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Stocks Rise on Wall Street

February 27, 2013 by Leave a Comment

Wall Street stocks moved sharply higher on Wednesday as investors awaited a second round of testimony in Congress by the Federal Reserve chairman, Ben S. Bernanke, for clarity on the longevity of the Fed’s economic stimulus program.

The Standard Poor’s 500-stock index added 0.9 percent, the Dow Jones industrial average rose 0.8 percent and the Nasdaq composite jumped 1 percent in afternoon trading.

“Of course, Bernanke is in the spotlight again but I don’t expect him to vary from his comments from yesterday,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

A day earlier, Mr. Bernanke strongly defended the Fed’s monetary stimulus efforts before Congress. His comments eased worries in the financial markets over an early retreat from the Fed’s bond buying program, which had been triggered by minutes of the Fed’s January meeting released a week ago.

His remarks, along with data showing sales of new homes hit a four and a half year high, helped Wall Street stocks rebound Tuesday from their worst decline since November.

Up 6 percent for the year, the S.P. 500 was within reach of record highs a week ago, before the minutes from the Fed’s January meeting were released. Since then, the index has shed 1 percent.

In earnings news, Target posted a lower quarterly profit as sales of food and value-priced items only partially mitigated weakness in holiday spending. The stock fell 1.3 percent.

Dollar Tree reported a higher quarterly profit as the chain controlled costs and as consumer spending improved. The stock rose 10.2 percent.

In Europe, shares rose almost 2 percent, steadying after the previous session’s sharp losses, though jitters over the euro zone kept a lid on gains.

Italy’s 10-year debt costs rose more than half a percentage point at the first longer-term auction since an inconclusive parliamentary election, although they remained below the psychologically important level of 5 percent.

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With No New Jobs in August, Calls for Urgent Action

September 3, 2011 by Leave a Comment

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 253 points by the close of trading, and some economists upgraded their expectations 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.

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Asian and European Markets Recover After Turmoil

August 15, 2011 by Leave a Comment

Investors’ attention was focused on a meeting Tuesday of the German chancellor, Angela Merkel, and Nicolas Sarkozy, the French president. The two leaders will be addressing the threat to the euro zone posed by low growth and teetering public finances in some euro members, their room to maneuver circumscribed by fears that France could be next in line for market attacks.

In early trading on Monday, the Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 0.9 percent, while the FTSE 100 index in London gained 0.5 percent.

Trading in U.S. index futures suggested that Wall Street stocks would rise at the opening bell, as well. The Standard Poor’s 500 index rose 0.5 percent Friday, after a rollercoaster performance during the week, as investors struggled to assess the impact of the U.S. ratings downgrade.

Asian shares rose, with the Tokyo benchmark Nikkei 225 stock average gaining 1.4 percent.

The main Sydney market index, the SP/ASX 200, jumped 2.6 percent. In Hong Kong, the Hang Seng was up 3.3 percent, and in Shanghai, the composite index rose 1.3 percent.

Comex gold futures rose $3.90 to $1,746.50. U.S. crude oil futures for September delivery rose 0.2 percent to $85.54.

Many European investors were taking the Assumption Day holiday off, though markets were open for business across most of the Continent.

In Japan, second-quarter gross domestic product data showing that the economy there had contracted less severely than expected also helped lift sentiment.

The statistics, released by the Cabinet Office early Monday, showed that the Japanese economy, which was battered by a massive earthquake and tsunami in March, had contracted 0.3 percent from the previous quarter, indicating that economic activity had rallied more quickly than expected after the disaster.

The dollar was mixed against other major currencies. The euro rose to $1.4319 from $1.4248 late Friday in New York, while the British pound rose to $1.6294 from $1.6276.

But the dollar was higher against the yen, rising to 76.84 yen from 76.67 yen, and gained to 0.7943 Swiss francs from 0.7777 francs.

“Decent data on Thursday and Friday last week brought a semblance of stability to markets,” analysts at DBS in Singapore wrote in a research note on Monday, referring to U.S. retail sales and jobless figures that were both relatively upbeat.

“Housing, inflation and industrial production will have the do the trick this week,” the DBS analysts commented. “It won’t be easy.”

Bettina Wassener reported from Hong Kong.

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Debt Worries Push European Markets Down

July 14, 2011 by Leave a Comment

A warning that the United States may lose its cherished triple-A credit rating and concerns over Europe’s debt problems weighed on stock markets Thursday, though an indication that the Federal Reserve could provide more monetary stimulus limited losses overseas and pushed Wall Street stocks positive.

Moody’s Investors Service warned late Wednesday that it may downgrade its view on Treasuries because of the failure of the White House and Congress to agree on a deal to raise the $14.3 trillion borrowing limit and avoid a default.

“The review of the U.S. government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes,” Moody’s said. “As such, there is a small but rising risk of a short-lived default.”

The Dow Jones industrial average opened slightly higher, adding 2.35 points to 12,493.96.

In Europe, the FTSE 100 index of leading British shares was down 0.51 percent at 5,876.03 points, while Germany’s DAX fell 0.43 percent to 7,236.53 points. The CAC 40 in France was 0.76 percent lower at 3,764.63.

Though most analysts think the American politicians will agree to raise the threshold by the early August deadline, the warning from Moody’s reminded investors that high debt is not just a European problem and knocked confidence in the markets. China, too, urged the leaders in Washington to “guarantee the interests of investors.” China is the United States’ biggest creditor, holding more than $1 trillion in Treasuries.

“Further talks (between the White House and Congress) are scheduled today and investors will continue to watch the situation, which is likely to keep both the dollar and stock market somewhat sensitive,” said Joshua Raymond, chief market strategist at City Index.

Despite the warning from Moody’s, investors were heartened by comments by the Fed chairman, Ben S. Bernanke, that the central bank was prepared to pump more money into the economy if the current economic lull persists.

Before trading began, JPMorgan Chase reported that its second-quarter profit rose 13 percent, to $5.4 billion, from the period a year earlier.

Earnings from Google, to be released after Wall Street closes, could well be a key factor in how stocks end the week.

Investors were also keeping a close watch on developments in the euro zone, especially in Italy. Earlier this week, there appeared to be a growing sign that Italy and Spain would be dragged into the debt crisis that has already seen Greece, Ireland and Portugal bailed out.

However, an acceleration in the Italian government’s budget proposals has helped calm tensions somewhat, despite news that the government had to pay a far higher interest rate in a five-year bond auction.

The easing in tensions over Europe’s debt crisis has been evident in the currency markets. The euro has recovered since Tuesday, when it slid to below $1.39. On Thursday it was trading slightly higher on the day, at $1.4187.

Earlier in Asia, Japan’s Nikkei 225 stock average finished down 0.3 percent at 9,936.12, while Hong Kong’s Hang Seng index inched up 0.1 percent to 21,940.20. The Shanghai Composite Index climbed 0.5 percent to 2,810.40.

Oil prices hovered near $98 a barrel as traders mulled a possible new round of American monetary stimulus.

Benchmark crude for August delivery was up 29 cents at $98.34 a barrel in electronic trading on the New York Mercantile Exchange.

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Wall Street Stocks Slip as Session Wears On

May 2, 2011 by Leave a Comment

The three main indexes had initially rose as investors absorbed the announcement that Bin Laden had been killed in Pakistan.

“The Osama bin Laden situation really had a nice impact at the open,” Doug Roberts, the chief investment strategist for Channel Capital Research Institute, said. “It looks like a lot of that might have been short-covering.”

But the gains moderated and shares turned as the session wore on. At the close, the Dow Jones industrial average was 3.71 points lower, at 12,806.83 while the broader Standard Poor’s 500-stock index lost 2.04 points, or 0.18 percent, to 1,361.21. The technology heavy Nasdaq lost 9.46points or 0.3 percent at 2,864.08.

The Japanese and South Korean markets were already 1 percent higher before President Obama announced late Sunday that American forces had killed Bin Laden in Pakistan.

In Europe, the Euro Stoxx 50 index, a barometer of euro-zone blue chips, closed up less than a point. The CAC 40 in Paris rose 1.85 points and the DAX in Frankfurt rose 0.18 percent or 13.18 points. London markets were closed for a bank holiday.

Investors also took in latest earnings, corporate mergers and the economic reports, which showed that construction spending rose in March and that manufacturing in the United States continued to expand in April, but at a slower pace.

Among the mergers and acquisition, Teva Pharmaceutical Industries said that it had agreed to buy the biopharmaceutical company Cephalon for $6.8 billion, a deal unanimously approved by the boards of the two companies. Teva shares rose more than 3.5 percent, while Cephalon was up more than 4 percent.

The dollar was mixed. The euro rose to $1.4815 from $1.4806 late Friday, while the British pound slipped to $1.6693 from $1.6706. The dollar rose to 81.47 yen from 81.20 yen.

While the dollar had a slight recovery after President Obama’s announcement, the effect soon faded. The dollar has been weak across the board with United States interest rates low at a time when other central banks are tightening.

In addition, the debt limit negotiations in Congress were hurting the dollar, said Brian Dolan, the chief currency strategist at Forex.com.

“It is still a weak dollar environment,” Mr. Dolan said. Referring to news of Bin Laden’s death, he said: “It does not really alter the economic outlook for the global recovery.”

“That is the significant takeaway: the dollar downtrend is very much intact,” Mr. Dolan said.

While the political and psychological significance of Bin Laden’s death was still being felt, the stock market reaction was relatively mild.

“News of the death of Osama Bin Laden has had a limited impact on regional asset prices,” analysts at Royal Bank of Canada summed up in a note on Monday.

By the close the Nikkei 225 index had gained 1.6 percent and the Kospi by 1.7 percent. This took the Nikkei to 10,004,20 points, the first time it closed above the 10,000-point mark since the devastating earthquake and tsunami that struck the country on March 11.

The news about Bin Laden comes at the start of a week that culminates with the release of the latest retail sales numbers on Thurday and April’s employment report on Friday. Before the markets open, the Chrysler Group reported its first quarterly profit since going through bankruptcy reorganization in 2009, as the company sold more cars at higher prices. Chrysler said it earned $116 million in the quarter, after losing $197 million in the period a year ago. Revenue grew 35 percent, to $13.1 billion, while sales were up 18 percent.

On the economic front, the Institute for Supply Management, a trade group of purchasing executives, said its index of manufacturing activity dipped to 60.4 in April but remained above 60 for a fourth month. That was down from 61.2 in March and 61.4 in February, the fastest expansion in nearly seven years. A reading above 50 signals growth.

In addition, construction spending rose 1.4 percent in March, helped by an increase in spending on home-improvement projects.

In other news of deals, Arch Coal said that it would buy the International Coal Group in a cash deal worth $3.4 billion that will create one of the world’s largest coal producers. Arch was slightly lower, while International Coal rose more than 30 percent.

Dish Network and the EchoStar Corporation have agreed to pay TiVo $500 million to settle a patent infringement lawsuit involving TiVo’s video recording technology, putting an end to a long and costly legal battle. TiVo rose more than 5 percent.

Some of the sharpest reactions to the news of Bin Laden’s death were in the commodities markets.

Benchmark crude oil for June delivery declined 41 cents to settle at $113.52 a barrel in volatile trading in New York.

Many analysts cautioned, however, that bin Laden’s death could stoke, rather than ease, worries about oil supplies and global security in the longer run if it led to retaliatory attacks.

“This is a positive development in the campaign against terrorism,” Jonathan Ravelas, chief market strategist at Banco de Oro Unibank in Manila told Bloomberg News. “In the last 10 years, bin Laden’s presence has been a serious threat to global stability. The flip side is this could be followed by retaliation activities from his supporters.”

Gold, which also initially fell, also turned high in New York trading, rising $3.60 to $1,560 an ounce. The precious metal, which is seen as a safer investment and tends to rise during times of rising inflation and global unrest, has been hitting successive record highs in recent weeks.

Silver prices dropped more than 10 percent on Monday, a declined attributed to a decision by the CME Group, which is the parent of the Chicago Board of Trade, to increase the margins for futures trading on silver.

A commodities analyst at Commerzbank in Frankfurt, Carsten Fritsch, said the rule change, which took effect after business Friday, had made speculating in silver less attractive by requiring investors to tie up more capital while chasing the potential gains.

The price fell because with the higher margin requirement and a widespread sense that silver was overvalued, investors who bought early were selling to lock in gains while those who bought recently were selling to limit losses, Mr. Fritsch said. Silver is still up 45 percent on the spot market this year, the best performance of any commodity, he said.

In India, the Sensex index was 0.6 percent lower by midafternoon amid widespread expectations that the Indian central bank will once again raise interest rates on Tuesday in a bid to tame rising inflation. Most other stock markets in the region, including Singapore, Hong Kong and mainland China, were closed for a public holiday.

David Jolly contributed reporting.

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