June 21, 2021

Wall Street Struggles to Advance

Stocks were mostly lower in choppy trade on Monday as the latest data on manufacturing continued to paint a mixed picture on the strength of the economy.

The Standard Poor’s 500-stock index lost 0.1 percent, the Dow Jones industrial average was 0.4 percent higher and the Nasdaq composite fell 0.6 percent.

The S.P. 500 fluctuated between losses and gains but the Dow managed to post a slight gain, helped by a jump in Merck Company.

“We are at all-time highs and the data is not supporting the all-time highs. There is a realization that unless things start to turn around we could be in for a little bit of a correction,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

A measure of manufacturing activity in the United States contracted in May for the first time in six months, as new orders slipped and there was less demand for exports. The Institute for Supply Management said its index of national factory activity fell to 49 points in May from 50.7 in April, short of expectations for 50.7. A reading below 50 indicates contraction in the manufacturing sector.

In a week that will feature the release of several significant reports on the economy, the most important will be the Labor Department’s nonfarm payrolls report for May, scheduled for Friday. A survey of analysts by Reuters shows an expected 170,000 jobs added, slightly higher than the 165,000 in April.

The Fed’s so-called Beige Book survey of regional conditions is to be released on Wednesday.

Trading has been volatile for the past week, with intraday swings of 1 percent up or down on concerns that the Fed may reduce its monetary stimulus earlier than expected. On Friday, Wall Street dived at the end of the session, finishing more than 1 percent lower.

A popular options gauge that measures the level of anxiety in the market also showed a jump. The CBOE Volatility index, or VIX, was up more than 2 percent at 16.64.

In company news, Merck shares rose 4 percent after the company’s drug designed to unmask tumor cells and mobilize the immune system into fighting cancer helped shrink tumors in 38 percent of patients with advanced melanoma in an early-stage study.

But F5 Networks, a network gear maker, fell more than 6.7 percent after Morgan Stanley downgraded the company to equal weight from overweight.

Markets in Asia and Europe were rattled on Monday by data showing that China’s economy lost some steam last month, with factory activity shrinking for the first time in seven months and cooler growth in services.

European markets, however, erased much of their losses through the day, helped by gains in mining companies.

“The overall theme for the coming weeks is going to be a very volatile trading environment and you are going to have the U.S. and Japan being a significant driver to what is happening in Europe,” said a Rabobank strategist, Lyn Graham-Taylor.

A mixed reading in Chinese data kept intact worries about its growth momentum and weighed on oil as Brent crude slipped to $100 a barrel for the first time in a month, though the figures were not bad enough to trigger active selling in other growth-sensitive commodity or currency markets.

In the debt market, German bond futures had a steady start to the week, while there was more selling of euro zone periphery debt amid signs its 10-month rally might be drawing to a close.

Speaking in China, the president of the European Central Bank, Mario Draghi, said the bank’s yet-to-be-tested bond buying program was “designed to keep government bond yields just below ‘panic’ levels,” not to help government solvency, and that the bank would not intervene if spreads were “fundamentally justified.”

The dollar index, measured against a basket of six major currencies, dropped 0.9 percent. That weakness, and a growing view that the E.C.B. was unlikely to cut interest rates again this week, pushed the euro up 1.9 percent, to $1.3096.

The broadly bearish sentiment in Asia took a toll on Japan’s Nikkei stock average again, as it slid 3 percent to a six-week low.

Article source: http://www.nytimes.com/2013/06/04/business/daily-stock-market-activity.html?partner=rss&emc=rss

Economic Growth Revised Higher in 3rd Quarter, to 3.1%

WASHINGTON — The United States economy grew faster than previously estimated in the third quarter as exports and government spending provided a lift, the Commerce Department said on Thursday in its third estimate of the data.

Gross domestic product expanded at a 3.1 percent annual rate, up from the 2.7 percent pace reported last month. That jump is likely to be lost amid slowing global demand and a move toward tighter fiscal policy, economists say.

It was the fastest growth since late 2011 and also reflected a slightly better pace of consumer spending than previously estimated.

Economists polled by Reuters had expected G.D.P. growth would be raised to a 2.8 percent pace. Exports grew at a 1.9 percent rate, rather than 1.1 percent.

Separately, the Labor Department said the number of Americans filing new claims for unemployment aid rose 17,000 to a seasonally adjusted 361,000 last week, suggesting job growth remains moderate.

The four-week moving average for new claims, a better measure of labor market trends, fell 13,750 to 367,750, the lowest since late October. The data covered the survey period for December nonfarm payrolls.

In the G.D.P. report, government spending was revised to a 3.9 percent growth rate from 3.5 percent, bolstered by a rebound in state and local government outlays. It added three quarters of a percentage point to growth in the third quarter.

The increase from exports is likely to be short-lived against the backdrop of a cooling global economy. Government spending is likely to be a drag in the coming quarters amid belt tightening to trim the budget deficits.

About $600 billion in automatic government spending cuts and higher taxes could be pulled out of the economy in early 2013, which could tip the country back into recession, unless an agreement is reached on a less-punitive plan.

While growth in consumer spending, which accounts for about 70 percent of American economic activity, was raised in Thursday’s revision by 0.2 percentage points to a 1.6 percent rate, that mostly reflected higher health care costs.

Business inventories were trimmed to $60.3 billion from $61.3 billion. Restocking by businesses contributed 0.73 percentage point to G.D.P. growth.

Given the sluggish spending pace, some of the inventory accumulation might have been unplanned, suggesting businesses will need to liquidate stocks this quarter because of weak demand.

Excluding inventories, G.D.P. rose at a revised 2.4 percent rate. Final sales of goods and services produced in the United States had been previously estimated to have increased at a 1.9 percent pace.

Article source: http://www.nytimes.com/2012/12/21/business/economy/economy-grew-3-1-in-3rd-quarter-according-to-revision.html?partner=rss&emc=rss

Job Growth at Halt in U.S.; Worst Showing in 11 Months

The dismal showing, the first time in 11 months that total payrolls did not rise, was the latest indication that the jobs recovery that began in 2010 lacked momentum. The unemployment rate for August did not budge, remaining at 9.1 percent.

As President Obama prepared to deliver a major proposal to bolster job creation next week, the report added to the pressure on the administration, on Republicans who have resisted any new stimulus spending, and on the Federal Reserve, which has been divided over the wisdom of using its limited arsenal of tools to get the economy moving again.

The White House immediately seized on the report as evidence that bold action was needed, calling the unemployment rate “unacceptably high.” Secretary of Labor Hilda L. Solis said in an interview that she hoped the president’s proposals would be embraced by Congress. “If they’re not supported, then he’s going to take it out to the public,” she said.

Republicans, in turn, argued that the numbers were further proof that the policies of Mr. Obama, whom they quickly dubbed “President Zero,” were not working. The lack of growth in nonfarm payrolls was well below the consensus forecast by economists of a 60,000 increase, which itself was none too optimistic. It was a sharp decline from July, which the Labor Department on Friday revised to show a gain of 85,000 jobs.

August’s stall came after a prolonged increase in economic anxiety this summer that began with the brinksmanship in Washington’s debt-ceiling debate, followed by the country’s loss of its AAA credit rating, stock market whiplash and renewed concerns about Europe’s sovereign debt.

On Friday, Wall Street stocks indexes promptly lost more than 2 percent of their value at the opening of trading, with the Dow Jones industrial average down about 200 points by midday, and some economists upgraded their odds for a double-dip recession.

The total employment figure, a monthly statistical snapshot by the Department of Labor, appears slightly more negative because 45,000 Verizon workers were on strike when the survey was taken and their jobs were not included. They will reappear in next month’s total. But even factoring in the Verizon jobs, private sector growth was the slowest it has been since May of last year. In addition, the report showed that job growth in June and July was softer than previously thought.

“As long as payrolls are weak, you will continue to hear cries of not just recession risk, but cries that the United States is in a recession and we just don’t know it,” said Ellen Zentner, the senior United States economist for Nomura Securities.

Economists blamed both sluggish demand for goods and services and the heightened uncertainty over the economy’s direction for the slow pace of job creation, saying political deadlock was creating economic paralysis.

“There is really a darkening cloud that seems to hover over the U.S. economy because of the lack of progress being made on economic issues,” said Bernard Baumohl, the chief economist at the Economic Outlook Group. “There is extreme frustration with Congress and the administration not working together to address the fiscal issues.”

Government continued to shed jobs over all, though small gains were posted at the state level, the Labor Department reported. Local governments, on the other hand, lost 20,000 jobs.

Two of the bright spots in the economy over the last year, manufacturing and retail, lost steam, falling by 3,000 and 8,000 jobs, respectively, in August. The health care sector added 29,700 jobs.

The number of long-term unemployed — people out of work for 27 weeks or more — remained about the same as in July, at 6 million , as did the median duration of unemployment, at 19.6 weeks compared with 19.7 weeks in July.

The general unemployment rate, which counts only people who looked for work in the previous four weeks, held steady at 9.1 percent. But a broader measure that includes people who have looked for work in the last year and people who were involuntarily working part-time instead of full-time, fell slightly to 16.1 percent. The percentage of working-age adults who were employed, already at its lowest rate since 1983, ticked down to 58.5 percent from 58.6 percent.

Though unexpectedly low, the jobs report may not change the mainstream view among economists that the economy will stay in growth mode, albeit at a level that is barely perceptible, much less comforting, to Americans without jobs.

“We’ve got at least another 12 months of difficulty to go through,” said Steven Ricchiuto, United States economist for Mizuho Securities USA. “I know that doesn’t help politicians who are worried about the elections.”

It is unclear whether the report increases the chances that Congress will act on any of the recommendations President Obama may make next week, such as a tax incentive for companies to hire new workers. But several economists said that given the fragility of the recovery, the payroll tax cut and extended unemployment benefits, both set to expire at the end of the year, should be renewed.

“It’s probably not the time for adding to fiscal drag,” said Jim O’Sullivan, the chief economist for MF Global. He said that together the tax cut and unemployment benefits account for 1 percent of the gross domestic product.

Some analysts had already downgraded their forecast for the jobs numbers on Thursday based on new economic indicators including weaker online job advertising, a rise in announced layoffs and a growing pessimism about the job market by consumers. A major report on manufacturing showed slowing employment growth and shrinking production and new orders.

But other indicators suggested that fears of recession have outstripped reality. Consumer confidence dropped sharply and pending home sales dipped, but in July retail sales increased and orders for durable goods — expensive items often purchased on credit — were up 4 percent. A report on chain-store sales indicated modest back-to-school shopping, somewhat slowed by Hurricane Irene.

Article source: http://www.nytimes.com/2011/09/03/business/economy/united-states-showed-no-job-growth-in-august.html?partner=rss&emc=rss