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Wall St. Slides After Bleak Jobs Report

September 3, 2011 by Leave a Comment

Many investors had sold stocks ahead of the Labor Department’s jobs report, which analysts in a Bloomberg News survey had forecast would show a gain of 68,000 nonfarm payrolls.

The monthly report showed there was no job growth in the United States in August, and the flat performance had a direct impact on stocks in market-sensitive sectors.

The August jobs figure was down from a revised 85,000 new jobs added in July. The unemployment rate stayed at 9.1 percent in August, the department said.

Philip J. Orlando, chief equity market strategist at Federated Investors, said the jobs report 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 pullback.”

In addition, analysts said financial stocks were hurt during the day by the prospect that a federal agency was set to file lawsuits against more than a dozen big banks over their handling of mortgage securities. Regulators filed the suits on Friday.

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, Citigroup and Deutsche Bank, among others.

“This is not good news from the perspective of the banking sector,” Mr. Orlando said.

When the stock market opened, all three major Wall Street indexes slid lower and stayed there. The Dow Jones industrial average closed down 253.31 points, or 2.20 percent, at 11,240.26. The Standard Poor’s 500-stock index was down 30.45 points, or 2.53 percent, at 1,173.97. Both indexes ended the week lower, the Dow by 0.3 percent and the S. P. 500 by 0.2 percent.

The Nasdaq composite index ended the day down by 65.71 points, or 2.58 percent, at 2,480.33. But it managed to squeeze out a 0.2 percent gain for the week.

The Treasury’s benchmark 10-year note rose 1 8/32, to 101 6/32, and the yield fell to 1.99 percent from 2.13 percent late Thursday.

Kate Warne, investment strategist at Edward Jones, said the jobs report raised fresh concerns about whether the economy might be headed for a new recession.

“Clearly, stocks are responding to the very disappointing jobs report,” Ms. Warne said. “It is one more piece of bad news that is really leading to a reassessment of the possibility of even slower economic growth.”

Though she said she did not believe there would ultimately be a double-dip recession, “the risks probably have risen.”

Financial stocks were affected by the jobs report because of its implications for the real estate market, retailing and consumer lending. The financial sector slid by 4 percent, dragging down the broader market, with the five most actively traded banks in the sector each down by 4 percent or more. Bank of America was more than 8 percent lower at $7.25. Wells Fargo was down 4 percent at $24.20 and JPMorgan was down more than 4 percent at $34.63.

Ms. Warne said that the impending lawsuits meant the banks would face additional legal troubles from lending that took place before the last recession. “There are not just concerns about weak growth, but increased worries that those problems are not behind them,” she said.

Industrial shares fell more than 3 percent. General Electric was down by 2.7 percent at $15.76. CSX was down 4.5 percent at $20.56.

Lower market results in the United States came after declines in Asia and Europe. The Euro Stoxx 50 index closed down by 3.69 percent. The DAX in Germany lost 3.36 percent and the CAC 40 in France fell 3.59 percent, while the F.T.S.E. in Britain was down by 2.34 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 turned in 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 would probably continue in September because of weak economic data from the United States and Europe.

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

Economists from Goldman Sachs said that the Fed was more likely to 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 encourage banks to lend more.

Oil futures in New York for October delivery fell 2.8 percent to about $86.45. Energy related stocks declined by more than 2.5 percent.

Gold fell about 2.8 percent to $1,873.70.

Shaila Dewan and Nelson D. Schwartz contributed reporting.

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Wall Street Recovers After Slipping on Fed Remarks

August 26, 2011 by Leave a Comment

The absence of an announcement on any new economic stimulus by the Federal Reserve chairman appeared to briefly disappoint investors on Friday, sending Wall Street indexes down by more than 1 percent, but they more than made up the decline by afternoon.

The financial markets had pinned their hopes early this week on some new announcement by the Fed chairman, Ben S. Bernanke, of aid to the economy at a symposium in Jackson Hole, Wyo., on Friday. But expectations began to wane by Thursday, when indexes closed more than 1 percent lower.

On Friday, shortly after Mr. Bernanke started to deliver his speech, investors generally got what they had been expecting. Mr. Bernanke said the economy was recovering and the nation’s long-term prospects remained strong, but he offered little indication of any plans for additional measures to bolster short-term growth.

The Standard Poor’s 500-stock index promptly slipped 2 percent. The Dow Jones industrial average lost 1.8 percent, and the Nasdaq composite index slipped 1.3 percent. But within a half-hour, there was some recovery, and by afternoon, the S. P. was up 1.5 percent, the Dow was up 1.3 percent and the Nasdaq rose more than 2 percent.

“It was a bit of a nonevent,” said Schwab’s chief investment strategist, Liz Ann Sonders, referring to the impact of the speech.

While Mr. Bernanke “did not close the door to anything,” she said, it appeared that the Fed wanted to give itself more time to assess the economy. “They continue to say they expect growth to pick up in the second half of the year. At least that is a non-negative.”

Mr. Bernanke made his standard announcement that the Fed would take any steps necessary to help the economy, and he said the issue would be discussed at the next meeting of the Fed’s policy-making board, in late September. But he made no mention of the measures the Fed might take, something he has provided on several occasions earlier this year.

Nigel Gault, the chief United States economist for IHS Global Insight, said the initial equity market reaction to the Fed statement was negative since there was no mention of new action, but the market probably turned around in the hope that action would still come in September. “Unfortunately, the Fed doesn’t have any rabbits to pull out of the hat to magically re-ignite economic growth,” said Mr. Gault.

Still, there were other factors at work on the markets on Friday. Technology shares pulled up the broader market, and on the Nasdaq, Aruba Network rose more than 20 percent. It reported on Thursday that fiscal fourth-quarter revenue was up 47 percent year over year, and the company said it was confident it would increase market share in the 2012 fiscal year.

Aside from corporate results, there were economic data points to contend with. After taking in disappointing jobs data on Thursday, the markets heard that gross domestic product for the second quarter rose at annual rate of 1.0 percent, the Commerce Department said, a downward revision of its prior estimate of 1.3 percent. Economists had expected growth to be revised down to 1.1 percent. In the first quarter, the economy advanced just 0.4 percent.

Clark Yingst, the chief market analyst at Joseph Gunnar, said the markets had already sent out signals before the speech that investors did not appear to be expecting anything new, but he also said they could be reacting to the new G.D.P. number. Stocks and the dollar were lower, and gold firmed slightly.

“The slight weakness in the dollar might be a knee-jerk reaction to that,” Mr. Yingst said of the new data. “The market is still anticipating certainly no official announcement of any change in monetary policy.”

Gold, which is typically a safe-haven asset, has been declining in recent days as many analysts said it was overpriced. On Friday Comex futures showed a slight increase, rising to $1,785.30 an ounce.

“Gold and the dollar are inversely related, so I think on the headline G.D.P. report, gold is higher,” Mr. Yingst said. “It may be nothing more than a bit of a bounce. I don’t think the action in gold and the dollar is anticipating something” from Mr. Bernanke.

The benchmark 10-year Treasury bond yield was lower at 2.185 percent.

Stock markets in Europe also fell for a second day, and markets in Asia were mixed on Friday.

Markets continued downward Friday in Hong Kong, where the Hang Seng index was 0.86 percent lower by midafternoon, and in India, where the Sensex was down 1.1 percent by the afternoon. The Nikkei 225-stock index rose 0.3 percent after Prime Minister Naoto Kan announced his resignation.

Binyamin Appelbaum contributed reporting from Jackson Hole, Wyo., and Julia Werdigier contributed from London.

Article source: http://www.nytimes.com/2011/08/27/business/global/daily-stock-market-activity.html?partner=rss&emc=rss

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Wall Street Indexes Are Mixed; Oil Prices Fall

May 3, 2011 by Leave a Comment

Investors turned their attention back toward the state of the economic recovery and the outlook for interest rates as any euphoria surrounding the death of Osama bin Laden ran its course.

“The markets appear to be looking beyond” Bin Laden’s death, a trader at Spreadex, Andrew Sykes, said “and worries about index levels and the economic recovery are moving to center stage.”

A heap of data on the economy and corporate earnings will likely sway the stock and bond markets for much of the week, culminating in the April jobs report on Friday.

The nation’s automakers are expected to report that American sales of cars and trucks rose 19 percent in April. Americans probably more bought cars during the month because of fears that the earthquake in Japan would lead to shortages.

In early trading, the Dow Jones industrial average was up 8.93 points or 0.1 percent, while the broader Standard Poor’s 500-stock index lost 3.03 points or 0.2 percent. Nasdaq dropped 12.55 points or 0.4 percent.

In London, the FTSE 100 index was up less than 0.2 percent while the DAX in Frankfurt fell 0.5 percent. The CAC 40 in France was 0.35 percent lower.

Bond prices were up, sending yields lower. The yield on the 10-year Treasury note fell to 3.27 percent from 3.28 percent late Monday.

In the commodities markets, the oil prices fell below $113 a barrel Tuesday as a stronger dollar made crude more expensive for investors with other currencies. Crude for June delivery was down $1 at $112.52 a barrel in New York trading.

Gold, silver, corn, wheat and soybeans were all lower.

Some analysts considered Bin Laden’s death a minor issue for the oil market, and were more focused on monetary policy. The Federal Reserve chairman, Ben S. Bernanke, said last week that the United States would keep interest rates low for an extended period, comments that helped weaken the dollar.

“In a number of respects, Ben Bernanke is much more central to the future of oil prices than Osama bin Laden,” Cameron Hanover said in a report. “We have seen the impact a weaker U.S. dollar has had on oil prices.”

Earnings reports are mixed on Tuesday. Net income for the drug maker Pfizer increased by 10 percent, in part because of lower costs for production. But Pfizer, the maker of the cholesterol drug Lipitor and impotence pill Viagra, said its revenue fell slightly.

The home builder Beazer Homes USA reported a larger-than-expected loss. Beazer’s orders for new homes fell, reflecting continued weakness in the housing industry.

And the Molson Coors Brewing said its net income fell 21 percent on rising costs for ingredients and fuel.

In Europe, investors will be keeping a close watch on interest rate decisions from the European Central Bank and the Bank of England later this week. Neither is expected to change interest rates, though the European Central Bank is expected to indicate Thursday that it will follow April’s interest rate increase — the first in nearly three years — with another rise in June.

That belief has bolstered the euro currency in the last couple of months despite debt problems, most notably in Greece, Ireland and Portugal. While the European Central Bank is poised to raise interest rates again, the Federal Reserve in Washington has shown few signs that it is ready to lift its super-low interest rates. That has added to the dollar’s recent weakness against the euro.

The euro was at $1.4831 on Tuesday — just off Monday’s near 18-month high of $1.4902. Meanwhile, the dollar was 0.6 percent lower at 80.71 yen.

Interest rates were in focus in Asia earlier after India’s central bank raised its benchmark interest rate by half a percentage point, warning that persistent inflation has become a threat to growth in Asia’s third-largest economy.

India’s reserve bank, which has raised borrowing costs nine times in just over a year, warned that economic growth would slow to about 8 percent this year while inflation would remain close to 9 percent for the first half of the fiscal year.

Unsurprisingly, share prices fell and India’s Sensex index was down 2.4 percent.

Bucking the trend in Asia, mainland Chinese shares rose after markets reopened following Monday’s May Day holiday.

The Shanghai Composite Index gained 0.7 percent to close at 2,932.19, while the Shenzhen Composite Index rose 1.1 percent to end at 1,214.12. Hong Kong’s Hang Seng Index fell 0.4 percent to end at 23,633.25

Article source: http://www.nytimes.com/2011/05/04/business/04markets.html?partner=rss&emc=rss

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Wall Street Indexes Try to Find Their Footing

April 29, 2011 by Leave a Comment

Caterpillar , the Chevron Corporation and Merck Company each beat earnings forecasts for the first-quarter. Merck, the pharmaceutical giant, said its profit more than tripled because of much lower restructuring and merger costs.

Caterpillar, the world’s largest maker of mining and construction equipment, rose 2.25 percent in early trading after the company said its earnings rose more than fivefold. The company also raised its sales and profit outlook for the year. Caterpillar is closely watched on Wall Street as a sign of the health of the global economy. Its shares were 1.9 percent while Merck rose 1 percent.

The Goodyear Tire and Rubber Company rose 14.1 percent, the most of any company in the Standard Poor’s 500 index, after it set a company sales record and reversed its loss from the first quarter of last year.

Shares of the home builder D. R. Horton rose 2.4 percent after it reported a surprisingly strong profit. The company said its fiscal second-quarter profit more than doubled mostly because of a large tax benefit. Its shares were 3.1 percent higher.

Shares of Chevron rose1.7 percent after the company said its net income rose 36 percent, its best quarter since 2008.

In economic news, the government said that consumers spent more in March. But that was because they paid more to buy food or fill up their cars with gas. Their incomes also increased, though, as a result of a cut of 2 percentage points in Social Security taxes

In afternoon trading, the Dow Jones industrial average was up 63.65 points, or 0.5 percent. The broader Standard Poor’s 500-stock index was 3.17 points or 0.23 percent higher. The technology heavy Nasdaq were flat.

Shares of Microsoft, the software maker, dropped 4 percent after it reported that revenues from its Windows operating system fell 4 percent from the same time last year.Despite the soft trading on Friday, all three major indexes are substantially higher for the week. The Dow has gained more than 2 percent, while both the S.P. and the Nasdaq have added about 1.6 percent.

Bond prices are falling, sending yields higher. The yield on the 10-year Treasury note fell to 3.31 percent from 3.32 percent late Thursday.

In Europe, the CAC 40 in Paris was flat, while the DAX in Frankfurt was up 0.4 percent. The FTSE 100 in London was closed as the country celebrated the nuptials of Prince William and Kate Middleton.

Economic reports from Europe were downbeat. Inflation in the 17 euro countries crept up to 2.8 percent in April, official data showed, keeping the pressure on the European Central Bank to raise interest rates again later this year.

That has aroused concerns that higher borrowing costs may make it harder for financially troubled countries like Greece, Ireland and Portugal to return to growth and manage their debt.

Other signs for the euro zone remained mixed. Unemployment was steady at 9.9 percent in March, although Spain’s rate rose sharply to a new euro zone record of 21.3 percent in the first quarter.

Nearly 5 million people are out of work now in Spain, the government said, adding pressure on the country as it tries to recover from nearly two years of recession and convince investors that it can handle its own debt load.

Two of Europe’s leading industrial companies reported hefty growth in first-quarter earnings. The German carmaker Daimler AG said net profit nearly doubled as its luxury Mercedes brand kept up its strong sales performance in China.

Total, Europe’s third largest oil producer, said its profit grew 50 percent in the first quarter thanks to sharply higher oil prices.

Meanwhile in Asia, equity markets also reacted nervously to the weak economic data in the United States. American demand for Asian exports may actually slow, said Dariusz Kowalczuk of Crédit Agricole in Hong Kong.

Hong Kong’s Hang Seng index closed down 0.4 percent to 23,805.63, with renminbi units of Hui Xian Real Estate Investment Trust falling 9.4 percent in their trading debut. They are the first equity securities denominated in China’s currency to trade outside of mainland China.

Japan’s Nikkei 225 was closed for the start of Golden Week holiday.

Article source: http://feeds.nytimes.com/click.phdo?i=f490b4187ea14c7055565eb34eae9274

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