March 24, 2023

G.D.P. Report Gives Stocks a Lift

Stocks on Wall Street rose on Thursday on strong economic data and a possible large deal between Vodafone and Verizon, while a potential Western military strike on Syria appeared to be delayed for now.

In afternoon trading the major indexes were off their highs for the day: the Standard Poor’s 500-stock index was 0.3 percent higher, the Dow Jones industrial average was 0.2 percent higher and the Nasdaq composite was up 0.8 percent.

Data showed the American economy grew more quickly than expected in the second quarter thanks to a surge in exports. The strong numbers, alongside data suggesting a strengthening in job gains in August, could bolster the case for the Fed to wind down a major economic stimulus program that has been a pillar of the recent rally in equities.

The numbers show the economic recovery may have started in the first half of the year, and the economy is strong enough to allow for the Fed to scale back its stimulus, said Philip J. Orlando, chief equity market strategist at Federated Investors in New York.

Shares of the Vodafone Group traded in the United States jumped 7.5 percent after the company said it was in talks with Verizon Communications to sell its 45 percent stake in their joint venture, Verizon Wireless. Verizon shares rose 2.8 percent.

Merger and acquisition activity “tells us companies have a lot of firepower, the ability to use cash, a lot of debt they could utilize and currency for stock deals, all that is positive” for the market, Mr. Orlando said.

European stocks ended the trading day higher. London’s FTSE 100 gained 0.8 percent, the DAX in Frankfurt was 0.5 percent higher and Paris’s CAC 40 rose 0.7 percent.

Asian markets closed mostly higher, with Japan’s Nikkei up 0.9 percent and the Hang Seng in Hong Kong gaining 0.8 percent. But the Shanghai Composite fell 0.2 percent.

The dollar rose against the yen, though hard-hit currencies in India, Brazil and Indonesia bounced higher against the dollar as their central banks moved to stem capital outflows.

In the oil markets, the reduced likelihood of an immediate major supply disruption allowed United States benchmark oil to drop, but the price picked up in afternoon trading, down just 14 cents a barrel, to $109.96, after its near 4 percent gain over the last two days.

“The market is reassessing the supply implications of the conflict in Syria,” said Eugen Weinberg, global head of commodities at Germany’s Commerzbank.

Gold eased 0.4 percent, to $1,412.40 an ounce, after reaching a three-and-a-half-month high in Wednesday’s flight to safety.

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Chinese Economy Expanded at End of 2012, Data Shows

HONG KONG — The giant Chinese economy picked up steam during the last few months of 2012, closely watched data from Beijing on Friday confirmed. But at the same time the figures underlined the view that the pace of future growth is likely to remain well below that seen in recent years.

China’s gross domestic product expanded 7.9 percent during the final quarter of last year, compared to a year earlier — slightly better than expectations, and significantly above the 7.4 percent pace recorded during the previous quarter.

Separate data for the month of December also came in a touch better than analysts had forecast: Retail sales expanded 15.2 percent from a year earlier, and industrial output grew 10.3 percent. Both figures were slightly better than those recorded in November.

The growth data “was the best we could have wished for,” Dariusz Kowalczyk, an economist at Crédit Agricole in Hong Kong, commented in a note. The figures “should put at rest any remaining doubt about China escaping a hard landing,” he added, referring to widespread fears last year that China could slow down sharply as the global turmoil, feeble domestic demand and a weak property market weighed on growth.

Stock market investors also welcomed the data. The Shanghai composite index rose 0.6 percent by around lunchtime, and in Hong Kong, the Hang Seng climbed 0.8 percent.

China’s mild re-acceleration has been helped by a gradual recovery in overseas demand for Chinese-made goods in recent months, as well as a string of economic stimulus measures announced by the government over the course of last year. These have helped put a floor under the beleaguered property market, and ramped up infrastructure construction activity, in particular.

The batch of data released by the Chinese statistics bureau on Friday also underlined that China’s once red-hot economy has now settled into a much slower pace of expansion.

The head of the statistics authority, Ma Jiantang, acknowledged as much at a press conference in Beijing: “I think you could use these two sentences to give a relatively concise assessment of economic performance in 2012,” he said. “First, national economic performance maintained stability while slowing; second, economic and social development made advances while maintaining stability.”

Annual expansion has slowed to around 8 percent — the pace for 2012 was 7.8 percent, down from the 9.3 percent in 2011 and the 10.4 percent in 2010 — and many economists expect a similar or slightly better pace for 2013.

Xianfang Ren, an economist at IHS Global Insight in Beijing, commented that Friday’s data confirmed “that the worst is probably over for the economy and that China has avoided a hard landing,” But it was “quite a narrow escape.” The economy will likely be “wiggling within quite a narrow band of growth rates in 2013, as the upside pull only marginally outweighs the downside drag,” Ms. Ren added in an e-mailed note.

Many analysts believe that the economy’s momentum may ease again later this year if the government alters policies in a bid to prevent inflation and property prices from heating up again.

Regulators also are watching out for potential problems caused by lending activities outside the regulated banking system, which have been an important driver of economic activity.

The growth of such non-bank credit, commented Yao Wei, an economist at Société Générale in Hong Kong in a recent research report, “is likely to slow once regulators respond seriously to risks rising from the shadow banking system.” Along with tighter property policies, Ms. Yao said, this factor is likely to cause the recovering momentum to fade late in the second quarter of this year.

Longer term, analysts believe the pace is likely to slow even further over the coming decade as the authorities pursue a shift towards higher-quality growth, and grapple with the gradual aging of the country’s population.

“China’s working-age population experienced its first absolute decline for some considerable time, and we are certainly taking this issue seriously,” Mr. Ma, the statistics bureau head, said Friday.

“For quite some time to come, and at least up until 2030, China’s working-age population aged from 15 to less than 60 years old will, I think, steadily and gradually shrink,” Mr. Ma said. This, he added, meant that it was important for China to raise labor productivity.

Chris Buckley contributed reporting.

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DealBook: U.S. Markets Closed on Tuesday

The New York Stock Exchange, which did not open Monday.Richard Drew/Associated PressThe New York Stock Exchange, which did not open Monday.

7:32 p.m. | Updated

Even in an era of widespread electronic trading, markets and those who tend to them are still proving vulnerable to the fury of a major hurricane.

Stock markets in the United States will be closed again on Tuesday for a second day without trading as Hurricane Sandy’s approach intensified the wind and rain in the New York area.

The New York Stock Exchange, the Nasdaq stock market and BATS Global Markets said in separate statements that they had agreed to close, after consulting with other exchanges and clients. The N.Y.S.E. added that it planned to operate on Wednesday, pending developments in weather conditions.

The stoppage is the first time the markets have been closed for consecutive days because of weather since a blizzard forced the N.Y.S.E. to close for two days in 1888. And it remained the first unscheduled market closure since the Sept. 11 terrorist attacks.

Markets in Europe and Asia were roughly flat on Monday. The FTSE 100 index closed down 0.2 percent, at 5,795, while the Hang Seng was down 0.2 percent at 21,511.05.

Hurricane Sandy Multimedia

Over all, a second day of closed markets could have a relatively limited effect on trading when business resumes, according to Larry Tabb, the founder and chief executive of the Tabb Group, a financial research firm.

An extended halt in trading could create some pent-up demand among traders that might lead to some higher volatility, he said. That could mean stocks of companies like insurers could see swings in their prices. But he predicted a short-lived effect on the markets.

In a research note published on Monday, Sam Stovall, the chief equity strategist for Standard Poor’s Capital IQ, said Hurricane Sandy would most likely not have a lasting effect on market performance. He noted that the S. P. 500-stock index rose 4 percent in the three months after Katrina, the costliest hurricane in American history.

“History says that hurricanes typically don’t trigger market declines,” Mr. Stovall wrote. “Equities are more likely driven by wider-reaching global events than localized natural disasters.”

The decision to keep the American exchanges closed came as little surprise, with market operators having already hinted that they would stay closed as the storm’s impact intensified. And the Securities Industry and Financial Markets Association, or Sifma, recommended that United States bond markets stayed closed on Tuesday as well.

The exchange closings have also meant that companies seeking to go public may need to delay their initial public offerings. That group includes Restoration Hardware, which had been hoping to raise as much as $124.8 million in its market debut.

And while 234 million shares of Facebook became eligible for trading on Monday, employees who held the stock were unable to sell. The company had moved up the expiration of a so-called lockup on the shares to help bolster staff morale.

The CME Group said that it would open its United States index futures and options markets for overnight trading, closing them at 9:15 a.m. Eastern time on Tuesday. It would also keep closed the physical trading floor of the Nymex commodities exchange, which was in a mandatory evacuation area in Lower Manhattan, but electronic trading of energy and metals would continue. On Monday, crude oil prices fell 74 cents, or 1.3 percent, to finish at $85.54 a barrel in Nymex trading.

Representatives for the exchanges emphasized that the safety of their employees was paramount, relying on skeleton crews to run critical operations. The companies have been consulting with regulators like the Securities and Exchange Commission and the Federal Reserve Bank of New York, as well as clients and Sifma.

While the N.Y.S.E. initially prepared to open for electronic trading on Monday, the exchange got some resistance from brokerages wary of using the emergency plan, which was last tested in March, according to people briefed on the matter. Market operators, trading firms and regulators ultimately decided to err on the side of caution.

A continued stoppage in trading is expected to have some costs for exchanges like the N.Y.S.E. and the Nasdaq. Richard Repetto, an analyst at Sandler O’Neill Partners, estimated in a research note that stock and option exchanges would lose about $1 million in transaction fees for every day that they are closed.

That loss of revenue will probably not hurt those companies’ earnings, Mr. Repetto said, though he added that he did not factor in lost revenue from exchanges’ other businesses.

Other Wall Street firms made contingency plans as well.

Goldman Sachs advised employees in an internal memorandum to stay home on Tuesday, and said that its offices at 200 West Street and 30 Hudson Street would be closed.

Citigroup said that its offices in evacuated parts of Lower Manhattan would remain closed.

Most of JPMorgan Chase’s offices will remain open, with smaller staffing. But the bank said it would close all of its retail branches in New York, New Jersey and Connecticut on Tuesday.

A version of this article appeared in print on 10/30/2012, on page B5 of the NewYork edition with the headline: Storm Forces Markets to Remain Closed.

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Asian Stocks Fall After S.&P. Warning

Standard Poor’s, the credit ratings agency, lowered its outlook on the United States from stable to negative on Monday because of the country’s high budget deficits and rising government indebtedness. It also cited the “material risk that U.S. policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013.”

S.P. did not actually downgrade the U.S. credit rating, and government officials in Japan on Tuesday voiced their support of the United States, saying that U.S. securities remained extremely good quality.

Still, S.P.’s statement sent brief jitters through the Treasury bond markets and spooked Wall Street, with the Dow Jones industrial average falling 1.1 percent Monday. In Europe, too, stocks fell steeply, dragged down by signs that the debt crisis in some of the continent’s periphery could be deepening.

The markets in the Asia-Pacific region followed suit on Tuesday.

In Japan, which is still struggling amid the turmoil caused by the disastrous earthquake and tsunami last month, the Nikkei 225 index was down 1.5 percent by the lunchtime break.

Singapore dropped 0.9 percent while South Korea was 0.8 percent lower. In Australia, the SP/ASX 200 index fell 1.3 percent.

The Hang Seng in Hong Kong sagged 1.4 percent by mid-morning, while the key index for mainland China was down 1.6 percent. In Taiwan, the Taiex fell 1.1 percent.

Despite the fundamentally good economic backdrop in many of the fast-growing Asian economies, investors are increasingly fretting about how policy makers will act to contain the mounting inflation that is plaguing much of the region.

The United States’ fiscal deficit and debt problems “are not the U.S.’s alone,” analysts at DBS in Singapore wrote in a research note on Tuesday.

“The rest of the world needs to come to terms that the U.S. can no longer sustain its role the consumer of last resort for the global economy indefinitely. Two years after the exit from the 2008 global crisis, there will be greater urgency for emerging markets, especially those with large surpluses, to focus and rely more on domestic demand for growth,” the DBS analysts commented.

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