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Home Prices Still Rising, but at Slower Pace

September 24, 2013 by

The leveling was not unexpected as more sellers ventured into the market and may have set less ambitious asking prices in the face of higher mortgage rates.

The Standard Poor’s Case-Shiller home price index, which tracks sales in 20 cities, showed prices up 12.4 percent from July 2012 to July 2013, and a separate index of mortgages backed by Fannie Mae and Freddie Mac showed an 8.8 percent gain in prices over the same time period.

But the month-to-month increase in the Case-Shiller index slowed to 0.6 percent, after gains of 1.7 percent in April, 0.9 percent in May and 0.9 percent in June.

Robert Shiller, the housing economist who helped develop the home price index, cautioned that despite double-digit gains in many cities, prices are still low compared with their prerecession peaks.

“It might be slowing down because the thing that’s driving this doesn’t seem to be excitement about a new era,” he told CNBC. “That’s what we saw eight years ago. But now it’s a rebound, interest rates are still maybe lower than they’ll be in a year — it’s that kind of thing.”

Still, the housing market recovery has exceeded expectations. Activity has been spurred by such factors as increased pressure to buy before prices rise further, a gradual relaxation of tight lending standards, inventory shortages and large-scale purchases of homes for the rental market by institutional investors, analysts said.

Higher home prices help the economy not just by strengthening the home building and real estate industries, but by making homeowners feel wealthier and more likely to spend. While the number of Americans who lost all the equity in their homes because of falling values is still huge by historical standards, rising prices have helped nudge more and more households back above water. According to CoreLogic, 2.5 million households regained equity in their homes in the second quarter.

Years of pent-up demand and emboldened consumers should continue to fuel the market, analysts said. But politics, including a looming battle over federal spending and the debt ceiling, could rein in the gains. “The real test will come over the next few months, given the sharp drop in mortgage demand and the potential for a rollover in consumers’ confidence as Congress does its worst,” wrote Ian Shepherdson, an economist with Pantheon Macroeconomics.

Mortgage rates went from about 3.4 percent on 30-year fixed-rate loans in January to about 4.4 percent in July, according to a survey by Freddie Mac, in anticipation of a wind-down of stimulus programs by the Federal Reserve. But this month, the Fed decided to delay the wind-down, which may lead to a dip in rates. Mortgage rates have much smaller impact on home sales than other factors like the employment rate, Mr. Shiller said.

But mortgage rates have put the brakes on refinancings, which helped ease pocketbooks by lowering monthly payments. On Monday, Citigroup became the latest of several banks in recent months to announce layoffs in its mortgage division.

Home prices are still almost 25 percent lower than their peak, and some economists cautioned that major factors — like slow job and wage growth — will limit their recovery.

“While recent results have been considerably better than those seen earlier in the cycle, and also better than we had anticipated,” wrote Joshua Shapiro, the chief United States economist for MFR Inc., “we have not given up on the argument that a large supply overhang of existing homes (factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time.” Still, the share of all sales that are foreclosures continues to decline.

Prices were up for the year in all 20 cities tracked by Case-Shiller, but the gains varied widely, from 3.5 percent in New York and 3.9 percent in Cleveland on the low end to a frothy 24.8 percent in San Francisco and 27.5 percent in Las Vegas.

But prices in San Francisco are still only at 2004 levels, cautioned Steve Blitz, chief economist for ITG Investment Research. “For those who bought and still hold homes in 2005, ’06 and ’07, they may still be in a negative equity position, depending on the terms of their mortgage,” Mr. Blitz wrote. “Don’t let those double-digit year-over-year percentage gains bias opinion to believe all is all right.”

Article source: http://www.nytimes.com/2013/09/25/business/economy/home-prices-still-rising-but-at-slower-pace.html?partner=rss&emc=rss

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Bank of England Holds Rate at Already Low Level

September 5, 2013 by

LONDON — The Bank of England made good on its pledge to keep interest rates low on Thursday, amid signs that Britain’s economic recovery was picking up steam.

The British central bank kept its benchmark interest rate unchanged at a record low of 0.5 percent. It also said it would hold its program of economic stimulus at £375 billion, or $580 billion.

After avoiding a triple-dip recession at the beginning of the year, the British economy started to recover. Relatively low borrowing costs, a buoyant housing market and an improvement of the economic situation in the euro zone, Britain’s largest export market, pushed growth to 0.7 percent in the three months that ended June 30.

But the Bank of England governor, Mark J. Carney, and some economists have warned that the current speed of the recovery, though encouraging, is unlikely to be sustainable.

“In the near term, we will get pretty strong growth,” said Jens Larsen, an economist at RBC Capital Markets. “Looking ahead, I don’t think we’ll have that very fast cyclical recovery that this would suggest. Wages, income in general and the level of indebtedness are still headwinds.”

The bank said Thursday it would reinvest proceeds from £1.9 billion worth of maturing British government bond purchased under its asset-buying program in keeping the overall size of the economic stimulus at £375 billion.

Mr. Carney, the former Canadian central bank governor who moved to the Bank of England in July, said in a speech last month that the outlook for British growth had “improved considerably in recent months” but that the prospects over the next three years were “solid, not stellar.” The pace of recovery is widely expected to slow at the beginning of next year.

In July, Mr. Carney pledged to keep interest rates at a record low of 0.5 percent until unemployment fell to 7 percent; it currently is at 7.8 percent. The pledge, called forward guidance, is supposed to help fuel the economic recovery by creating certainty among borrowers about the affordability of debt in the near term.

But Rob Wood, chief economist for Britain at Berenberg Bank in London, said in a note that he expected unemployment to reach 7 percent in the third quarter of 2015.

“This is a faster decline than the BoE expects, so the first rate rise is probably coming sooner than Mark Carney has argued,” Mr. Wood wrote. “Output is still 3 percent lower than it was in 2007, and there are 732,000 more part-time workers who want but cannot get a full-time job. So recovering demand growth will result in a jobs-lite recovery rather than rapidly falling unemployment.”

Nick Beecroft, chairman and senior market analyst at Saxo Capital Market, noted that the bank’s statement on Thursday made “no attempt to fight the market’s judgment that rates will be on the increase long before the bank’s doomed forward guidance would have us believe.” He predicted that “rates will be on the rise in late 2014.”

The Organization for Economic Cooperation and Development said Tuesday that the economic outlook in countries like Britain, the United States and Japan had improved and that a “moderate recovery” was under way. Growth in Britain was “picking up more vigorously than expected,” and the euro area as a whole was no longer in recession, the O.E.C.D. said.

According to one survey, the British manufacturing sector grew to the highest level in more than two years in August. Yet some economists worried that growth was bolstered only by stoking the British property market.

Britain’s construction industry grew last month at the fastest pace in six years and faster than some economists had expected, according to Markit Economics and the Chartered Institute of Purchasing and Supply. Construction of residential homes was the best-performing section of the industry. In a separate survey, Markit said the British manufacturing sector grew to the highest level in more than two years in August.

The value of homes has been rising, helped by low interest rates and a government program to help first-time buyers. House prices increased at the fastest pace since 2010 in July, according to Hometrack, a property research concern. Home builders, including Persimmon and Barratt Homes, have reported higher sales over the last three months and stepped-up the construction of new homes.

Article source: http://www.nytimes.com/2013/09/06/business/global/bank-of-england-holds-rate-at-already-low-level.html?partner=rss&emc=rss

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Home Sales Slip

July 22, 2013 by Leave a Comment

WASHINGTON — U.S. sales of previously occupied homes slipped in June to a seasonally adjusted annual rate of 5.08 million but remain near a 3½-year high.

The National Association of Realtors said Monday that sales fell 1.2 percent last month from an annual rate of 5.14 million in May. The NAR revised down May’s sales, but they were still the highest since November 2009.

Despite last month’s dip, home sales have surged 15.2 percent from a year ago. Sales have recovered since early last year, buoyed by job gains and low mortgage rates.

Still, mortgage rates have surged in recent weeks over concern that the Federal Reserve could slow its bond-buying programs later this year. The Fed’s bond purchases have helped keep long-term mortgage and other rates low.

Higher mortgage rates slowed sales last month of higher-priced homes in states such as California and New York, the Realtors group said.

The average rate on a 30-year fixed mortgage leapt to 4.46 percent by the end of June from 3.81 percent at the end of May. The rate was 4.37 percent last week.

That rate increase could hamper sales in coming months, economists said. But most expect housing to continue to recover, though at a slower pace.

“There’s little doubt the housing market slowed in the summer as mortgage rates rose,” Dan Greenhaus, chief global strategist at BTIG LLC, an institutional brokerage, said in a note to clients. “Housing is still expected to grow and contribute to economic output. It just may not be at the pace we’ve seen of late.”

Sales of previously occupied homes in June reflect contracts that were mostly signed in April and May, when mortgage rates were lower. Rising rates can cause some signed contracts to fall through if buyers no longer qualify for mortgages at higher rates.

The one factor that’s likely most holding back sales is a limited supply of homes available. Though more sellers put their homes on the market in June, the supply remained unusually low — nearly 8 percent less than a year ago.

At the current sales pace, the number of homes for sale would be exhausted in 5.2 months. That’s below the six months’ supply that’s consistent with a healthy housing market.

Another concern is that first-time buyers, who usually drive healthy markets, aren’t participating as much in the current recovery. They made up only 29 percent of buyers in June, below the 40 percent that is typical. Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. That’s made it harder for first-time buyers to qualify for mortgages.

Still, mortgage rates remain relatively low and home prices remain affordable despite rising in the past year. And higher mortgage rates could encourage some potential buyers to come off the sidelines and purchase homes before rates rise further.

The strength in housing this year has offset weaknesses elsewhere in the economy, like manufacturing and business investment. Rising home sales tend to lead to more spending at furniture and home supply stores.

Homebuilders have also stepped up construction in the past year, creating more construction jobs. In June, they applied for permits to build single-family homes at the fastest pace in five years.

Article source: http://www.nytimes.com/aponline/2013/07/22/us/politics/ap-us-home-sales.html?partner=rss&emc=rss

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March Home Prices See Best Annual Rise in Seven Years

May 28, 2013 by Leave a Comment

The data on Tuesday also suggested the two segments could act as buffers as the broader economy faces the pinch of belt-tightening in Washington.

The SP/Case Shiller composite index of 20 metropolitan areas climbed 10.9 percent year over year, beating expectations for 10.2 percent. This was the biggest increase since April 2006, just before prices peaked in the summer of that year.

Prices in the 20 cities gained 1.1 percent in March compared to the month before on a seasonally adjusted basis, topping economists’ forecasts for a 1 percent rise.

The housing market turned a corner in 2012, several years after its far-reaching collapse. The recovery has picked up since as inventory has tightened, foreclosures eased and historically low mortgage rates have attracted buyers.

A Reuters poll showed the recovery in the housing market likely has momentum through the rest of the year, with economists ratcheting up their forecasts for price gains in 2013.

Separate data showed consumer confidence picked up in May to its highest in more than five years in the midst of a stock market rally and lower gasoline prices.

Housing and the consumer have shown strength even as there have been hints that tighter fiscal policy is starting to bite in the broader economy. Across-the-board U.S. government spending cuts of $85 billion went into effect in March, while the payroll tax holiday expired at the beginning of the year, raising taxes for many Americans.

The data suggested both areas were performing better than the overall economy, said Sam Bullard, senior economist at Wells Fargo in Charlotte, North Carolina.

“There are some individual circumstances that are helping to propel both of these a little bit stronger than what the actual underlying strength would suggest,” said Bullard, pointing to the effect of higher stock prices on consumers, and investor demand for homes in beaten-down regions lifting prices.

Economists expect the pace of growth likely cooled in the second quarter, partly due to tighter fiscal policy, but the second half of the year is seen regaining traction. Investor attention has turned to when the Federal Reserve might start to slow its economic stimulus efforts.

The data lent support to equities where Wall Street rallied more than 1 percent after comments from central banks around the world reassured investors supportive monetary policies would remain in place. U.S. 10-year Treasury yields were at their highest in over a year.

Housing-related shares gained following the Case-Shiller report, with the SP homebuilders ETF up 1.1 percent. The ETF is up more than 20 percent for the year, outpacing the more than 16 percent surge seen in the benchmark SP 500.

Home prices in Phoenix continued their sharp ascent, rising 22.5 percent from a year earlier. Other standouts included San Francisco, up 22.2 percent, and hard-hit Las Vegas, up 20.6 percent.

For the first quarter of this year, the seasonally adjusted national index rose 3.9 percent, stronger than the 2.4 percent gain seen in the final quarter of last year.

“Low inventories and gradually improving housing demand have combined to push housing starts higher and support home price appreciation,” said Michael Gapen, an economist at Barclays in New York.

“We see these factors as remaining in place and expect residential investment to add to GDP growth in the coming quarters. We also expect rising real estate wealth to support household balance sheets and underpin consumption, helping the broader economy to offset a substantial fiscal drag in 2013.”

The Conference Board, an industry group, said its index of consumer attitudes jumped to 76.2 from an upwardly revised 69 in April, topping economists’ expectations for 71. It was the best level since February 2008.

In a sign of confidence among high-end consumers, jeweler Tiffany Co reported better-than-expected sales for the first quarter.

Consumer activity accounts for about two-thirds of the economy and while improved sentiment does not necessarily translate into more spending, the improvement was encouraging.

Still, even with the gain in confidence in May, second-quarter consumption growth is likely to have slowed to a 2.5 percent annualized pace from 3.2 percent in the first quarter, according to Capital Economics.

The expectations index rose to 82.4 from 74.3, while the present situation index climbed to 66.7 from 61.

Consumers’ assessment of the labor market improved. The “jobs hard to get” index slipped to 36.1 percent from 36.9 percent the month before, while the “jobs plentiful” index gained to 10.8 percent from 9.7 percent.

(Editing by Chizu Nomiyama)

Article source: http://www.nytimes.com/reuters/2013/05/28/business/28reuters-usa-economy-homes-index.html?partner=rss&emc=rss

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Bucks Blog: Americans’ Attitudes Toward Owning a House Have Changed

April 3, 2013 by Leave a Comment

A home for sale in Glenview, Ill.Associated Press
A home for sale in Glenview, Ill.

Even as the housing market improves, Americans seem more willing to embrace renting as an alternative to homeownership, a new survey on housing attitudes from the MacArthur Foundation finds.

Many Americans still say they have a strong desire to own their own home, but the overall appeal of renting compared with owning is changing, the survey found. Fifty-seven percent of adults believe that “buying has become less appealing,” and 54 percent believe that “renting has become more appealing” than it was before.

And nearly half of current homeowners (45 percent) say they can see themselves renting at some point in the future.

The survey was commissioned by the John D. and Catherine T. MacArthur Foundation. Hart Research Associates conducted telephone interviews of 1,433 adults from Feb. 27 to March 10. The margin of sampling error is plus or minus three percentage points.

The survey is part of the foundation’s “How Housing Matters” initiative, which finances research that explores “if and how housing leads to improved outcomes in child well-being, physical and mental health, education and economic opportunity.”

Despite improving indicators, like upswings in home values and building, many Americans remain unconvinced that the housing crisis is over. Nearly 8 in 10 believe the country is still in the midst of the crisis, the survey found. The effects of the housing crisis, combined with longer-term lifestyle changes, seem to have created a more realistic view of the risks and benefits of homeownership, Rebecca Naser, a vice president at Hart Research, said in a conference call about the findings.

The sentiment that renting is more acceptable is “quite pronounced” across the public, Ms. Naser said. “The world is changing, and renting is becoming more viable,” she said.

Two-thirds of adults now believe the focus of the country’s housing policy should be equally split between rental and ownership, rather than promoting one over the other, the survey found.

And 61 percent of adults now believe that renters can be just as successful as owners in achieving the “American dream,” the survey found.

How has the housing crisis changed your outlook on homeownership? Do you think renting is a viable long-term option?

Article source: http://bucks.blogs.nytimes.com/2013/04/03/americans-attitudes-toward-owning-a-house-have-changed/?partner=rss&emc=rss

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U.S. Retail Sales Jump

March 13, 2013 by Leave a Comment

WASHINGTON — Retail sales in the United States rose more than expected in February, suggesting that consumer spending this quarter will hold up despite higher taxes.

The Commerce Department said on Wednesday that retail sales increased 1.1 percent last month, the largest rise since September, after a revised 0.2 percent gain in January.

Economists polled by Reuters had expected retail sales, which account for about 30 percent of consumer spending, to rise 0.5 percent last month after a previously reported 0.1 percent gain in January.

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, rose 0.4 percent after advancing 0.3 percent in January.

The rise in core sales was the latest suggestion of momentum in the economy even as fiscal policy tightened, marked by the end of a 2 percent payroll tax cut and an increase in tax rates for wealthy Americans in January.

The gains in core sales in the first two months of the year offered hope that consumer spending, which accounts for about 70 percent of the American economy, might not be slowing much this quarter after growing at a 2.1 percent annual rate over the last three months of 2012.

Receipts at auto dealerships rose 1.1 percent after falling 0.3 percent in January, the government said. Excluding autos, retail sales increased 1 percent, also the largest increase in five months. That followed a 0.4 percent advance in January.

Last month, the high gas prices helped to lift sales at gasoline stations by 5 percent, the largest increase since August. They had risen 0.7 percent in January. Excluding gasoline, sales rose 0.6 percent.

Sales at building materials and garden equipment suppliers increased 1.1 percent, reflecting gains in homebuilding as the housing market recovery gains momentum. Receipts at clothing stores gained 0.2 percent.

Delays in tax refunds probably hurt sales at restaurants and bars, which fell 0.7 percent, while receipts at sporting goods, hobby, book and music stores declined 0.9 percent. Sales of electronics and appliances slipped 0.2 percent, while receipts at furniture stores dropped 1.6 percent, the largest decline since April 2011.

Article source: http://www.nytimes.com/2013/03/14/business/economy/us-retail-sales-jump.html?partner=rss&emc=rss

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Businesses Report Solid Growth, Indicating Rise in Consumer Spending

March 5, 2013 by Leave a Comment

WASHINGTON (AP) — American service companies grew in February at the fastest pace in a year, buoyed by higher sales, more new orders and solid job growth. The gain suggests higher taxes have yet to slow consumer spending on services.

The Institute for Supply Management said on Tuesday that its index of nonmanufacturing activity rose to 56 in February from 55.2 in January. Any reading above 50 indicates expansion.

The report measures growth in industries that cover 90 percent of the work force, including retail, construction, health care and financial services. A solid recovery in the housing market helped drive the index higher.

Service companies also kept adding jobs last month. A measure of service sector hiring fell only slightly after reaching a nearly seven-year high in January.

“This survey does bode well for both activity and employment in the second quarter,” Paul Dales, an economist at Capital Economics, said in a note to clients.

In the I.S.M. survey, 13 of the 18 industries reported expansion, including construction, real estate, finance and insurance and utilities.

The growth suggested that Americans were spending more despite an increase in Social Security taxes that took effect on Jan. 1. The higher payroll taxes cost a household earning $50,000 about $1,000 a year; a household with two highly paid workers will have up to $4,500 less.

The companies surveyed by the I.S.M. cover many industries that are closely tied to consumer spending, like retail, hotels and restaurants, and arts and entertainment. And those companies expect consumers to keep spending. Order backlogs grew at the fastest pace in 20 months, a sign that many companies could not keep up with rising sales. Stockpiles also rose strongly.

Anthony Nieves, the chairman of the I.S.M. survey committee, said the increases in both categories pointed to higher future sales.

“Companies are gearing up for more volume, more activity,” Mr. Nieves said.

The report also pointed to continued growth in hiring at service companies last month. Labor Department figures showed that service and construction companies added an average of 195,000 jobs from November through January. The I.S.M. includes construction hiring in its service index; the Labor Department measures those jobs separately from service hiring.

The government will release the February employment report on Friday. Economists on average are expecting an increase of 160,000 jobs, with the unemployment rate holding steady at 7.9 percent, according to a survey by Bloomberg News.

Article source: http://www.nytimes.com/2013/03/06/business/economy/businesses-report-solid-growth-indicating-rise-in-consumer-spending.html?partner=rss&emc=rss

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Dow Reaches Record High, Spurred by Fed and Profits

March 5, 2013 by Leave a Comment

The Dow Jones industrial average, which measures the performance of 30 blue-chip companies, rose more than 150 points in afternoon trading on Tuesday, surpassing its previous record close of 14,164.53, which it achieved nearly five and a half years ago, as well as its record intraday high, set around the same time, of 14,198.10.

Of course, a few things have happened since October 2007. The housing market collapsed, the financial system went into meltdown, the European Union started to fray and politicians dragged the United States through an on-off-on-again fiscal imbroglio.

 But stocks managed to move beyond all that.

 Since a low point in March 2009, the Dow Jones index has more than doubled, stunning even the most seasoned stock market watchers.

 “What’s amazing about this bull market is that people still don’t think it’s real,” said Richard Bernstein, chief executive of Richard Bernstein Advisors, a money management firm. “We think this could be the biggest bull market of our careers.”

On Tuesday in particular, leading indexes abroad were rising after the Chinese government announced that it would step up spending and European data showed that retail sales there have been stronger than expected.

After the bell sounded at the New York Stock Exchange, stocks were pushed up more after a reading on the service sector in the United States showed that it had risen to its highest level of activity in a year, surprising analysts.

“Given that the service sector accounts for close to 85 percent of the U.S. economy, the strong performance on this index suggests that the overall recovery may be continuing to build on the positive momentum at the end of the year,” said Millan Mulraine,  a senior strategist at TD Securities. There are some important caveats to the record, however. The Dow is a rather narrow measure of the stock market, so it can provide a somewhat distorted picture of the market’s performance.

At 1,541.81 points in Tuesday afternoon trading, the much broader Standard Poor’s 500-stock index was still off its nominal high of 1,565.15, also set in October 2007.

After taking inflation into account, both indexes are down from their earlier highs in 2000. And, on an inflation-adjusted basis, the S.P. 500 is down even after factoring in returns from dividend payments.

Still, American stocks are far ahead of their foreign counterparts. The Euro Stoxx 50, a barometer of euro zone blue chips, ended Tuesday at 2,683.02 points, off its record high of 5,464.43 reached in March 2000, while the FTSE 100 in London was at 6,431.95, compared to a record of 6,930.20 in December 1999.

In Asia, the Nikkei 225-share index in Tokyo closed Tuesday at 11,683.45; it reached its high of 38,916 points in December 1989. And the Hang Seng index in Hong Kong finished at 22,560.50, versus a high of 31,638 points in October 2007.

Still, despite its flaws, the Dow Jones average is the recognizable face of the stock market to many Americans, and it contains some of the best-known American corporations, like Wal-Mart, Coca-Cola, General Electric and International Business Machines.

The stock prices of some of the companies in the index have more than doubled since that low point in 2009. For instance, American Express is up more than 400 percent. After the crash of 1929, it took 25 years for the Dow to get back to the nominal level it plunged from. The severe economic contractions of the 1930s, during which scores of banks collapsed, weighed heavily on stocks.

But one essential government institution did things differently after the 2009 low point, and that has bolstered the stock market. The Federal Reserve has added more than $3 trillion of monetary stimulus to the economy and more than $1 trillion of bailout loans to financial firms since the 2008 financial crisis. This was done to prevent a widespread banking crash and help the wider economy.

Anne Bagamery contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/03/06/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Wall Street Hesitates on China Concerns

March 4, 2013 by Leave a Comment

Stocks on Wall Street rose modestly on Monday as investors kept up a recent trend of buying on dips, with equities recovering from early weakness despite concerns about growth and China’s housing market.

The Standard Poor’s 500-stock index ended the day up 0.5 percent, the Dow Jones industrial average added 0.3 percent and the Nasdaq composite index rose 0.4 percent.

The S.P. 500 has jumped about 7 percent so far in 2013 and has resisted calls for a pullback even though there are few catalysts to drive shares definitively higher. The Dow closed less than 40 points away from hitting its closing high, while the S.P. 500 was 3 percent below its record close.

Concerns about budget cuts in the United States and the euro zone debt crisis also have served as reasons for investors to take a breather in the face of technical resistance. Any sign that the $85 billion in cuts were beginning to take a toll on the economy could jostle markets.

“The stock market still represents opportunity for investors, especially when you look at the domestic market,” aid Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina, which manages $5 billion, “but it wouldn’t be surprising if we pulled back on the concerns over China and Europe.”

Retail stocks ranked among the strongest after Deutsche Bank raised price targets on Target and Macy’s . Target climbed 3.6 percent and Macy’s shares rose 2.4 percent. The SP retail index jumped 1.3 percent.

Bucking the trend was J.C. Penney, which is struggling to compete against its rivals, falling 4.6 percent.

Plans to tighten curbs on the housing market in China and a slowdown in the growth of that country’s services sector prompted worries about growth in the world’s second-largest economy. In addition, China’s services industries expanded at the slowest pace in five months in February.

Also weighing on the market, Italy could be inching closer toward another election within months after center-left leader Pier Luigi Bersani issued an ultimatum to anti-establishment 5-Star Movement boss Beppe Grillo to support a new government or return to the polls. European market indexes closed mixed.

Providing some support for the market, Janet Yellen, the Federal Reserve’s influential vice chairwoman, said the central bank’s aggressive monetary stimulus is warranted, given how far below its full potential the economy is operating.

Hess shares rose 4.1 percent after the company said it would exit its retail, energy marketing, and energy trading businesses. The company also boosted its dividend by 150 percent and announced a stock buyback program.

Ferro shares surged 31.2 percent after A. Schulman offered to buy the company for $563 million, although Ferro rejected the bid.

Article source: http://www.nytimes.com/2013/03/05/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Dow Ends Above 14,000 for Year’s Highest Close

February 13, 2013 by Leave a Comment

The Dow Jones industrial average rose to its highest close of the year Tuesday, putting it within 1 percent of its record. Stocks gained after two big consumer brands posted impressive quarterly results.

The Dow closed up 47.46 points, or 0.34 percent, to 14,018.70 Tuesday. That is 146 points from its record close of 14,164.53 set in October 2007. The Standard Poor’s 500-stock index gained 2.42 points, or 0.16 percent, to 1,519.43, also close to its record.

In a day of quiet trading, stocks were driven higher by the beauty products maker Avon and the luxury clothing and accessories company Michael Kors, whose results impressed investors. Consumer spending accounts for 70 percent of economic activity in the United States.

Financial and home-building stocks, led by the Bank of America and the Masco Corporation, which reported some of the day’s biggest gains, also lifted the averages.

The Dow has logged its best January in almost two decades after lawmakers reached a last-minute deal to avoid sweeping tax increases and spending cuts. Investors are also becoming more optimistic that the housing market is recovering and that hiring is picking up.

The Dow has advanced 7 percent this year and the S. P. 500 is up 6.6 percent.

The 30-member Dow has closed above 14,000 twice this month. Before February, the index closed above that level just nine times in its history. The first time was in July 2007; the rest were in October of that year.

Shares of Avon rose $3.51, or 20 percent, to $20.79 after the company posted a fourth-quarter loss that was not as bad as analysts expected. The company also hopes to save $400 million by slashing costs. Michael Kors rose $5, or 9 percent, to $62 after reporting earnings that beat analysts’ predictions.

Bank of America was the biggest gainer on the Dow, adding 38 cents, or 3.25 percent, to $12.24. Stocks gaining in the index outnumbered those falling by a ratio of more than four to one.

About 70 percent of companies in the S. P. 500 have reported earnings for the fourth quarter. Analysts are projecting that earnings will rise 6.4 percent for the period, an improvement from the 2.4 percent growth reported in the third quarter, according to S. P. Capital IQ.

Investors may have become too optimistic about the outlook for stocks, said Uri Landesman, president of the hedge fund Platinum Partners.

“The market is priced for perfection,” Mr. Landesman said. “The odds of a disappointment are very, very high.”

Mr. Landesman predicts that the S. P. 500 will climb past its record and rise as high as 1,600 by April before then slumping as low as 1,300 as company earnings start to disappoint investors. The record close for the S. P. 500 is 1,565, reached in October 2007.

Investors were expected to be watching closely Tuesday night when President Obama delivered his annual State of the Union address. Mr. Obama was expected to focus on the economy, including job creation.

A decline in bond prices since the beginning of the year has also slowed. The Treasury’s 10-year note fell 4/32 to 96 28/32 on Tuesday and the yield rose to 1.98 percent from 1.96 percent late Monday. The yield was 1.71 percent at the beginning of the year.

In other trading Tuesday, the Nasdaq composite index was down 5.51 points, or 0.17 percent, to 3,186.49.

Among other stocks making big moves:

Coca-Cola, the beverage company, fell $1.05, or 2.7 percent, to $37.56 after reporting fourth-quarter revenue that fell short of analysts’ forecasts.

Masco, a home improvement and building product company, rose $2.22, or nearly 13 percent, to $20.01 after reporting earnings that beat analysts’ expectations, helped by strong demand in North America.

Dun Bradstreet, a provider of credit and business data, fell $6.60, or 7.7 percent, to $78.68 after the company reported a fourth-quarter profit that was below market expectations.

Article source: http://www.nytimes.com/2013/02/13/business/daily-stock-market-activity.html?partner=rss&emc=rss

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