March 28, 2024

Week Finishes on a High Note for the Markets

The Dow Jones industrial average and the Standard Poor’s 500-stock index ended at milestone highs on Friday, as shares posted a third consecutive week of gains when a rise in Google and other technology shares offset a slide in energy stocks.

Nasdaq led gains, bolstered by a 1 percent rise in Google’s stock.

Indexes were flat for much of the session, but managed a late-day surge. On Thursday, the S. P. 500 broke a five-day streak of new closing highs.

Stocks have risen on the Federal Reserve’s bond buying and some encouraging corporate earnings, but analysts said the momentum could wane without further positive signs.

“I think it’s going to be hard to maintain these levels in the short term,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Maryland, which has about $13 billion in assets.

“There are not a lot of positive catalysts to keep it going,” she said, noting that spending cuts by the federal government could pressure the economy in the near term.

Oil prices tumbled as the dollar hit a four-and-a-half-year high against the yen, and the dollar index was on track for its strongest week in 10 months against other major currencies. A strong dollar makes commodities priced in dollars, like gold and oil, more expensive for foreign investors, pressuring shares of energy and basic materials companies.

The Dow Jones industrial average was up 35.87 points, or 0.24 percent, at 15,118.49. The S. P. 500 was up 7.03 points, or 0.43 percent, at 1,633.70. The Nasdaq composite index was up 27.41 points, or 0.80 percent, at 3,436.58.

The S. P. 500 is up 14.6 percent for the year. For the week, the Dow rose 1 percent, the S. P. 1.2 percent and the Nasdaq 1.7 percent.

Among energy stocks, Exxon Mobil lost 1 percent to $90.14.

Shares of Hess slid 2.3 percent to $69.30. John B. Hess, its chief executive and son of the company’s founder, is being stripped of his duties as chairman as the oil and gas company scrambles to keep an activist investor at bay.

The S. P. energy index dropped 0.5 percent as Brent and West Texas Intermediate crude oil prices fell.

Shares of Priceline jumped 3.8 percent to $765.41, a day after the online travel company reported a first-quarter profit that topped estimates.

The benchmark 10-year Treasury note fell 25/32 to 98 21/32. Its yield rose to 1.90 percent, from 1.81 percent.

Article source: http://www.nytimes.com/2013/05/11/business/daily-stock-market-activity.html?partner=rss&emc=rss

Jobs Data Cements a Bad Week for the S.&P. 500

Weak data on jobs tripped up Wall Street on Friday, capping the worst week of the year for the Standard Poor’s 500-stock index and throwing cold water on optimism that the country was finally poised for a sustained recovery.

The employment figures for March showed that employers added the fewest jobs in nine months and that more people gave up looking for work. Employers added just 88,000 jobs, according to the Labor Department’s monthly survey. That is half the pace of the previous six months. The report was far worse than economists had forecast and a disappointment for investors following positive signs on housing and the job market over the winter.

The Dow Jones industrial average fell 40.86 points, to 14,565.25, down 0.3 percent. The index was down as much as 171 points in the early going, but it rose gradually throughout the day. The Standard Poor’s 500 fell 6.70 points, or 0.4 percent, to 1,553.28. The S. P. was down 1 percent for the week. The Nasdaq composite index, which includes many technology companies, fell 21.12 points, or 0.7 percent, to 3,203.86.

The employment survey, one of the most closely watched economic indicators, dented investors’ confidence in the country’s economic rebound. The stock market has surged this year, and the Dow hit another high close on Tuesday. The index is still up 11.2 percent this year.

“Things are still looking decent, but there’s no doubt that this was a bit of a disappointment,” said Brad Sorensen, the director of market and sector research at Charles Schwab. “We’re watching to see: is this the start of another soft patch?”

The Treasury’s benchmark 10-year note rose 15/32, to 102 4/32, and the yield plunged to 1.71 percent, from 1.77 percent late Thursday. The yield declined to 1.69 percent at one point on Friday, the lowest since December. The benchmark rate has declined sharply over the last month, from 2.06 percent on March 11, because demand for low-risk assets increased as evidence mounted that domestic growth was slowing.

Technology stocks fell the most of the 10 industry groups in the S. P. 500, dropping 1 percent. Among big decliners in tech stocks, Cisco Systems shares fell 43 cents, or 2 percent, to $20.61. Oracle stock dropped 34 cents, or 1 percent, to $32.03.

Investors were cutting their exposure to risk, in addition to buying Treasuries, by playing it safe with companies that provide rich dividends and stable earnings. Utilities and telecommunications industries, for example, bucked the downward trend in the market, with both rising 0.4 percent on Friday.

The Dow Jones transportation average, which includes airlines like United and Delta and shipping companies like U.P.S. and FedEx, was down 3.5 percent for the week, its biggest weekly decline since September. The index is thought to be a leading indicator of the broader market.

Investors will shift their focus to earnings reports next week.

Alcoa, the first company in the Dow index to report earnings, will release its first-quarter financial results after the markets close on Monday.

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

Economy Shows Some Positive Signs

While other data on Thursday showed that industrial output shrank for the first time in seven months in November, much of the decline came from auto production, which analysts said had been held back by temporary supply disruptions.

“It looks like we have just hit a clear patch on the road to recovery, where things are going to speed up a little bit,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, N.C.

Although growth is quickening from the third quarter’s 2 percent annual rate, analysts cautioned that troubles in debt-stricken Europe pose a major risk to the economy in the United States. The fourth quarter growth rate is expected to top 3 percent.

Much of the rest of the global economy is already weakening, with the euro zone — the 17 nations in the European Union that use the euro — expected to slip into recession.

In the United States, initial claims for state unemployment benefits dropped 19,000 to 366,000, the lowest since May 2008, the Labor Department said. That follows a report earlier this month that showed the jobless rate hit a 2 1/2-year low of 8.6 percent in November.

The economy’s firming tone was also emphasized by data showing an acceleration in factory activity in New York state and the mid-Atlantic region this month.

The Philadelphia Federal Reserve Bank said its index of business conditions rose to its highest level since March as new orders surged. A separate report showed business activity in New York state at its highest since May, with a strong rebound in new orders and an improvement in hiring.

But the Fed’s industrial production report took some of the shine off the two regional factory surveys. Output at the nation’s mines, factories and refineries dropped 0.2 percent in November after rising 0.7 percent in October.

The decline was led by a 0.4 percent drop in factory output, which reflected a 3.4 percent slump in motor vehicle production.

Economists, however, blamed a scarcity of auto parts from flood-ravaged Thailand for the weakness. They said it also most likely weighed on production of high-technology goods, which were down sharply for a third consecutive month.

“We are not worried about the health of the manufacturing sector,” said Michelle Girard, a senior economist at RBS in Stamford, Conn.

“Inventories are lean and firms will likely need to restock after a decent holiday season. Automakers also plan healthy production increases in the first quarter,” she said.

FedEx on Thursday provided a further signal the economy was gaining momentum, saying demand for residential delivery services was rising with “healthy growth” in online shopping.

Honeywell International, the maker of products ranging from cockpit electronics to control systems for large buildings, also struck an upbeat note on the economy and predicted strong sales growth next year.

Another report from the Labor Department showed wholesale prices rose 0.3 percent last month, reversing October’s 0.3 percent fall, as food prices climbed 1 percent. Excluding food and energy, producer prices were up a mild 0.1 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=3266aa532a0b272691c41e1fc13a91b9

Economix: Podcast: Jobs, Wages and Middle-Class Costs

A drop in the unemployment rate and a jump in job creation must count as good news, but this is no time for celebration.

After all, at 8.8 percent, unemployment is still very high,even if the current rate is down slightly from 8.9 percent a month ago, and at the current pace of growth in jobs, a painfully large number of people will be out of work for years to come.

Still, as Michael Powell says on the new Weekend Business podcast and writes in The Times, there are some very positive signs embedded in the Labor Department’s monthly report. Manufacturing, for example, a downtrodden sector that has been in decline in the United States for decades, has been reviving in the economic recovery. Most sectors reported net job gains in March, and they occurred despite several global crises — the turmoil in the Middle East, the disasters in Japan and the debt problems in Europe.

In the United States, it’s tough enough to get a job in the current environment. It’s even tougher to get one that pays a living wage, as Motoko Rich observes in another discussion on the podcast. She talks about a new study, which she covered for The Times, indicating that many working people are unable to make ends meet.

The study, by Wider Opportunities for Women, a nonprofit group, found that a single worker needs an average income of $30,012 a year — or just above $14 an hour — to cover expenses and save for retirement and emergencies. That’s nearly three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour.

Recent census data indicates that 14.3 percent of Americans were living below the official poverty line in 2009, and many working people are undoubtedly living below the income level defined in the study.

Robert Frank, the Cornell economist, looks at the cost of a middle-class existence in the Economic View column in Sunday Business. In the podcast, he notes that the most commonly used measure of average income — per capita gross domestic product, or G.D.P. — has gone up fairly steadily in the United States, but says it doesn’t give the full picture.

Among other shortcomings, he says, it doesn’t reflect the effects of growing income inequality. In reality, median wage earners now have a much heavier burden than those of previous generations, when you measure the work required to give a family an average home and children access to an average school.

The unusually tight synchronization of global financial markets is the subject of my Strategies column in Sunday Business, which I discuss with Motoko Rich on the podcast. Markets in various regions and for a range of asset classes — including stocks, bonds and commodities — have been moving together to a very extreme degree, recent studies have shown.

“Risk on, risk off” trading helps to explain some of this pattern. The phrase is trading jargon referring to a central decision these days — whether to hold high-risk, high-reward assets, or to move to a position of greater safety. Since the shocks of the financial crisis, this focus on risk has helped to increase the correlations of diverse markets, as has the growth of advanced communications and trading technologies.

The high correlation implies that many portfolios may be less well diversified than investors believe. In addition, financial institutions themselves may be exposed to greater risks than anticipated.

The podcast also discusses Tiger Woods’s stalled career in golf course design, which Paul Sullivan writes about on the cover of Sunday Business. He tells David Gillen that the troubles of the great golfer extend to his ventures in creating courses in the United States and abroad.

In the podcast’s news summary, I discuss a resignation at Warren Buffett’s Berkshire Hathaway and the controversial trades that preceded it, the compensation of executives at Fannie Mae and Freddie Mac, and a flare-up in the European debt crisis.

You can find specific segments of the show at these junctures: jobs report (33:13); news and wage study (26:47); Tiger Woods golf courses (19:48); Robert Frank (13:39); risk on, risk off (6:31); the week ahead (1:43).

As articles discussed in the podcast are published during the weekend, links will be added to this posting.

You can download the show by subscribing from the New York Times podcast page or directly from iTunes.

Article source: http://feeds.nytimes.com/click.phdo?i=0c0b29b1903e7111e85a1ec8e35e99d2