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Wall Street Manages a Gain

September 29, 2011 by Leave a Comment

News that the United States economy grew by more than previously thought in the second quarter of the year and an unexpectedly large drop in the number of weekly jobless claims drove stocks higher for much of the day.

But after a 2 percent gain at the start of trading, Wall Street lost steam in the afternoon. A half-hour before the close of trading, the Dow Jones industrial average was dead-even with Wednesday’s close — and then rallied again to close up 1.3 percent, or about 143 points, to 11,153.98.

The Standard Poor’s 500-stock index also eked out a gain in the last half-hour, rising 0.8 percent for the day, or 9.34, to 1,160.40. The Nasdaq composite index, weighed down by a 1.8 percent drop in Apple stock, fell 0.4 percent, or 10.82 points to 2,480.76.

The Commerce Department said the economy grew at an annual rate of 1.3 percent in the April-June quarter, up from an estimate of 1 percent made a month ago. The improvement reflected more consumer spending and more exports.

“The quality of the improvement far outweighs the scale of improvement with the U.S. consumer key to future growth,” said Michael Woolfolk, an analyst at the Bank of New York Mellon. “The risk for the third quarter is to the upside, with the outside possibility that it could well come in at the upper end of the 2.0 to 3.0 percent range.”

Further good news emerged from the Labor Department, which found that jobless claims last week dropped 37,000 to a seasonally adjusted 391,000, the lowest level since April 2. It is the first time applications have fallen below 400,000 since Aug. 6.

The mood in stock markets had been largely positive after a clear victory for Chancellor Angela Merkel in a vote on beefing up Europe’s bailout fund. More encouraging for the markets, perhaps, was the fact that Mrs. Merkel did not have to rely on support from opposition parties.

In the short term, the vote in favor of an expanded rescue fund indicated that Germany was fully behind efforts to shore up Europe’s defenses against a crisis that has already required three countries to be bailed out and stoked talk that Greece would default.

“The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiraling crisis under control,” said Sony Kapoor, managing director of Re-Define, an economic research group.

In Europe, the DAX in Germany closed up 1.1 percent, as did the CAC 40 in France. The FTSE 100 index of leading British shares was off 0.4 percent.

The improved appetite for risk on Thursday also helped the euro brush off another survey showing that Europe’s economy was grinding to a halt. When risk appetite is high, the euro usually garners support against the dollar. Following the German vote, it was trading 0.8 percent higher at $1.3629.

Earlier in Asia, the Nikkei 225 index in Japan swung between gains and losses before finishing up 1 percent. The Kospi in South Korea index shot up 2.7 percent. The Shanghai Composite Index in China dropped 1.1 percent. Markets in Hong Kong were closed due to severe weather.

Oil prices tracked equities higher too. Benchmark crude for November delivery rose $1.88 to $83.09 a barrel on the New York Mercantile Exchange.

Article source: http://www.nytimes.com/2011/09/30/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Stocks Trade Higher in Early Going

September 28, 2011 by Leave a Comment

A two-day rally driven by hopes that Europe had a plan to contain Greece’s debt crisis and shore up the Continent’s other struggling countries appeared to be flagging Wednesday on European and Asian markets amid reports of divisions among leaders.

In New York, however, the Standard Poor’s 500-stock index managed a gain of 0.6 percent at the opening of trading, after a two-day increase of 3.4 percent. The Dow Jones industrial average rose 0.9 percent, and the Nasdaq composite index gained 0.7 percent.

The past few weeks have seen remarkable volatility, particularly in European shares, with investors responding to every twitch from European leaders on whether Greece would get its next loan installment, whether national parliaments would agree to a stronger pan-European bailout fund and whether there was a credible plan to save Italy and Spain from needing rescue loans themselves.

A pushback against a call to slash the amount Athens owes creditors renewed uncertainty about Greece’s path on Wednesday.

In France, the CAC 40 fell 0.3 percent, while the DAX in Germany rose 0.1 percent. The FTSE index of leading British shares was down 0.7 percent. The euro, however, held its own against the dollar, rising 0.2 percent to $1.3617.

The relatively small moves in markets may be a sign they are waiting to see how the coming events unfold. Finland approved the proposals to strengthen the euro zone bailout package on Wednesday, and Germany was to vote on Thursday.

“The markets are readying themselves for concrete news now but the slow progress of politics could mean the markets are setting themselves up for a fall,” said Jane Foley of Rabobank.

Meanwhile, whatever happens with Europe, the larger global economy still looks fairly weak, and the price of oil fell again Wednesday on expectations that slow growth would weaken demand for raw materials.

Benchmark oil in New York fell 79 cents to $83.66 a barrel.

Earlier, shares in Asia lost steam after spending the morning in positive territory.

Japan’s Nikkei 225 index eked out a gain of less than 0.1 percent to close up just 5.70 points at 8,615.65. Australia’s S. P./ASX 200 was 0.9 percent higher at 4,039.50. But South Korea’s Kospi gave up earlier gains and closed down 0.7 percent to 1,723.09.

Hong Kong’s Hang Seng sank 0.7 percent to 18,011.06, while benchmarks in Singapore and Thailand also fell.

Article source: http://feeds.nytimes.com/click.phdo?i=c74b28f8b95684021059fdabf8235390

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Wall Street Rebounds in Early Trading

September 26, 2011 by Leave a Comment

Shortly after trading started in New York, the Standard Poor’s 500-stock index rose 0.8 percent, while the Dow Jones industrial average climbed 1.1 percent. The Nasdaq composite index added 0.2 percent.

The benchmark Euro Stoxx 50 index rallied 2.1 percent in afternoon trading, rebounding from an early loss. The DAX climbed 2.2 percent in Frankfurt.

News reports from a conference at the International Monetary Fund in Washington over the weekend suggested that the German and French authorities have begun a major strategy to prevent the crisis escalating, culminating in a possible announcement at the next Group of 20 leaders’ summit meeting set for Nov. 4 in Cannes, France.

The plan was said to include bank recapitalizations similar to the United States Treasury Department’s Troubled Asset Relief Program, which started injecting capital into banks in 2008. News reports also suggested that the European Central Bank could lend extra funds to the European Financial Stability Fund, the main bailout mechanism in Europe.

There was no official comment, although Wolfgang Schäuble, Germany’s finance minister, said during the weekend that policy makers could make the financial stability fund more “efficient.” And he raised the prospect of bringing in a permanent financial support mechanism before 2013, the current target date.

Olli Rehn, the European Union’s monetary affairs commissioner, said that there was “increasing political will” among European leaders for a new effort to soothe investors.

Jim Reid and Colin Tan, Deutsche Bank analysts, said in a research note Monday: “The hope in Europe is that things are getting potentially so bad that the chances of seeing something much more substantial from the authorities over the next few weeks have surely increased.”

“If not,” the note continued, “then we will really have to think about a financial disaster in the Continent.”

Also supporting stocks in Europe on Monday, a European Central Bank governing council member, Ewald Nowotny, was quoted Monday by the news agency Market News International as saying that an interest rate cut by the bank could not be excluded.

Separately, a report showed that German business confidence in September had fallen less than economists had forecast. The Ifo Institute in Munich said its business climate index dropped for a third straight month to 107.5 points from 108.7 in August. Economists had forecast a decline to 106.5 points, according to Bloomberg News.

In the Asia-Pacific region, stocks declined, compounding the sharp falls they had suffered during the previous week.

In Japan, the Nikkei 225 index dropped 2.2 percent, ending at 8,374.13 points. The index has fallen nearly 500 points since Sept. 16 and is now at its lowest close since April 2009.

The Kospi in South Korea ended down 2.6 percent and the Taiex in Taiwan declined 2.4 percent on Monday. The Hang Seng was 1.5 percent lower.

The markets have for months been shrugging off the fact that most Asian economies — with the notable exception of Japan — are still poised to grow solidly, especially when compared to those of the United States and Europe, and have little direct exposure to the sovereign debt woes of Greece and other euro zone nations.

Many foreign investors have instead stayed on the sidelines or pulled funds into assets deemed safer, like Treasury bonds from the United States and currencies like the Swiss franc and Japanese yen.

But investor jitters have hit gold, which usually is considered a haven in times of uncertainty, and the precious metal fell to around $1,560 an ounce on Monday.

In London, the euro was higher against the dollar on Monday, trading at $1.3508.

Matthew Saltmarsh reported from London. Bettina Wassener contributed reporting from Hong Kong.

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Stocks & Bonds: Shares Post Modest Gains After a Punishing Week

September 24, 2011 by Leave a Comment

The Dow shed 737 points in its biggest weekly drop since October 2008.

Investors have been weathering a period of persistent uncertainty over the pace of economic growth and the problems in the euro zone. This has sent stocks down and bonds up. Gold, traditionally a safe haven asset, fell $101.70 to $1,637.50 on Friday, which some analysts partly attributed to selling by hedge funds or investors trying to raise cash.

Analysts said recent losses in the financial markets were related to concerns about whether the governments of developed economies were doing enough to support growth. The declines also reflected broad pessimism about the debt crisis in the euro zone and intensifying fears about the economic outlook, despite the release of a statement late Thursday in Washington by the world’s major economies that reiterated their commitment to the stability of banks and financial markets.

The statement by the Group of 20 nations did not, however, include commitments to new action or any talk of additional support for Europe.

“All in all, there appeared to be nothing in the way of concrete new action, and markets were generally underwhelmed,” said Sue Trinh, senior currency strategist at RBC Capital Markets.

The Dow wavered in a narrow range on Friday, closing up 37.65 points, or 0.4 percent, at 10,771.48, after a decline of 3.5 percent on Thursday, its largest drop since Aug. 18, and a day after the Federal Reserve announced new stimulus measures. The broader Standard Poor’s 500-stock index closed up 6.87 points, or 0.6 percent, at 1,136.43. The two indexes each fell more than 6 percent this week.

The Nasdaq composite index gained 27.56 points, or 1.1 percent, to 2,483.23 on Friday to finish the week 5.3 percent lower.

In Europe, the FTSE 100 in London rose 0.5 percent, the CAC 40 in Paris gained 1 percent and the DAX in Frankfurt added 0.6 percent.

The yield on the 10-year United States Treasury note rose to 1.83 percent after hitting a new low of 1.72 percent late Thursday. The price fell 1 1/32 to 102 21/32.

Yields have declined since the Federal Reserve announced Wednesday that a complete economic recovery was still years away and that there were “significant downside risks to the economic outlook, including strains in global financial markets.”

The Fed also said that it would buy long-term Treasury bonds and sell short-term bonds to help stimulate lending and growth.

Some analysts attributed the market declines to disappointment that the Fed did not act more forcefully and to little faith that policy tools like lower interest rates could encourage consumers to spend more when they were already worried about jobs.

“The Fed just moved the deck chairs,” said Steve Blitz, the senior economist for ITG Investment Research. “When you see a 10-year Treasury trading at 1.7 percent, the market is telling you that real growth over the next 10 years is going to be zero.

“So it is not so much deflation, but that no one sees the growth that is going to generate demand to borrow,” Mr. Blitz added. “You need confidence to borrow. If people had confidence, they would be falling all over themselves to borrow.”

As gold fell, the dollar rose, and the price for benchmark light, sweet crude oil futures contracts was flat at $80.50 a barrel on the New York Mercantile Exchange.

The weakness in commodities prices suggested to some analysts that investors were starting to bet that the likelihood of a recession in major economies was increasing.

Andreas Hürkamp, chief equity analyst at Commerzbank in Frankfurt, said declines in commodity prices and fears about a possible default by Greece offset an initial rally on Friday.

“Until recently, commodity prices had been stable despite the weakness in equities,” Mr. Hürkamp said. “Now that seems to be changing.”

Energy and materials stocks, particularly susceptible to demand related to the economic outlook, were down. Financials were more than 1 percent higher.

Brian M. Youngberg, energy analyst for Edward Jones, said concerns over the global economy had thrown future oil demand into question.

“It is kind of the calm after the storm today,” he said. “There was significant panic yesterday with some data out of China maybe signaling that the Chinese economy may be slowing its growth rate, and then on top of that concerns of a double-dip recession in the United States and ongoing concerns about Europe.”

“All those factors caused investors to take risk off the table and avoid sectors that are viewed to be tied to the economy,” Mr. Youngberg said.

Markets in Hong Kong, Australia, Singapore, Taiwan, Thailand, the Philippines and New Zealand also were lower on Friday but registered smaller losses than on Thursday.

Matthew Saltmarsh and Kevin Drew contributed reporting.

Article source: http://www.nytimes.com/2011/09/24/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Wall Street Slides After Jobs Figures

September 2, 2011 by Leave a Comment

The monthly Labor Department report, released Friday, showed there was no job growth in the United States economy in August. In addition, analysts said financial stocks were hurt by the prospect, reported by The New York Times, that a federal agency was set to file lawsuits against more than a dozen big banks over their handling of mortgage securities.

Many investors had sold stocks ahead of the government’s Labor Department report, which analysts in a Bloomberg News survey had forecasted would show a gain of 68,000 nonfarm payrolls. The flat performance t was down sharply from a revised 85,000 new jobs in July. The unemployment rate stayed constant at 9.1 percent in August.

The suits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

When the stock market opened, all three major Wall Street indexes slid lower and stayed there. By midday, the Dow Jones industrial average was down 169.34 points, or 1.5 percent. The Standard Poor’s 500-stock index was down 1.7 percent, and the Nasdaq composite index fell 1.6 percent.

The financial sector dragged down the broader market, with the five most actively traded banks in the sector each down about 3 percent or more. Bank of America was about 6 percent lower; Wells Fargo was down nearly 4 percent, and JPMorgan was down more than 3 percent.

“This is not good news from the perspective of the banking sector,” Phil Orlando, chief equity market strategist at Federated Investors, said about the potential for the mortgage-security lawsuits.

The jobs report, too, was “very disappointing. It was much weaker than expected. We were thinking that if today’s jobs number was poor we would start to see a pull-back.”

The markets in the United States followed declines in Asia and Europe.

The Euro Stoxx 50 index plunged 5.5 percent, while the DAX in Germany lost 3.4 percent and the CAC 40 in France fell 3.6 percent. The FTSE in Britain was down by 2.3 percent. In Asia, the Shanghai, the Nikkei and the Hang Seng indexes each closed down by more than 1 percent.

“The latest fall follows a highly volatile August period which saw global markets take substantial hits over political uncertainty over the U.S. debt ceiling and subsequent credit downgrade,” John Douthwaite, chief executive officer of SimplyStockbroking, said in a research note.

In August, all three indexes in the United States had their worst monthly performance since 2001. Shares took a beating for reasons that included fears of an economic slowdown and fiscal problems in the United States as well as continuing concerns over debt issues in Europe.

Mr. Douthwaite said market turbulence was set to continue in September because of weak economic data from the United States and Europe.

The decline in stocks on Friday came just ahead of the start of the three-day Labor Day weekend in the United States. It followed a lackluster day of low trading volume on Thursday, when banks led the market down, ending a four-day rally.

The three major indexes extended their losses from Thursday, when they closed more than 1 percent lower.

The worse-than-expected jobs report led some economists to forecast new policy action by the Federal Reserve at its next meeting on Sept. 20-21.

Economists from Goldman Sachs said that it now was more likely the Fed would lengthen the average maturity of its balance sheet, with sales of relatively short-dated Treasuries and purchases of relatively long-dated Treasuries.

Mr. Orlando said the central bank could also cut the premium on banking reserves to force banks to lend more.

The price of the 10-year Treasury note rose Friday morning, and the yield fell to 2.043 percent from 2.13 percent late Thursday.

Shaila Dewan and Nelson D. Schwartz contributed reporting.

Article source: http://www.nytimes.com/2011/09/03/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Stocks Lose Momentum

August 24, 2011 by Leave a Comment

Stock indexes had powered ahead on Tuesday, the second consecutive day of gains, as investors scooped up stocks that had become cheaper after recent sell-offs.

But the markets were not as certain on Wednesday, wavering between gains and losses. Gold fell, the benchmark Treasury yield rose slightly to 2.203 percent and financial stocks declined.

A government report Wednesday that showed that durable goods orders rose in July provided little stability. Analysts noted that, considering recent talk of another recession, it would take more than one economic data point to convince investors that the economy was on solid footing.

“Any one report is not going to have real significant impact because the market is looking for a breadth of data,” said Stuart Freeman, chief equity strategist for Wells Fargo Advisors.

Some investors were betting that weak economic data would support the likelihood of further stimulus from the Federal Reserve, whose chairman, Ben S. Bernanke, will speak at the Fed’s symposium at Jackson Hole, Wyo., on Friday. Mr. Bernanke had outlined stimulus options at the same meeting in 2010 in response to the slowdown of the economy.

While those expectations had driven some of the gains on Tuesday, there was little follow-through on Wednesday.

In early afternoon trading, the Standard Poor’s 500-stock index was down 0.2 percent and the Dow Jones industrial average was down 0.2 percent. The Nasdaq composite index was down 0.6 percent.

“There is some trading going on with the expectation that the Fed is going to make some comments that they have got something up their sleeve,” Mr. Freeman said. “I think we are going to be in this volatile sideways moving market” for some time.

Gold, which sagged sharply on Tuesday only to rise in Asian trading, fell further on the Comex exchange. It was down $69.70, or 3.8 percent, to $1,788.60 an ounce. The metal had been used as a safe haven in recent market volatility and risen to record nominal highs.

Jeffrey Nichols, the managing director of the American Precious Metals Advisors, said that the run-up in gold had been “so large in magnitude and fast” that “to have a significant correction here really makes sense.”

“Some of the rally was a function of speculative demand by short-term-oriented institutional traders,” he said, adding that the consequence would be for them to sell, take profits and move on to other instruments. But he said that the long-term economic outlook was basically unchanged.

The Commerce Department reported earlier that overall orders for durable goods rose 4 percent last month, the biggest increase since March. But a category that tracks business investment plans fell 1.5 percent, the biggest drop in six months.

Abigail Huffman, director of research at Russell Investments, said that some of Wednesday’s early gains may have been a result of the durable goods numbers and the market’s momentum from the previous day.

“It is definitely a wait-and-see feeling preceding the Fed meeting,” she said.

Stocks in Europe rose for a third day, after declines in Asian markets, as some investors bet that the Federal Reserve would act soon to strengthen the economy and that the sharp stock market drops earlier this month were overdone.

Adrian Darley, head of European equities at Ignis Asset Management, said that even though some investments now looked cheap, investors lacked confidence.

“There are remaining concerns about global economic growth slowing down,” Mr. Darley said. “The question is whether the sell-off has gone too far. Companies recognize that there is a lot of value out there but investors don’t have a lot of confidence.”

The Euro Stoxx 50 index closed 1.8 percent higher in Europe, while Germany’s DAX index increased 2.7 percent and France’s CAC 40 index rose 1.8 percent. Stock markets in Asia slipped as investors took in the downgrade by Moody’s Investors Service of its rating on Japanese government debt and shrugged off both Tuesday’s surge on Wall Street and fresh efforts by the Japanese government to prop up feeble economic growth.

The Nikkei 225-stock index rose in early trading, but quickly gave up those gains to end the day down 1.1 percent at 8,629.61 points. Similarly, the yen remained persistently strong in the international currency markets, hovering at about 76.60 yen per U.S. dollar.

Moody’s decision to lower its rating of Japan by one notch came as little surprise, as Standard Poor’s had announced a similar downgrade in January and the economic and political challenges facing the country are well known.

Elsewhere in the Asia-Pacific region, the markets slipped, ignoring the firm rally in the American markets during the previous day. Analysts cautioned that the lingering uncertainties about the economy in the United States and debt woes in Europe remained in place and were likely to produce more volatility in coming months.

The key index in South Korea closed down 1.2 percent, the Taiex in Taiwan fell 0.6 percent, and the S. P./ASX 200 in Australia finished 0.1 percent lower.

In Hong Kong, the Hang Seng index was 1 percent lower by mid-afternoon, the Straits Times index in Singapore fell 0.4 percent, and in India, the Sensex was down 0.8 percent by the afternoon.

Julia Werdigier reported from London and Bettina Wassener contributed reporting from Hong Kong.

Article source: http://www.nytimes.com/2011/08/25/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Stocks Rise on Economic Signals

August 23, 2011 by Leave a Comment

Stocks rose on Tuesday with indexes around the world advancing more than 1 percent, partly helped by stronger economic data in Asia and Europe. It was the second consecutive day of gains for many stocks after weeks of turmoil that were fueled by concerns about a curb in global economic growth and the widening impact of sovereign debt problems.

In early afternoon trading on Wall Street, the Standard Poor’s 500-stock index gained 23.19 points, or more than 2 percent, and the Dow Jones industrial average added 201.70 points, or 1.8 percent. The Nasdaq composite index added 62.05 points, or 2.63 percent.

The 10-year benchmark Treasury bond yield was mostly unchanged at 2.105 percent.

Stock markets in Europe and the Asia-Pacific region also mainly rose as investors interpreted a wide variety of economic statistics and awaited the Federal Reserve’s annual symposium later this week in Jackson Hole, Wyo.

“The market has got in its head that any help from policy makers is desperately needed,” said Robert Buckland, global equity strategist at Citigroup in London. “People are clearly looking at Jackson Hole.” It was at that gathering last year that the Fed chairman, Ben S. Bernanke, signaled further stimulus in light of a similar slowdown of the American economy.

Major European stock markets were up about 1 percent, after a survey of purchasing managers’ expectations for output in the euro area showed no change, at a nearly two-year low.

“The market was factoring in worst-case scenarios for the economic slowdown,” said Russell Price, senior economist with Ameriprise Financial. “Things have slowed down but are not falling off a cliff.”

In addition, a survey of manufacturers in China showed factory activity had probably contracted slightly in August. The findings underpin the widely held perception that the giant Chinese economy is growing at a more moderate, yet still robust, pace than many other places.

Mr. Price noted that the China purchasing managers index was also better than expected, and that current retail data in the United States might be offsetting some of the weaker data from other sectors of the economy.

“We are not continuing to decline to another double-dip,” he said, but “just enough to offset the worst-case scenario.”

But expectations grew that the fighting in Libya could last longer than expected, setting back hope for a recovery of oil output there. The price of oil rose 15 cents, to $84.57 a barrel.

The energy index on the S.P. was up more than 2.6 percent, propelled by shares in Exxon Mobil and Chevron, which rose 3 percent or more.

Materials shares, technology and consumer shares were up more than 2 percent. The financial sector was also up more than 2 percent despite the fact that the most widely traded share on the index, Bank of America, fell about 2.5 percent.

Economic data in the United States continued to document weakness in the housing sector. Sales of new homes fell for the fourth straight month in July, according to the Census Bureau. Although the report showed a bigger-than-forecast drop, the housing market was already weak, so it appeared to have little impact on the broader market.

“This year is shaping up to be the worst year on record for new home sales,” said Patrick Newport, United States economist for IHS Global Insight, in a research commentary.

“We do not see a reason for sales to pick up this year.  The economy is weak, uncertainty is up as is the likelihood of a recession, and foreclosures and delinquencies remain high,” he added.

Many analysts say that investors are waiting for clear statements from policymakers about what they are going to do about fiscal troubles in the euro zone and the economic headwinds in the United States.

The main focus of investor attention this week is the assessment of the American economy by Mr. Bernanke expected during the Fed’s symposium on Friday. Some Wall Street analysts said they expected the Fed to take some action — perhaps lengthening in maturity of the bonds it holds — to depress longer-term interest rates.

“The behavior of financial markets has become truly worrying, with stock market averages down sharply around the globe as heightened risk aversion has gripped markets,” Kevin Logan, chief United States economist at HSBC, wrote in a research note.

“A flight to safety, or alternatively, a disinclination to take risk can affect real economic activity as well as financial markets,” he cautioned. “A recession begins when thousands of independent decision makers all around the country decide to postpone hiring and capital investments, all in an attempt to protect cash positions and reduce risk of loss.”

Stock markets in South Korea and Taiwan saw gains of more than 3 percent by the close of trading, while the main market index in Australia rose 2.2 percent. In Japan, where investors, companies and policy makers remain on edge about the strength of the yen, the Nikkei 225 index closed 1.2 percent higher. The Hang Seng index in Hong Kong gained 2.0 percent, while stocks in mainland China rose 1.5 percent.

With investors still intensely nervous after the roller-coaster ride of the past weeks, gold continued to push higher on Tuesday.

The precious metal, which is a traditional haven for investors in times of uncertainty, hit another nominal high during early Asian trading, topping $1,910 an ounce. By late afternoon in London, the price was hovering at around $1,883 an ounce.

Julia Werdigier reported from London. Jack Ewing contributed reporting from Frankfurt and Bettina Wassener contributed from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=69048b3de134ef55b2621f8aeb84d2d3

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Stocks and Bonds: U.S. Stocks Return to Pre-Downgrade Level

August 16, 2011 by Leave a Comment

A spate of mergers and acquisitions helped build a rally of more than 2 percent in the Standard Poor’s 500-stock index, leading some analysts to weigh whether the surge signaled a possible period of stability after last week’s steep losses and volatility.

Standard Poor’s downgraded the nation’s credit rating on Aug. 5, after the market had closed at 1,199.38. Stocks sold off the next week, with the S. P. 500 and the Dow Jones industrial average finishing the five-day period nearly 2 percent lower. On Monday, however, the broader market as measured by the S. P. 500 inched above the pre-downgrade level to close at 1,204.49, after gaining 25.68 points, or 2.2 percent.

The Dow was up 213.88 points, or 1.9 percent, at 11,482.90, also exceeding its pre-downgrade close of 11,444.61. The same was the case with the Nasdaq composite index, up 47.22 points, or 1.9 percent, at 2,555.20.

With gains of around 3 percent in utility, energy and bank stocks on Monday, analysts were cautiously weighing whether the worst of the recent upheaval was over.

“For now it is clear that in essence there is a relief in the market,” said Quincy Krosby, a market strategist for Prudential Financial. “You can feel it.”

Still, given the unease that had set in even before the downgrade, stocks are still in a slump. The S. P. 500 is more than 10 percent below where it was as recently as July 22.

And even as shares climbed on Monday, Ms. Krosby and other analysts said there was plenty of new economic information in the week ahead that could upend the gains of the last three sessions, including jobless claims and the Consumer Price Index. In addition, Monday’s volumes were low.

“When the buying picks up, we like to see more buying,” she said. “It is an indication of more conviction.”

New deals helped propel Monday’s market. A multibillion-dollar Google deal, a rise in commodity prices and the perception that European leaders and the central bank would take measures including bond purchases to support heavily indebted member countries could be helping, analysts said, though such sovereign debt and economic problems are expected to remain a factor in the markets.

Financial stocks rose, including Bank of America, which increased 7.9 percent to $7.76. It took steps on Monday to leave the international credit card business, agreeing to sell its $8.6 billion Canadian card venture to the TD Bank Group for an undisclosed amount, and putting its remaining European card portfolio on the block.

Citigroup was up 4.8 percent to $31.27.

Worries about the United States economy and the threat of a financial crisis in Europe had already overwhelmed traders, but the downgrade proved to be a tipping point, sending stocks reeling in what turned out to be one of the most tumultuous weeks on Wall Street.

Analysts said that investors were taking a second look at some of the causes of the volatility from last week.

Investors’ attention was focused on a meeting Tuesday of Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France.

The two leaders will be addressing the threat to the euro zone posed by low growth and teetering public finances in some euro member nations, their room to maneuver circumscribed by fears that France could be next for market attacks.

“People are taking a more rational view of the path ahead, that some of the problems in Europe can be addressed with additional spending restraint from some of the governments,” which will take time, said Russell Price, senior economist with Ameriprise Financial.

The euro rose against the dollar, a development that Ms. Krosby of Prudential attributed to expectations for the Merkel-Sarkozy meeting.

The price of the benchmark 10-year Treasury note fell 14/32, to 98 12/32, and the yield rose to 2.31 percent, from 2.26 percent late Friday.

“Today was a day that people took a little bit of a rest to try to digest all the news that has happened and the volatility that has happened in the market recently,” said George Rusnak, national director of fixed income for Wells Fargo.

Broader commodity prices were up, and investors were probably bargain hunting after last week’s declines, said Keith B. Hembre, the chief economist and chief investment strategist at Nuveen Asset Management.

“It is part of the market trying to find its feet,” he said. “Despite the bounce on Friday, this market has been really beaten up.”

European stocks showed modest gains. The FTSE 100 index in London was up 0.6 percent. The CAC 40 in France rose 0.8 percent and the DAX in Germany was up 0.4 percent. Asian shares rose, with the Tokyo benchmark Nikkei 225 stock average gaining 1.4 percent.

Ben Protess, David Jolly and Bettina Wassener contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=431835457d49853847cff33f1769cb55

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U.S. Stocks Resume Their Slide After a One-Day Rally

August 10, 2011 by Leave a Comment

The sharp declines of more than 3 percent on the Dow and two other main indexes in less than an hour after the opening bell on Wednesday sent a message to investors: That the rally of about 4.7 percent in the broader market on Tuesday had no basis to last. Stocks had surged after the Federal Reserve announced that while it would not be coming to the rescue with some new program to stimulate the economy, it would leave interest rates unchanged for a couple of years.

But the rally stalled Wednesday morning. As it had been in recent weeks, market sentiment was shaken by the confluence of events that had plagued it, including the Standard Poor’s downgrade of the United States credit rating, weak data related to the United States economy, and the euro zone’s fiscal problems.

As the flight from risky assets heated up, 10-year government bonds prices rose. Yields declined to 2.14 percent from 2.25 percent on Tuesday.

“The market psychology is such that investors no longer seem to know who or what to root for and all that they do know is, according to the Fed, that rates will remain low until the middle of 2013,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company.

By midmorning the Dow was down 410 points, or 3.65 percent. The Standard Poor’s 500-stock index lost 41.33 points, or 3.52 percent, and the Nasdaq composite index was off 80.09 points, or 3.23 percent.

Financial stocks, in particular, were trading lower, down by about 6 percent.

The Fed is hoping that its statement, which three of the 10 members of the Federal Open Market Committee voted against, will encourage investment and risk-taking by keeping the cost of borrowing extremely low until at least mid-2013. Still, it suggested that the United States monetary authorities are now adopting the same policy pursued by the Bank of Japan over the last decade with marginal effect.

The Fed’s pledge to hold short-term interest rates near zero for at least two more years to support the faltering United States economy “has helped to stabilize sentiment in equities and other risky asset markets — at least for now,” analysts at Standard Chartered wrote in a research commentary. However, they added: “The heavy emphasis on downside risks to growth suggests the pendulum of investor sentiment can quickly rotate back to a more risk-averse stance in coming days.”

The strong rally on Tuesday in the United States had spilled over when Asian markets opened on Wednesday but then lost steam when the baton was passed to Europe.

Stocks turned sharply downward in European afternoon trading, led by banking shares. French banking stocks dropped amid rumors that a downgrade of France’s AAA credit rating was imminent, though none of the major ratings agencies has recently signaled that such a move was on the horizon. The French bank Société Générale fell about 18 percent, while its rival BNP Paribas fell more than 9 percent. Intesa Sanpaolo, the Italian lender, fell almost 11 percent.

Laetitia Maurel, a spokeswoman for Société Générale, declined to comment on the share price decline, but said the bank’s fundamentals remain strong, with a first-half 2011 net profit of 1.663 billion euros, even after booking losses for its share of the Greek rescue. “The market seems to fear a global recession, but I don’t think that’s going to happen,” Valérie Cazaban, a fund manager at Stratège Finance, said. “Emerging markets are still strong and the United States, though manufacturing is weakening, should avoid returning to recession.”

“For the short term, I think we’ve seen the worst for stocks,” she added. “Valuations are very low considering companies’ profitability and balance sheets. Volatility will stay high, but stock prices aren’t far from their lows.” Still, she said, governments and central banks, having ruled out further fiscal stimulus, have no tools other than liquidity injections left to address the ongoing crisis, meaning that “over the longer term, considering the possibility of inflation, we may not have such a brilliant future. We’ll still have problems left to deal with.”

President Nicolas Sarkozy of France returned from vacation on the French Riviera to meet with officials, including his finance minister and the governor of the Bank of France, on what his office called “the economic and financial situation.”

David Jolly and Bettina Wassener contributed reporting.

Article source: http://www.nytimes.com/2011/08/11/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Wall Street Ahead After Fed Testimony

July 13, 2011 by Leave a Comment

Stock indexes rose sharply Wednesday as the Federal Reserve chairman spelled out ways the central bank might stimulate the American economy if weakness persists and if the threat of deflation, or falling prices, reemerges. The rally came after three days of losses, but then it lost steam in the final hours of Wednesday trading.

Ben S. Bernanke’s remarks to Congress were far from a promise for more economic stimulus, but markets reacted immediately nonetheless. The Dow Jones industrial average nearly doubled its morning gains in 10 minutes, and the dollar fell as investors shed lower-risk assets. Some of the stock market’s gains fizzled in afternoon trading.

“It’s a complete overreaction,” said Barry Knapp, head of United States equity strategy at Barclay’s Capital. Mr. Knapp said Mr. Bernanke’s remarks indicated the economy would have to deteriorate substantially for the Fed to step in.

In afternoon trading Wednesday, the Dow Jones industrial average gained 54.30 points, or 0.44 percent, to 12,501.18, and the Standard Poor’s 500-stock index gained 5.14 points, or 0.39 percent, to 1,318.78. Both indexes had been up as much as 1.4 percent earlier.

The Nasdaq composite index, which focuses on technology shares, rose 16.04 points, or 0.58 percent, to 2,979.95.

Energy and materials stocks rose more than the overall market as investors bought companies that would benefit most from an upturn in the economy. All 30 of the stocks in the Dow average rose, led by the heavy equipment maker Caterpillar with a 2.2 percent gain.

The Fed’s policy of ultra-low interest rates and buying Treasury bonds on the open market has pushed stocks higher since last August. Many traders were disappointed when the Fed ended its second round of bond purchases in June.

The first sign that Fed governors were considering new stimulus measures came Tuesday afternoon, when the Fed released minutes from its June 21-22 meeting. Those minutes indicated that some Fed officials favored taking more action to prop up the economy if needed.

In his testimony before Congress, Mr. Bernanke spelled out specific steps the Fed might consider if the economy gets worse, including another round of bond purchases. He also detailed what the Fed would do should the economy improve.

Mr. Bernanke’s position remains that the slowdown in the economy this spring was due largely to temporary factors including high gas prices and parts shortages caused by the earthquake in Japan. He said he still expects economic growth to pick up in the second half of the year.

Remarks from the Fed chairman often have an immediate effect on stocks. During a speech in Jackson Hole, Wyo., last Aug. 27, Bernanke outlined an effort to spur economic growth, put a floor under consumer prices and push markets higher through the purchase of government bonds.

So was Bernanke’s talk in front of Congress today akin to his 2010 speech at Jackson Hole?

Joe Saluzzi, co-head of equity trading at Themis Trading in Chatham, N.J., agreed that the market’s rally was an overreaction. “It’s just silliness in my opinion. There’s nothing new here,” he said. “But the bulls are taking this as `This is fantastic.” ’

Signs of healthy growth in China also helped push stocks higher. The Chinese government reported that the country’s economy grew at a slower but still healthy rate of 9.5 percent last quarter. China is attempting to rein in its expansion and ease inflation, but a sudden drop-off in growth could hurt the American economy by cutting into demand for exports.

Markets were also higher as fears abated that Italy would default on its debt. The SP 500 fell 2.9 percent over the past three days as traders worried one or more European countries would fail to pay their debts, causing a global slowdown in lending.

A successful auction of Italian government debt and a pledge by that country’s leaders to accelerate cost-cutting plans reassured markets that Europe’s third-largest economy was not on the verge of becoming the latest European country to need emergency financial support to avoid a default. Italian stocks rallied 1.8 percent on relief that Italy’s fiscal outlook was not as shaky as believed just a few days ago.

Article source: http://feeds.nytimes.com/click.phdo?i=f898e472297c4b0177b197846f741928

Filed Under: Economy News Tagged With: , ,
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