.

Even here, though, market strategists say investors have been reacting rationally.

For instance, it remains to be seen whether the White House and Congress will agree about what to do about the automatic tax increases and spending cuts that are set to kick in at the start of 2013.

If nothing is done, taxes on long-term capital gains, for example, are set to go back up to 20 percent from today’s maximum rate of 15 percent. But even if Washington agrees to hold the line on the capital gains tax per se, the effective rate on most investment income of high-earner households is still expected to tick higher. As part of the Affordable Care Act, such income in those households will be taxed at 3.8 percent. Add that to the basic capital gains rate, and the tax for high earners will rise to 18.8 percent or 23.8 percent next year — depending on how the talks go.

“People who bought stocks a year ago and are looking at 30 percent gains are also looking at a whole lot of uncertainty,” said Duncan W. Richardson, chief equity investment officer at Eaton Vance. So the thinking lately among investors who need to raise cash, he said, is “to do some tax-gain selling rather than the traditional tax-loss selling they normally do at the end of the year.”

Paul J. Lim is a senior editor at Money magazine. E-mail: fund@nytimes.com.

Article source: http://www.nytimes.com/2012/11/25/your-money/a-stock-slide-that-resulted-from-rational-decisions.html?partner=rss&emc=rss

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Stocks Slip After Jobs Report

October 7, 2011 by Leave a Comment

The Labor Department reported that the American economy last month added more jobs than expected, easing investors’ fears that the country was slipping into recession. But Fitch downgraded its rating on the government debt of Spain and Italy, sending the stock market and the euro marginally lower in afternoon trading.

The Standard Poor’s 500-stock index closed down 0.8 percent, while the more narrow Dow Jones industrial average fell 20.21 points, or 0.2 percent, to 11,103.12. The technology-heavy Nasdaq composite index lost 1.1 percent. Yields on 10-year United States Treasury bonds rose to 2.06 percent.

The Labor Department said that American employers added 103,000 jobs in September, while the unemployment rate remained at 9.1 percent. Some investors pointed to gains in average hourly earnings and an uptick in hiring of temporary workers as signs in the report of an improving outlook in the labor market.

Still, economists cautioned that the numbers were weak and noted that the report seemed positive only in light of low expectations.

The jobs report shows an economy that is “neither reaccelerating nor shifting into recession,” wrote Steve Blitz, senior economist for ITG Investment Research, in a report to investors. Mr. Blitz said the American economy remained particularly vulnerable because of its reliance on exports during a time of global economic uncertainty.

“The employment data in the coming months should be more of the same, which isn’t much, and if growth starts to decelerate more rapidly around the world, negative jobs numbers are more likely than not,” he wrote.

The jobs report, coupled with somewhat optimistic reports on same-store retail sales and auto sales for September, quelled fears of an immediate recession, said David Kelly, chief market strategist for JPMorgan Funds, but traders were likely cashing in on gains from earlier in the week.

“With this dollop of good news, it’s natural for people to take money off the table,” he said. “But when you’re investing, rather than trading, you do need to look at the fundamentals. The fundamentals do justify both higher interest rates and higher stock prices than prevail today.”

Fitch downgraded its rating on Italian debt by one level, following similar moves by the other major rating agencies in recent weeks. It also lowered its rating on Spain two levels. In both cases, the agency cited concerns about debt coupled with low growth. The outlook on both countries was negative.

The move weighed on Wall Street, particularly on banks, whose exposure to the debt crisis in Europe is unclear. Shares for JP Morgan slipped 4.1 percent, Citibank shares dropped 3.9 percent and Bank of America dropped 4.3 percent.

The value of the euro also fell in the wake of Fitch’s action, to $1.3385 from $1.3437.

Marc Chandler, an analyst at Brown Brothers Harriman, said that investors would continue to put more weight on the situation in Europe than on the domestic economy.

“The U.S. is not the crosshairs,” he said. “Europe is in the crosshairs.”

European markets, which closed before the downgrades, were moderately higher. Governments there are simultaneously contemplating making banks take a bigger write-down on Greek debt, taxing their financial transactions and boosting their capital base.

The Euro Stoxx 50 index of blue chip shares closed up 0.9 percent for the day and 4.1 percent for the week. The FTSE 100 in London gained 0.2 percent to end the week up 3.4 percent, while the DAX in Frankfurt gained 0.5 percent on Friday and 3.2 percent for the week.

In another downgrade, Moody’s Investors Service cut its ratings on 12 British financial institutions, including Lloyds TSB Bank and Royal Bank of Scotland, saying that it believed they were less likely to be bailed out than European banks in the event of their failure. Lloyds shares were down 2.7 percent, and the Royal Bank of Scotland were down 3.3 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=2416c3dcf324b373b007cc40723eadc1

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Economix Blog: A Recession in Our Minds

October 6, 2011 by Leave a Comment

Are we in a recession in our minds?

Americans certainly seem unhappy about the prospects for the economy. Consumer sentiment remains near its lowest levels since 2009. And those daily indicators of investor confidence — the markets — have painted a very pessimistic picture; the Standard Poor’s 500-stock index, seen as a broad indicator of the market, is down 8 percent for the year.

But economic data based on what people are actually doing tells a slightly different story. There is no measure by which the economy seems robust, but economic indicators published recently — measuring activity in manufacturing and service, vehicle sales and construction spending — were relatively positive, beating analysts’ expectations. By most measures, the economy is growing, while measures of the national mood are at recession levels.

Jeffrey Kleintop/LPL FinancialA comparison of the University of Michigan’s Consumer Sentiment Index and the Leading Economic Index shows a wide gap between consumers’ attitudes and economic activity.

This disconnect is illustrated starkly in an analysis by Jeffrey Kleintop, chief market strategist for LPL Financial. Mr. Kleintop compared the University of Michigan’s Consumer Sentiment Index, which surveys people about their outlook on the economy, and the Conference Board’s Leading Economic Index, which looks primarily at hard economic indicators like how many hours people are working and what manufacturers are ordering. The gap between these two indexes is at a record high, a mirror image of the late 1990s, when optimism about Silicon Valley inflated the tech bubble.

So why do people feel the economy is doing so much worse than it is? In part, say some economists, it is because of increased cynicism about the ability of the president and Congress to handle the economy. Indeed, the University of Michigan’s consumer confidence index shows a sharp drop this summer during the debt crisis debate. While it has improved slightly since then, it still remains at its lowest levels since early 2009. Economists say that the lack of confidence is also driven by structural changes to the American economy: unemployment has remained high even as the economy has grown slowly, while wages have stagnated for those who are working.

On Friday, the Labor Department will release its monthly report on jobs, which has a particularly visceral impact on ordinary Americans. Last month, the report showed zero job growth nationwide.

“There’s a lot of economic indicators like industrial production, or durable goods orders, that economists put a lot of weight on. Individuals just have no idea what they mean,” Mr. Kleintop said. “When you talk about a change in jobs they get that, they understand what it means. It’s very intuitive. And they take that information and they extrapolate that to everything.”

Another bad report on job growth on Friday will make it hard for consumers and businesses to gain the confidence they need to spend money, analysts say.

There is some evidence that people are capable of saying one thing and doing something else. For instance, even in these times of gloom, sales of many items that could be considered indulgences are rising. On Thursday, Nordstrom and Saks Fifth Avenue said their monthly same-store sales were helped by sales of luxury items. But some experts say they believe that a negative outlook on the economy is ultimately a self-fulfilling prophecy.

“If you talk about recession enough, you can have a recession,” said Andrew Goldberg, a strategist with J.P. Morgan Chase Asset Management.

The stock market can also be pushed downward by a collective lack of confidence, and many analysts describe the market’s behavior in recent weeks as “emotional,” rather than a rational response to the news investors were getting about the economy. The negativity of investors is largely being driven by events in Europe, where policy makers’ lack of decisive action to help Greece confront its debt problems has led to acute fears of a widespread financial crisis.

Attitudes on Wall Street eventually filter back to those on Main Street. According to an analysis by JPMorgan Chase, a 10 percent year-over-year decrease in the S.P. 500 amounts to a decline of 2.7 percent in the University of Michigan’s consumer sentiment index.

A bad stock market is particularly worrisome because it affects the attitudes of those who have the most money to spend, Mr. Goldberg said. He noted that households whose incomes are in the top 20 percent of the country own about 80 percent of the shares traded on American markets. They also make up about 60 percent of consumer spending, a major driver in the economy. So if this group feels poorer, it has a disproportionate impact, potentially dragging down the population as a whole.

Article source: http://feeds.nytimes.com/click.phdo?i=73930a8cb0f5327866ff6c7fe2539db9

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Stocks and Bonds: Wall Street Closes Sharply Lower

October 4, 2011 by Leave a Comment

Shares in every major sector spiraled downward on Monday as the market dropped to its lowest point in over a year amid anxiety over the European debt crisis and the struggling United States economy.

The nation’s biggest banks were once again hard hit, with Citigroup and Bank of America plunging almost 10 percent while shares of regional and community banks also plummeted. American Airlines fell by almost a third to just below $2 on speculation that it could declare bankruptcy.

The sharp sell-off brought Wall Street to the edge of a bear market — generally a fall of 20 percent from a recent high — as the Standard Poor’s 500-stock index showed a 19.4 percent decline since its April 29 high. That, in turn, could unleash yet another wave of negative news that could scare investors and push stocks even lower.

“People are really panicked, so any more incremental news in that direction, bad headlines if you will, are certainly things that may spur momentum to the downside,” said Jeffrey Kleintop, chief market strategist for LPL Financial.

On Monday, the S. P. 500 fell 2.85 percent, or 32.19 points to 1,099.23. The Dow Jones industrial average was off 258.08 points, or 2.36 percent, to close at 10,655.30. The Nasdaq composite index dropped 3.29 percent. Major stock markets in Europe and Japan also closed lower.

Seeking safer assets, investors flocked to Treasury bonds. Yields on the benchmark 10-year note fell to 1.75 percent from 1.92 percent late Friday. Fears that the problems in Europe might spread across the Atlantic and push an extremely fragile economy back into a recession have been looming for more than a year. With the job market still weak and the confidence of businesses and consumers in tatters, investors seem to be lurching from one piece of bad news to another.

Through the summer, for every big gain in stocks there were twice as many big losses, with 13 days of drops of 2 percent or more compared with seven days of gains of at least 2 percent. The rises were often driven by hopes that the European debt crisis could be contained, but then were wiped out by fears of cascading defaults and bank runs, and no real solution to too much debt and too little growth in Europe.

Even glimmers of hope, like reports on Monday showing stronger-than-expected manufacturing and construction data, were overshadowed by the unknowns about what will happen in Europe.

“That uncertainty has the markets completely shell-shocked, in jitters,” said Nariman Behravesh of IHS Global Insight.

In Europe, stock markets closed lower as finance ministers from the euro zone countries met Monday to try to approve a new installment of aid to Greece. But tension over the country’s inability to impose tough structural changes has stalled the talks, and no decision is expected this week.

Investors are also awaiting a meeting of the European Central Bank on Thursday, and many expect the bank to cut interest rates. Analysts say such action could push the euro lower and perhaps stave off a sharper decline in growth.

But fears about European contagion again weighed heavily on the major American banks, whose shares have fallen more than 35 percent this year.

“It’s just painful. Every day seems like it is the worst,” said Frederick Cannon, the chief equity strategist at Keefe, Bruyette Woods in New York. “As long as U.S. financials are tied to the comings and goings of Europe, it is going to be a roller-coaster ride without an end to it.”

Wall Street firms were pounded as investors worried that they may have large, indirect exposures to the Continent’s fiscal troubles because of the business they do with major European companies and banks. On Monday, Morgan Stanley’s shares fell almost 8 percent after plunging more than 10 percent on Friday. Shares of Goldman Sachs fell almost 5 percent Monday.

In another sign of investor fears, credit-default swaps on bonds backed by both Morgan Stanley and Goldman Sachs surged on Monday to their highest levels since the 2008 financial crisis. According to Markit, a credit derivatives data provider, investors are now paying $558,000 to insure against the risk that $10 million of Morgan Stanley bonds might default. They are paying $348,000 for similar protection for Goldman Sachs debt.

More domestically focused banks were not spared. Amid the onslaught of bad economic news — and fears of another weak jobs report on Friday — investors were dubious about the financial industry’s ability to improve revenue. They are also concerned that Federal Reserve policy measures to keep interest rates near zero for the next two yeas will ravage their results. Even generally well-run institutions — like JPMorgan Chase, Bank of New York Mellon, PNC Financial, U.S. Bancorp and Wells Fargo — fell 3 to 5 percent.

Airline stocks were also battered on Monday amid concerns consumers and businesses will cut back on travel spending in a deeper downturn. Traders started circling AMR, the parent company of American Airlines, because of rumors that it may be headed for bankruptcy.

An analyst report noted that an unusually large number of pilots have retired in recent months, contributing to AMR’s price drop of more than 33 percent, to $1.98. Shares of Delta Air Lines and United Continental Holdings fell about 11 percent. The U.S. Airways Group stocks sank almost 16 percent.

David Jolly, Stephen Castle and Bettina Wassener contributed reporting.

This article has been revised to reflect the following correction:

Correction: October 3, 2011

Because of an editing error, an earlier version of this article misstated the price of oil. It is trading slightly above $77, not $777.

Article source: http://feeds.nytimes.com/click.phdo?i=553fda21528c7ff61d8cc188e6aa70b4

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Stocks Fall After G.D.P. Data

July 31, 2011 by Leave a Comment

A disappointing report on the nation’s second-quarter economic activity spurred a steep initial decline in stocks in the United States on Friday, adding to the malaise in the markets as investors wait for an outcome of the debt ceiling debate in Washington.

The three main indexes raced lower by about 1 percent shortly after the market opened, responding to the Commerce Department’s report that gross domestic product grew at an annual rate of 1.3 percent in the second quarter, well below analysts’ forecasts. The department also revised the first-quarter annual rate to 0.4 percent from earlier estimates of 1.7 percent.

But through the course of the trading session, stocks retraced some ground, possibly in response to the prospect of a resolution related to the other main market factor on Friday: the debt ceiling impasse.

At the close, the Dow Jones industrial average, retreating for the sixth consecutive trading day, was down 96.87 points, or 0.79 percent, to 12,143.24.

The Standard Poor’s 500-stock index, a broader measure of the market, lost 8.39 points, or 0.65 percent, to 1,292.28. The Nasdaq composite index fell 9.87 points, or 0.36 percent, to 2,756.38.

The broader market as measured by the S.P. ended the week down about 3.9 percent, its largest weekly loss in more than a year. It also recorded its third consecutive monthly loss. The last time the broader market closed lower for three straight months was in 2008, for the months of September, October and November.

Commerce Department revisions to earlier G.D.P. figures suggested that the recovery was weaker than initial estimates had let on. Consumer spending, accounting for about 70 percent of G.D.P., was virtually unchanged in the second quarter.

Stephen Wood, Russell Investments’ chief market strategist, noted that many economists had expected a slow second quarter, for reasons including severe weather and the supply chain disruptions that followed the earthquake in Japan.

But changes to the G.D.P. estimates for the first quarter and the quarters before it weighed especially heavily on sentiment.

“We were clearly looking at a second-quarter slow patch,” he said. “The revision to Q1 caught the market by surprise.”

The lack of a strong recovery highlights the difficulties Congress is facing in its deadlocked deliberations to raise the debt ceiling for the American government because some businesses are delaying decisions amid the uncertainty. A recovery in the job market and consumer spending is seen as crucial in stimulating the pace of the economy.

While it was another day of selling, investors had few alternatives for their money.

“The debt ceiling debate, if you can call it that, is an ongoing drama,” Mr. Wood said. “Where do you go given that Treasuries are in the teeth of the debt ceiling negotiations? This is uncharted waters.”

Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, described the G.D.P. report as “roundly disappointing.”

He also said that the stalemate in the debate in Congress was having an impact on the markets.

“The Treasury market is trading higher this morning as yet another day goes by without a viable plan for resolving the debt ceiling impasse,” said Mr. Giddis in an early commentary, referring to prices.

As Treasury prices rose, the yield on the benchmark 10-year note fell sharply to 2.79 percent in late afternoon trading, compared with 2.96 percent late Thursday.

Lawmakers have to reach a deal by Aug. 2 or the government might face a shortfall and be unable to meet its financial obligations.

Declines in European markets steepened after the G.D.P. report was released in the United States. The FTSE 100 in London fell 0.99 percent to 5,815.19, the DAX in Frankfurt was down 0.44 percent to 7,158.77 and the CAC 40 in Paris fell 1.07 percent to 3,672.77. The euro rose to $1.439.

Catherine Rampell contributed reporting from Washington.

This article has been revised to reflect the following correction:

Correction: July 29, 2011

An earlier version of this article referred imprecisely to the number of consecutive trading days the Dow Jones industrial average had declined. Friday was the sixth.

Article source: http://feeds.nytimes.com/click.phdo?i=b8199419c85a214e8d218391640020f2

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Debt Impasse Fuels Sharp Fall in Stocks

July 27, 2011 by Leave a Comment

The Dow Jones industrial average closed down 198.75 points, or 1.59 percent, to 12,302.55. The broader Standard Poor’s 500-stock index lost 27.05 points, or 2.03 percent, to 1,304.89, and the technology-stock-heavy Nasdaq composite index fell 75.17, or 2.65 percent, to 2,764.79.

The United States has one week to reach a deal to increase its $14.3 trillion debt limit or face not being able to pay all of its bills.

Republican leaders had promised a vote on Wednesday in the House of Representatives on a plan to increase the debt limit and avoid America’s first-ever default. But the vote was put off until at least Thursday.

Though most investors think a last-minute deal to raise the debt limit will eventually emerge, the difficulty of reaching an agreement may leave a lasting impression on investor sentiment, some traders fear. That was evident in the price of gold, widely used as a haven investment; it reached a nominal record high above $1,625 an ounce on Wednesday.

A worry in the markets is that only a short-term deal will be struck, with a promise to revisit the issue later.

“Investors remain hopeful that a deal can be made in time, but the longer the delay goes on, the more entrenched investors’ fears become,” said Joshua Raymond, chief market strategist at City Index.

In Europe, the FTSE 100 index of leading British shares and the DAX in Germany each fell about half a percent. The CAC 40 in France fared worse, trading 0.90 percent lower.

A raft of disappointing earnings in Europe did nothing to lift the mood. Banco Santander of Spain, the French car company Peugeot and the German pharmaceutical maker Merck were all trading sharply lower after their latest earnings updates.

Ben Critchley, a sales trader at IG Index, said investors would be keeping a close watch on the Congressional testimony of senior staff members of credit rating agencies in Washington on Wednesday.

“This may offer further direction on the likelihood of a downgrade for the U.S.,” he said.

In the currency market, the prospect of a potential American default also remained the main consideration. Not surprising, the dollar has drifted lower for most of the last few days.

The dollar, however, was managing to hold relatively steady on Wednesday, particularly against the euro. The euro was trading lower, at $1.4355, while the dollar was 0.3 percent lower, at 78.07 yen.

The yen’s renewed strength against the dollar has reignited talk that the Bank of Japan would intervene again to stem the export-sapping rise in its currency. In March, after a devastating earthquake and tsunami, the Bank of Japan and other major central banks around the world intervened in the markets when the dollar was trading around the 76-yen mark.

The yen’s spike weighed on the country’s Nikkei 225 stock average, as much of Japan’s economic well-being is dependent on the performance of its exporters. The Nikkei closed 0.5 percent lower, at 10,047.19 points.

Elsewhere, the Kospi in South Korea edged up 0.3 percent to finish at 2,174.31 points, while the Hang Seng index in Hong Kong fell 0.1 percent, closing at 22,541.69 points.

Chinese shares gained strongly as investors snapped up bargains two days after a sell-off led by railroad shares after a deadly train crash in the country’s east.

The Shanghai composite index gained 0.8 percent, closing at 2,723.49 points, and the smaller Shenzhen composite index gained 1.7 percent, to end at 1,190.83 points.

Oil prices dropped to near $99 a barrel after a report showed American crude supplies had unexpectedly risen last week, suggesting that demand might be weakening. The main New York oil contract was down $2.20 to $97.39 a barrel, in electronic trading on the New York Mercantile Exchange.

Article source: http://www.nytimes.com/2011/07/28/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

U.S. Markets Rise on Home Price Data

June 28, 2011 by Leave a Comment

Home prices increased in April in 13 of the 20 cities tracked by the Standard Poor’s Case-Shiller index.

In afternoon trading on Tuesday the Dow Jones industrial average was up 118 points, or 1 percent, at 12,161. The Standard Poor’s 500-stock index was up 13 points, or 1 percent, at 1,293. The Nasdaq composite index rose 32 points, or 1.2 percent, at 2,721 points.

Global stocks also traded higher as investors awaited a critical Greek parliamentary vote that could go a long way to determining whether the country avoids a default on its debts.

Investors were hoping that Prime Minister George Papandreou of Greece will muster enough votes to get the 28 billion euro ($40 billion) austerity bill through Parliament in a vote Wednesday.

A majority of the 300 deputies must approve the spending cuts and tax increases for the country to get its next batch of bailout funds — worth 12 billion euros — from last year’s 110 billion euro bailout package. But the measures are proving unpopular, and Greek unions began striking Tuesday in the hopes of pressuring lawmakers to vote against the package.

If the package fails, Greece will face a default on its debts even though French banks are planning to accept slower repayment of their holdings of Greek bonds.

“Despite today’s general strike, there still seems to be an optimistic tone that the austerity measures will be passed tomorrow and the bailout can move to the next stage,” said David Jones, chief market strategist at IG Index. “There is still a lot that could go wrong, but with the way markets have performed over the last couple of days, some are hoping that finally sentiment has turned a corner and it is time for a recover.”

A calmer mood over the Greek debt crisis has helped shore up the euro over the past few sessions. It was trading higher Tuesday afternoon, up 0.5 percent to $1.4349.

Earlier in Asia, Japan’s Nikkei 225 climbed 0.7 percent to close at 9,648.98 but shares on South Korea’s Kospi fell 0.4 percent to 2,062.91. Hong Kong’s Hang Seng gained 0.1 percent to 22,061.78. Australia’s S. P./ASX 200 closed 0.3 percent higher at 4,474.30.

Mainland Chinese shares rose too with the Shanghai Composite Index edging up less than 0.1 percent higher to 2,759.20 while the Shenzhen Composite Index gained 0.3 percent to 1,152.00.

Oil prices clawed back some ground lost in the wake of last week’s decision by the International Energy Agency to release 60 million barrels of crude over 30 days. Benchmark oil for August delivery was up $1.05 to $91.66 a barrel on the New York Mercantile Exchange.

Article source: http://feeds.nytimes.com/click.phdo?i=6248f0f9175a9ebdc4febe2ef856b299

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