NEW YORK (MarketWatch) -- With signs of growth convincingly returning to parts of the globe, some U.S. strategists are turning their attention overseas, either by raising their exposure to global equities or by focusing on U.S. firms with a large chunk of international revenues.
Standard & Poor's Equity Research, which late Wednesday raised its 12-month target on the S&P 500 Index ($SPX) to 1,150 from 1,100, also decided to recommend investors add their exposure to worldwide equities.
"We see equity prices benefiting from an expected gradual rise in global economic-growth projections, a further weakening of the U.S. dollar and the expectation of a continued improvement in corporate [earnings per share]," wrote Sam Stovall, chief investment strategist at S&P, in a note.
On Thursday, the Dow Jones Industrial Average ($INDU) gained 72 points, or 0.8%, to 9,797. The S&P 500 rose 8 points, or 0.8%, to 1,066, while the Nasdaq Composite Index (COMP) advanced 18 points, or 0.9%, to 2,129.
Gains were fueled by aluminum-giant Alcoa Inc. (AA), often seen as a barometer of the economy, which kicked off the third-quarter earnings season by posting a surprise profit.
Alcoa's results were due to a mix of improved demand and aggressive cost cuts. Aluminum prices have risen since June and demand has ticked higher, mostly as China replenishes its stockpiles.
In its latest World Economic Outlook, the International Monetary Fund projected the global economy would grow by 3.1% next year, up from its 2.5% forecast in July. Asia is expected to lead the recovery, with the region expected to grow by 2.8% this year and by 5.8% in 2010.
Among the S&P 500's 10 sectors, S&P recommends overweighting three sectors with high exposure to global growth, such as energy, materials and industrials.
BNY Convergex's chief market strategist Nicholas Colas believes that weakness in the dollar should now benefit the Dow industrials over the S&P 500, given the higher percentage of multinationals represented in the blue-chip average. See full story.
According to Ed Yardeni, chief investment strategist at Yardeni Research, U.S. firms increasingly are trying to find more revenues and earnings overseas, especially among emerging economies.
from MarketWatch
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Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Thursday, October 8, 2009
Wednesday, August 5, 2009
June shows slight gain
WASHINGTON — As gasoline prices rose, Americans spent more in June than in May — despite falling incomes. For the rest of the year, economists expect falling wages and rising unemployment to act as a drag on spending.
Consumer spending is closely watched because it accounts for about 70 percent of economic activity and has helped lift the economy out of previous recessions. While analysts expect the economy to grow in the second half of this year, consumers aren’t likely to lead the way.
Americans boosted their spending 0.4 percent in June, the Commerce Department said Tuesday, the second consecutive monthly increase. But adjusting for inflation, spending fell 0.1 percent, following a flat reading in May. Inflation-adjusted spending hasn’t increased since February, the department said.
Personal income, meanwhile, dropped 1.3 percent in June, the eighth straight decline and steepest fall in four years. Incomes were inflated in May due to one-time payments from the Obama administration’s stimulus program. But wages and salaries also fell 0.4 percent in June.
"The key message is that … income remains weak” and consumers are likely to keep saving more, Paul Dales, U.S. economist at Capital Economics, wrote in a note to clients. "Under those circumstances, we expect spending to remain muted for some time.”
Gasoline prices peaked June 22 after rising nearly every day for two months. A price index included in the income and spending report showed overall prices rose 0.5 percent in June, but were up only 0.2 percent when food and energy are excluded.
by the associated press
Consumer spending is closely watched because it accounts for about 70 percent of economic activity and has helped lift the economy out of previous recessions. While analysts expect the economy to grow in the second half of this year, consumers aren’t likely to lead the way.
Americans boosted their spending 0.4 percent in June, the Commerce Department said Tuesday, the second consecutive monthly increase. But adjusting for inflation, spending fell 0.1 percent, following a flat reading in May. Inflation-adjusted spending hasn’t increased since February, the department said.
Personal income, meanwhile, dropped 1.3 percent in June, the eighth straight decline and steepest fall in four years. Incomes were inflated in May due to one-time payments from the Obama administration’s stimulus program. But wages and salaries also fell 0.4 percent in June.
"The key message is that … income remains weak” and consumers are likely to keep saving more, Paul Dales, U.S. economist at Capital Economics, wrote in a note to clients. "Under those circumstances, we expect spending to remain muted for some time.”
Gasoline prices peaked June 22 after rising nearly every day for two months. A price index included in the income and spending report showed overall prices rose 0.5 percent in June, but were up only 0.2 percent when food and energy are excluded.
by the associated press
Monday, June 15, 2009
Tokyo Shares on the down side
TOKYO (Dow Jones)--Tokyo stocks fell Monday as weaker base metal and crude futures prices prompted profit-taking on commodity shares such as Inpex and Sumitomo Metal Mining, which have gained strongly in recent sessions.
But increased speculation that the worst may be over for the Japanese economy sparked buying in shares of companies mostly doing business domestically, such as real estate shares, helping keep the Nikkei 225 Stock Average above the psychologically significant 10,000 level.
"Buying of defensive shares supported the Nikkei and kept it above 10,000," said Kenichi Hirano, operating officer at Tachibana Securities.
The Nikkei 225 fell 96.15 points, or 1%, to 10,039.67. The Topix index of all the Tokyo Stock Exchange First Section issues fell 3.72 points, or 0.4%, to 946.82. September Nikkei 225 futures ended down 100 points, or 1%, at 10,040 on the Osaka Securities Exchange.
However, Hirano said that some technical charts suggest the market is overheated after its sharp recent gains, and that could lead to more selling to earn profits. The Nikkei has gained 5.4% this month, and is trading 5.2% above its 25-day moving average of 9543.73.
A retreat in the share prices could push the Nikkei to as low as 9900 this week while the upside should be capped at 10,200 this week, analysts say. The market's direction may also be determined by U.S. economic indicators such as May housing starts, with strong numbers likely to increase bullishness in the Japanese market.
Falling prices of metals such as copper dragged down commodity shares such as Inpex, down 1.9% at Y793,000, and Sumitomo Metal Mining, 4.6% lower at Y1,505.
On the London Metal Exchange Friday, copper prices fell $140 at $5,235.0-$5,240.0 per metric ton, while crude oil futures fell $0.64 at $72.04.
A weak session for tech companies on Nasdaq Friday plus profit taking weighed on some Japanese tech exporters including Nikon, which dropped 4.4% to Y1,540 after gaining 5.7% last week. Real estate stocks were notable gainers, with Mitsui Fudosan rising 3.2% to Y1,757.
Helping real estate shares was an upgrade of the sector by Daiwa Institute of Research to Neutral from Underweight. It said the global credit market is becoming more stable, and there are hopes that asset prices would bottom out during this fiscal year through March.
Meanwhile, Japan Tobacco surged 7.3% to Y325,000 after saying late Friday that it will buy U.K.-based Tribac Leaf and integrate it with JT Group's Global Leaf Procurement Group based in Geneva, to gain more control over price and quality of its tobacco leaves.
"Securing a stable supply of tobacco leaves is a positive," said Credit Suisse analyst Yoshiyasu Okihira, adding that shares look cheap at the current price level.
from the wall street journal
But increased speculation that the worst may be over for the Japanese economy sparked buying in shares of companies mostly doing business domestically, such as real estate shares, helping keep the Nikkei 225 Stock Average above the psychologically significant 10,000 level.
"Buying of defensive shares supported the Nikkei and kept it above 10,000," said Kenichi Hirano, operating officer at Tachibana Securities.
The Nikkei 225 fell 96.15 points, or 1%, to 10,039.67. The Topix index of all the Tokyo Stock Exchange First Section issues fell 3.72 points, or 0.4%, to 946.82. September Nikkei 225 futures ended down 100 points, or 1%, at 10,040 on the Osaka Securities Exchange.
However, Hirano said that some technical charts suggest the market is overheated after its sharp recent gains, and that could lead to more selling to earn profits. The Nikkei has gained 5.4% this month, and is trading 5.2% above its 25-day moving average of 9543.73.
A retreat in the share prices could push the Nikkei to as low as 9900 this week while the upside should be capped at 10,200 this week, analysts say. The market's direction may also be determined by U.S. economic indicators such as May housing starts, with strong numbers likely to increase bullishness in the Japanese market.
Falling prices of metals such as copper dragged down commodity shares such as Inpex, down 1.9% at Y793,000, and Sumitomo Metal Mining, 4.6% lower at Y1,505.
On the London Metal Exchange Friday, copper prices fell $140 at $5,235.0-$5,240.0 per metric ton, while crude oil futures fell $0.64 at $72.04.
A weak session for tech companies on Nasdaq Friday plus profit taking weighed on some Japanese tech exporters including Nikon, which dropped 4.4% to Y1,540 after gaining 5.7% last week. Real estate stocks were notable gainers, with Mitsui Fudosan rising 3.2% to Y1,757.
Helping real estate shares was an upgrade of the sector by Daiwa Institute of Research to Neutral from Underweight. It said the global credit market is becoming more stable, and there are hopes that asset prices would bottom out during this fiscal year through March.
Meanwhile, Japan Tobacco surged 7.3% to Y325,000 after saying late Friday that it will buy U.K.-based Tribac Leaf and integrate it with JT Group's Global Leaf Procurement Group based in Geneva, to gain more control over price and quality of its tobacco leaves.
"Securing a stable supply of tobacco leaves is a positive," said Credit Suisse analyst Yoshiyasu Okihira, adding that shares look cheap at the current price level.
from the wall street journal
Tuesday, June 9, 2009
Treasurys mixed
NEW YORK (AP) — A strong auction of three-year Treasury notes Tuesday convinced some investors to buy back into shorter-term government debt.
The gains were small, though, and the Treasury's 30-year bond fell. Traders were less sure that upcoming auctions of 10-year and 30-year Treasurys will go as smoothly.
"There's little more trepidation ahead of the longer-dated auctions," said Kim Rupert, managing director of global fixed income analysis at Action Economics. In the back of investors' minds, she said, is the fear that an auction will go badly — perhaps not this week, but eventually. A poor auction would indicate that demand for government debt is drying up.
As a result, yields will probably keep heading upward, Rupert said.
The yields on two-year, 10-year and 30-year Treasurys have recently reached their highest levels in more than six months. That's been contributing to a rise in mortgage rates; last week, Freddie Mac said the average rate on 30-year mortgages jumped above 5 percent for the first time in nearly three months after hitting record lows in April.
Investors have been selling off Treasurys because of the government's swelling debt load. The concern is that supply is rising too high, and will lead to rampant inflation, which eats into bonds' fixed returns over time.
The Treasury Department auctioned $35 billion in three-year notes Tuesday. Demand was strong, particularly from foreign buyers. The ratio of bids to notes sold was 2.82 — much higher than it has been in recent debt sales.
But investors are more concerned with Wednesday's auction of $19 billion in 10-year notes and Thursday's auction of $11 billion in 30-year bonds. Any indication that demand, especially from foreign central banks who are among the Treasury's biggest customes, is waning would signal problems to the market.
By late trading on Tuesday, the 10-year Treasury note rose 2/32 to 93 30/32. Its yield slipped to 3.86 percent from 3.89 percent late Monday. On Monday, the 10-year yield hit a seven-month high of 3.93 percent.
The yield on the two-year note fell to 1.32 percent from 1.42 percent, as its price fell 6/32 to 99 4/32. On Monday, the two-year yield hit a six-month high of 1.45 percent.
The yield on the three-month Treasury bill slipped to 0.17 percent from 0.18 percent. Its discount rate was 0.18 percent.
The yield on the 30-year bond rose to 4.67 percent from 4.62 percent, as its price fell 25/32 to 93 11/32. The 30-year yield reached 4.70 percent last Friday, its highest yield since last August.
Borrowing costs between banks remain near record lows on continuing signs that the banking industry is healing.
The British Bankers' Association said the London Interbank Offered Rate, or Libor, on three-month loans in dollars was flat at 0.65 percent. On Monday it had edged up 0.02 percentage point from an all-time low.
The Treasury Department announced Tuesday that it is allowing 10 large financial institutions, including JPMorgan Chase & Co, Goldman Sachs Group Inc., and Morgan Stanley, to pay back government bailout funds.
by the associated press
The gains were small, though, and the Treasury's 30-year bond fell. Traders were less sure that upcoming auctions of 10-year and 30-year Treasurys will go as smoothly.
"There's little more trepidation ahead of the longer-dated auctions," said Kim Rupert, managing director of global fixed income analysis at Action Economics. In the back of investors' minds, she said, is the fear that an auction will go badly — perhaps not this week, but eventually. A poor auction would indicate that demand for government debt is drying up.
As a result, yields will probably keep heading upward, Rupert said.
The yields on two-year, 10-year and 30-year Treasurys have recently reached their highest levels in more than six months. That's been contributing to a rise in mortgage rates; last week, Freddie Mac said the average rate on 30-year mortgages jumped above 5 percent for the first time in nearly three months after hitting record lows in April.
Investors have been selling off Treasurys because of the government's swelling debt load. The concern is that supply is rising too high, and will lead to rampant inflation, which eats into bonds' fixed returns over time.
The Treasury Department auctioned $35 billion in three-year notes Tuesday. Demand was strong, particularly from foreign buyers. The ratio of bids to notes sold was 2.82 — much higher than it has been in recent debt sales.
But investors are more concerned with Wednesday's auction of $19 billion in 10-year notes and Thursday's auction of $11 billion in 30-year bonds. Any indication that demand, especially from foreign central banks who are among the Treasury's biggest customes, is waning would signal problems to the market.
By late trading on Tuesday, the 10-year Treasury note rose 2/32 to 93 30/32. Its yield slipped to 3.86 percent from 3.89 percent late Monday. On Monday, the 10-year yield hit a seven-month high of 3.93 percent.
The yield on the two-year note fell to 1.32 percent from 1.42 percent, as its price fell 6/32 to 99 4/32. On Monday, the two-year yield hit a six-month high of 1.45 percent.
The yield on the three-month Treasury bill slipped to 0.17 percent from 0.18 percent. Its discount rate was 0.18 percent.
The yield on the 30-year bond rose to 4.67 percent from 4.62 percent, as its price fell 25/32 to 93 11/32. The 30-year yield reached 4.70 percent last Friday, its highest yield since last August.
Borrowing costs between banks remain near record lows on continuing signs that the banking industry is healing.
The British Bankers' Association said the London Interbank Offered Rate, or Libor, on three-month loans in dollars was flat at 0.65 percent. On Monday it had edged up 0.02 percentage point from an all-time low.
The Treasury Department announced Tuesday that it is allowing 10 large financial institutions, including JPMorgan Chase & Co, Goldman Sachs Group Inc., and Morgan Stanley, to pay back government bailout funds.
by the associated press
Commodity stocks climb
NEW YORK (AP) — Stocks are ending a quiet day mixed, with commodity and technology stocks showing the biggest gains.
Investors have shrugged off news Tuesday that 10 of the nation's largest banks can repay $68 billion in bailout money.
Texas Instruments Inc. boosted tech stocks after raising its profit forecast. And a falling dollar pushed the price of oil to its first finish over $70 a barrel since November and drove prices of metals like copper and aluminum higher.
According to preliminary calculations, the Dow is down 1 at 8,763. The Standard & Poor's 500 index is up 3 at 942. The Nasdaq is up 17 at 1,860.
Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to a relatively low 1.1 billion shares.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW YORK (AP) — Investors reacted coolly to word that 10 of the nation's largest banks can repay $68 billion in bailout money.
Stocks mostly rose in quiet trading Tuesday after the Treasury Department's widely expected announcement that some of the 19 banks would be allowed to give back the money they received from the $700 billion rescue fund created by Congress last October at the height of the financial crisis.
"It's part of the healing process for the banking industry," said Rob Lutts, chief investment officer at Cabot Money Management in Salem, Mass.
Traders had already sized up those banks that they deemed in good enough shape to return the money so they turned their focus to technology and commodity stocks.
The Nasdaq composite index lead the three major stock indicators with a gain of about 1 percent after Texas Instruments Inc. raised its profit forecast for the quarter. That stirred hopes that the semiconductor industry could see a rebound in demand.
A falling dollar pushed the price of oil to its first finish over $70 a barrel since November and drove prices of metals like copper and aluminum higher. The rising prices lifted stocks of energy and materials producers.
A successful government auction of three-year notes that pushed interest rates lower. The good auction results reassured investors, who have worried in recent weeks that rising interest rates would choke off a recovery by making it more expensive to get a mortgage or other loan.
Analysts said the market's third straight day of modest moves wasn't surprising after the 38.8 percent surge in the Standard & Poor's 500 index since it hit a 12-year low exactly three months ago.
"The next three months are just going to be a long, hot flat summer. I don't see a catalyst," said Scott Armiger, portfolio manager at Christiana Bank & Trust in Greenville, Del.
In late afternoon trading, the Dow Jones industrial average rose 7.79, or 0.1 percent, to 8,772.28. The broader S&P 500 index rose 4.03, or 0.4 percent, to 943.17, and the Nasdaq rose 19.95, or 1.1 percent, to 1,862.35.
The banks have been eager to get out of the program to escape government restrictions such as caps on executive compensation. Among the banks that confirmed that they received permission to repay the bailout funds were: American Express Co. rose $1.18, or 4.6 percent, to $26.83, while JPMorgan Chase & Co. slipped 7 cents to $35.32.
Texas Instruments rose $1.27, or 6.4 percent, to $21.04.
Aluminum producer Alcoa Inc. rose 35 cents, or 3.3 percent, to $11.12 and U.S. Steel Corp. rose $2.61, or 7.4 percent, to $37.67. In energy, Occidental Petroleum rose 99 cents to $69.32.
Bond prices were mixed. The benchmark 10-year Treasury note rose, pushing its yield down to 3.86 percent from 3.89 percent late Monday.
In other trading, the Russell 2000 index of smaller companies rose 4.84, or 0.9 percent, to 529.63.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 746.8 million shares compared with 773.7 million shares traded at the same time Monday.
Overseas, Britain's FTSE 100 slipped less than 0.1 percent, Germany's DAX index fell 0.1 percent, and France's CAC-40 rose 0.2 percent. Japan's Nikkei stock average fell 0.8 percent
by the associated press
Investors have shrugged off news Tuesday that 10 of the nation's largest banks can repay $68 billion in bailout money.
Texas Instruments Inc. boosted tech stocks after raising its profit forecast. And a falling dollar pushed the price of oil to its first finish over $70 a barrel since November and drove prices of metals like copper and aluminum higher.
According to preliminary calculations, the Dow is down 1 at 8,763. The Standard & Poor's 500 index is up 3 at 942. The Nasdaq is up 17 at 1,860.
Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to a relatively low 1.1 billion shares.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW YORK (AP) — Investors reacted coolly to word that 10 of the nation's largest banks can repay $68 billion in bailout money.
Stocks mostly rose in quiet trading Tuesday after the Treasury Department's widely expected announcement that some of the 19 banks would be allowed to give back the money they received from the $700 billion rescue fund created by Congress last October at the height of the financial crisis.
"It's part of the healing process for the banking industry," said Rob Lutts, chief investment officer at Cabot Money Management in Salem, Mass.
Traders had already sized up those banks that they deemed in good enough shape to return the money so they turned their focus to technology and commodity stocks.
The Nasdaq composite index lead the three major stock indicators with a gain of about 1 percent after Texas Instruments Inc. raised its profit forecast for the quarter. That stirred hopes that the semiconductor industry could see a rebound in demand.
A falling dollar pushed the price of oil to its first finish over $70 a barrel since November and drove prices of metals like copper and aluminum higher. The rising prices lifted stocks of energy and materials producers.
A successful government auction of three-year notes that pushed interest rates lower. The good auction results reassured investors, who have worried in recent weeks that rising interest rates would choke off a recovery by making it more expensive to get a mortgage or other loan.
Analysts said the market's third straight day of modest moves wasn't surprising after the 38.8 percent surge in the Standard & Poor's 500 index since it hit a 12-year low exactly three months ago.
"The next three months are just going to be a long, hot flat summer. I don't see a catalyst," said Scott Armiger, portfolio manager at Christiana Bank & Trust in Greenville, Del.
In late afternoon trading, the Dow Jones industrial average rose 7.79, or 0.1 percent, to 8,772.28. The broader S&P 500 index rose 4.03, or 0.4 percent, to 943.17, and the Nasdaq rose 19.95, or 1.1 percent, to 1,862.35.
The banks have been eager to get out of the program to escape government restrictions such as caps on executive compensation. Among the banks that confirmed that they received permission to repay the bailout funds were: American Express Co. rose $1.18, or 4.6 percent, to $26.83, while JPMorgan Chase & Co. slipped 7 cents to $35.32.
Texas Instruments rose $1.27, or 6.4 percent, to $21.04.
Aluminum producer Alcoa Inc. rose 35 cents, or 3.3 percent, to $11.12 and U.S. Steel Corp. rose $2.61, or 7.4 percent, to $37.67. In energy, Occidental Petroleum rose 99 cents to $69.32.
Bond prices were mixed. The benchmark 10-year Treasury note rose, pushing its yield down to 3.86 percent from 3.89 percent late Monday.
In other trading, the Russell 2000 index of smaller companies rose 4.84, or 0.9 percent, to 529.63.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 746.8 million shares compared with 773.7 million shares traded at the same time Monday.
Overseas, Britain's FTSE 100 slipped less than 0.1 percent, Germany's DAX index fell 0.1 percent, and France's CAC-40 rose 0.2 percent. Japan's Nikkei stock average fell 0.8 percent
by the associated press
Market reacts to bailout
NEW YORK — Investors are reacting coolly to word that 10 of the nation's largest banks can repay $68 billion in bailout money.
Stocks are zigzagging in a narrow range Tuesday following the Treasury Department's widely expected announcement that the banks will be allowed to repay the money they received from the $700 billion bailout fund Congress created in October at the height of the financial crisis.
The banks have been eager to escape government restrictions on executive compensation. American Express Co., JPMorgan Chase & Co. and Morgan Stanley are among those given the OK to repay the money.
At midday, the Dow is down 30 at 8,734. The Standard & Poor's 500 index is down 1 to 938, while the Nasdaq composite index is up 8 to 1,851
by the associated press
Stocks are zigzagging in a narrow range Tuesday following the Treasury Department's widely expected announcement that the banks will be allowed to repay the money they received from the $700 billion bailout fund Congress created in October at the height of the financial crisis.
The banks have been eager to escape government restrictions on executive compensation. American Express Co., JPMorgan Chase & Co. and Morgan Stanley are among those given the OK to repay the money.
At midday, the Dow is down 30 at 8,734. The Standard & Poor's 500 index is down 1 to 938, while the Nasdaq composite index is up 8 to 1,851
by the associated press
Friday, May 29, 2009
Debt auction spuring surge in markets
NEW YORK — Interest rate movements called the shots on Wall Street for the second straight day.
The bond market recovered Thursday, bringing stocks along with it, a day after panicky selling pushed long-term borrowing rates to their highest level in six months.
Stock indicators rose more than 1 percent, including the Dow Jones industrial average, which gained almost 104 points.
The yield on the 10-year Treasury note, a widely used benchmark for loans, moved decisively lower to 3.62 percent from 3.75 percent the day before as investors were relieved to see ample demand at an auction for Treasury debt.
The note’s yield had surged the day before, triggering a selloff in stocks, on concerns that a flood of U.S. government debt coming to market this year would overwhelm demand. In addition to raising borrowing costs for the government, higher yields on long-term Treasurys could drive up borrowing costs for consumers.
The Federal Reserve has said it will buy large amounts of Treasurys and other kinds of debt in an effort to keep borrowing costs low.
What’s ahead?
Stock trading could remain jumpy going forward as investors look at interest rates and economic data for confirmation that the market’s aggressive bet on an economic recovery is still sound. The Standard & Poor’s 500 index is still up 34 percent from a 12-year low in early March.
"The market is absolutely being held hostage to the data,” said David Joy, chief market strategist at Ameriprise Financial Inc.’s RiverSource Investments.
The Dow rose 103.78, or 1.3 percent, to 8,403.8. Meanwhile the S&P 500 index rose 13.77, or 1.5 percent, to 906.83, and the Nasdaq composite index advanced 20.71, or 1.2 percent, to 1,751.79.
by the associated press
The bond market recovered Thursday, bringing stocks along with it, a day after panicky selling pushed long-term borrowing rates to their highest level in six months.
Stock indicators rose more than 1 percent, including the Dow Jones industrial average, which gained almost 104 points.
The yield on the 10-year Treasury note, a widely used benchmark for loans, moved decisively lower to 3.62 percent from 3.75 percent the day before as investors were relieved to see ample demand at an auction for Treasury debt.
The note’s yield had surged the day before, triggering a selloff in stocks, on concerns that a flood of U.S. government debt coming to market this year would overwhelm demand. In addition to raising borrowing costs for the government, higher yields on long-term Treasurys could drive up borrowing costs for consumers.
The Federal Reserve has said it will buy large amounts of Treasurys and other kinds of debt in an effort to keep borrowing costs low.
What’s ahead?
Stock trading could remain jumpy going forward as investors look at interest rates and economic data for confirmation that the market’s aggressive bet on an economic recovery is still sound. The Standard & Poor’s 500 index is still up 34 percent from a 12-year low in early March.
"The market is absolutely being held hostage to the data,” said David Joy, chief market strategist at Ameriprise Financial Inc.’s RiverSource Investments.
The Dow rose 103.78, or 1.3 percent, to 8,403.8. Meanwhile the S&P 500 index rose 13.77, or 1.5 percent, to 906.83, and the Nasdaq composite index advanced 20.71, or 1.2 percent, to 1,751.79.
by the associated press
Wednesday, May 27, 2009
Shoppers help Wall Street
NEW YORK — Consumers are getting more confident about the economy, and Wall Street is tagging along with them.
Stocks surged Tuesday, posting their first big win in a week after a research group said consumer sentiment rose in May to the highest level recorded since September. Major stock indicators jumped more than 2 percent, including the Dow Jones industrial average, which added 196 points.
The day’s gains nudged the Standard & Poor’s 500 index back into the plus column for the year and leaves the Nasdaq composite index up 11 percent in 2009. The Dow is still down 3.5 percent.
Investors started buying enthusiastically after the Conference Board’s Consumer Confidence Index vaulted to 54.9 from 40.8, soaring past the 42.3 that economists surveyed by Thomson Reuters forecast.
Wall Street has been watching the index for signs of whether consumers might start shopping more or buy big-ticket items like cars and homes.
Consumer spendingmakes up more than two-thirds of U.S. economic activity, making their confidence critical for the U.S. to pull out of recession.
"The consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” said Jim King, chief investment officer at National Penn Investors Trust Co.
With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.
Traders saw green on their screens on the first day back from a long weekend, but the compressed week still could trip up the market.
The Dow rose 196.17, or 2.4 percent, to 8,473.49. The S&P 500 index rose 23.33, or 2.6 percent, to 910.33, and the Nasdaq rose 58.42, or 3.5 percent, to 1,750.43.
Analysts said the day’s gains reveal just how jumpy the market still is and warned that it could show a similar quick reaction to bad news.
The Conference Board’s report marked the second consecutive month of large gains in its measure of consumer confidence.
by the associated press
Stocks surged Tuesday, posting their first big win in a week after a research group said consumer sentiment rose in May to the highest level recorded since September. Major stock indicators jumped more than 2 percent, including the Dow Jones industrial average, which added 196 points.
The day’s gains nudged the Standard & Poor’s 500 index back into the plus column for the year and leaves the Nasdaq composite index up 11 percent in 2009. The Dow is still down 3.5 percent.
Investors started buying enthusiastically after the Conference Board’s Consumer Confidence Index vaulted to 54.9 from 40.8, soaring past the 42.3 that economists surveyed by Thomson Reuters forecast.
Wall Street has been watching the index for signs of whether consumers might start shopping more or buy big-ticket items like cars and homes.
Consumer spendingmakes up more than two-thirds of U.S. economic activity, making their confidence critical for the U.S. to pull out of recession.
"The consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” said Jim King, chief investment officer at National Penn Investors Trust Co.
With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.
Traders saw green on their screens on the first day back from a long weekend, but the compressed week still could trip up the market.
The Dow rose 196.17, or 2.4 percent, to 8,473.49. The S&P 500 index rose 23.33, or 2.6 percent, to 910.33, and the Nasdaq rose 58.42, or 3.5 percent, to 1,750.43.
Analysts said the day’s gains reveal just how jumpy the market still is and warned that it could show a similar quick reaction to bad news.
The Conference Board’s report marked the second consecutive month of large gains in its measure of consumer confidence.
by the associated press
Sunday, May 17, 2009
Stock market becoming calm
DES MOINES, Iowa — The rapid swings in the stock market seem to have subsided, but what should investors make of the relative calm?
One widely watched indicator of whether investors indeed feel better is the Chicago Board Options Exchange volatility index. Known best by its ticker symbol "VIX,” the index reflects investor sentiment about expected market volatility over the next 30 days. Measured on a point scale, the VIX is based on how much investors are willing to pay for options — contracts to buy or sell stocks at a specified price and time.
Gauging anxiety
Options can help investors insulate themselves against price swings. That’s because when stock prices are volatile, investors are willing to pay a higher price for options so they can lock in a set price. This in turn raises the VIX.
Because increased investor anxiety can cause the VIX to climb, it’s frequently called the fear index. It’s a label that management of the CBOE discourages, saying it is more accurately just a measure of anticipated fluctuations. Still, during the market instability last fall, the record high level of the VIX was construed by many as reflecting a heightened fear.
Traditionally the VIX has traded between 10 and 30. The lower number means investors expect little rapid movement in the market, a higher number means there are expectations for sudden market swings, usually downward. The VIX hit a record 89.5 in October at the height of the financial market meltdown.
"Certainly when it was at 80 you could call it the fear gauge for sure,” said Dan Deming of Stutland Equities, who trades options tied to the VIX, noting that was an extremely elevated and unusual time.
Uncertainty lingers
So, where are we now and what does it mean?
Since the beginning of the year, the VIX has largely been under 50. The index spent most of the first quarter in the mid- to upper-40s. In April it fell below 40, and it’s currently in the low-30s. The recent downward movement indicates a sense of relative calm from big swings in the stock market.
But with the historical average around 18, the current level is nearly twice the norm. That means that while investors feel better than they did last fall and even earlier this year, they believe some market uncertainty still lingers.
Their strengthened comfort level can be attributed, at least in part, to progress being made to stabilize the nation’s banks. Investors have a better understanding of the government’s bailout plan and they’ve seen some glimmer of hope that the recession may end later this year.
Before the market meltdown, many investors spotted buying opportunities when the VIX climbed above 30. That’s because at that level the VIX reflects a general expectation that the market will fall, presenting opportunities to buy low, said Gary Gordon, president of Pacific Park Financial Inc. in Aliso Viejo, Calif.
That changed when the VIX blew the roof off any previous high mark last fall, rendering old benchmarks useless for awhile.
"It was one of the ultimate contrarian indicators of fear and greed, but now you have a whole new question: What do you do between 30 and 80?” Gordon said.
Chances are the VIX eventually will settle back down to its previous levels and many investors will once again consider it as one indicator of short-term market behavior, Gordon said. Though he said they may not use an above-30 mark as a sign to buy with the same conviction as before.
by associated press
One widely watched indicator of whether investors indeed feel better is the Chicago Board Options Exchange volatility index. Known best by its ticker symbol "VIX,” the index reflects investor sentiment about expected market volatility over the next 30 days. Measured on a point scale, the VIX is based on how much investors are willing to pay for options — contracts to buy or sell stocks at a specified price and time.
Gauging anxiety
Options can help investors insulate themselves against price swings. That’s because when stock prices are volatile, investors are willing to pay a higher price for options so they can lock in a set price. This in turn raises the VIX.
Because increased investor anxiety can cause the VIX to climb, it’s frequently called the fear index. It’s a label that management of the CBOE discourages, saying it is more accurately just a measure of anticipated fluctuations. Still, during the market instability last fall, the record high level of the VIX was construed by many as reflecting a heightened fear.
Traditionally the VIX has traded between 10 and 30. The lower number means investors expect little rapid movement in the market, a higher number means there are expectations for sudden market swings, usually downward. The VIX hit a record 89.5 in October at the height of the financial market meltdown.
"Certainly when it was at 80 you could call it the fear gauge for sure,” said Dan Deming of Stutland Equities, who trades options tied to the VIX, noting that was an extremely elevated and unusual time.
Uncertainty lingers
So, where are we now and what does it mean?
Since the beginning of the year, the VIX has largely been under 50. The index spent most of the first quarter in the mid- to upper-40s. In April it fell below 40, and it’s currently in the low-30s. The recent downward movement indicates a sense of relative calm from big swings in the stock market.
But with the historical average around 18, the current level is nearly twice the norm. That means that while investors feel better than they did last fall and even earlier this year, they believe some market uncertainty still lingers.
Their strengthened comfort level can be attributed, at least in part, to progress being made to stabilize the nation’s banks. Investors have a better understanding of the government’s bailout plan and they’ve seen some glimmer of hope that the recession may end later this year.
Before the market meltdown, many investors spotted buying opportunities when the VIX climbed above 30. That’s because at that level the VIX reflects a general expectation that the market will fall, presenting opportunities to buy low, said Gary Gordon, president of Pacific Park Financial Inc. in Aliso Viejo, Calif.
That changed when the VIX blew the roof off any previous high mark last fall, rendering old benchmarks useless for awhile.
"It was one of the ultimate contrarian indicators of fear and greed, but now you have a whole new question: What do you do between 30 and 80?” Gordon said.
Chances are the VIX eventually will settle back down to its previous levels and many investors will once again consider it as one indicator of short-term market behavior, Gordon said. Though he said they may not use an above-30 mark as a sign to buy with the same conviction as before.
by associated press
Tuesday, May 5, 2009
Market turns positive
NEW YORK — The Standard & Poor’s 500 index is up for the year. And for once, it was the housing market that sent stocks soaring.
The S&P 500, considered Wall Street’s most important indicator, bounded up 3.4 percent Monday and erased the last of its losses for 2009. And the Dow Jones industrials shot up more than 200 points and had their first finish above 8,400 since Jan. 13.
Two months ago, an S&P 500 in positive ground would have seemed impossible, with the stock market having fallen to 12-year lows on fears of a worsening recession. Monday’s rally was led by the same financial and housing stocks that were decimated by the credit crisis and the sinking economy, and it added more momentum to a stunning rally that began March 10.
A double dose of good housing news ignited the advance: Pending U.S. home sales rose more than forecast and had their second straight monthly gain, while construction spending rose unexpectedly in March after five straight declines.
With Monday’s gain, the S&P has soared 34.1 percent in the 39 trading days since the rally began, its steepest gain over that many days since 1933. The Dow, meanwhile, is up 28.7 percent.
Investors are betting that a stream of slowly improving data since early March mean that the economy, and Wall Street itself, have found a bottom. As they’ve kept buying, they’ve also overlooked reports, including millions of lost jobs, that point to continuing economic weakness.
Still, as dramatic as the rally has been, no one is describing the market as euphoric, and analysts are warning that Wall Street might not be able to sustain its advance. Monday’s gain came on moderate trading volume, a sign that some investors are still being cautious.
"The bear market may not be over,” said David Kotok, chairman and chief investment officer of Cumberland Advisors. He pointed out that the real estate market is still weakening and banks are still taking losses on loans.
"We have the makings of a ‘V’ or the first half of a ‘W,’ " Kotok said, referring to the shape of the stock market’s path. "The upward leg looks the same … Only time will tell
by the associated press
The S&P 500, considered Wall Street’s most important indicator, bounded up 3.4 percent Monday and erased the last of its losses for 2009. And the Dow Jones industrials shot up more than 200 points and had their first finish above 8,400 since Jan. 13.
Two months ago, an S&P 500 in positive ground would have seemed impossible, with the stock market having fallen to 12-year lows on fears of a worsening recession. Monday’s rally was led by the same financial and housing stocks that were decimated by the credit crisis and the sinking economy, and it added more momentum to a stunning rally that began March 10.
A double dose of good housing news ignited the advance: Pending U.S. home sales rose more than forecast and had their second straight monthly gain, while construction spending rose unexpectedly in March after five straight declines.
With Monday’s gain, the S&P has soared 34.1 percent in the 39 trading days since the rally began, its steepest gain over that many days since 1933. The Dow, meanwhile, is up 28.7 percent.
Investors are betting that a stream of slowly improving data since early March mean that the economy, and Wall Street itself, have found a bottom. As they’ve kept buying, they’ve also overlooked reports, including millions of lost jobs, that point to continuing economic weakness.
Still, as dramatic as the rally has been, no one is describing the market as euphoric, and analysts are warning that Wall Street might not be able to sustain its advance. Monday’s gain came on moderate trading volume, a sign that some investors are still being cautious.
"The bear market may not be over,” said David Kotok, chairman and chief investment officer of Cumberland Advisors. He pointed out that the real estate market is still weakening and banks are still taking losses on loans.
"We have the makings of a ‘V’ or the first half of a ‘W,’ " Kotok said, referring to the shape of the stock market’s path. "The upward leg looks the same … Only time will tell
by the associated press
Saturday, May 2, 2009
Wall Street comeback makes it too third straight month
NEW YORK — Wall Street extended its rally into a third month, shrugging off reminders of the recession and placing cautious bets on an economic recovery.
Stocks ended higher Friday after a day of quiet back-and-forth trading as investors determined that they could add to the gains of March and April despite mixed economic data and earnings reports.
The advance left the stock market’s major gauges with gains of about 1.5 percent for the week.
Wall Street has been growing more optimistic about the economy stabilizing, but the reports Friday confirmed that business conditions remain difficult and that any recovery is likely to be gradual.
Wall Street comeback extends to third month
Comments 0
Buzz up!BY THE ASSOCIATED PRESS
Published: May 2, 2009
A trader works Friday on the floor of the New York Stock Exchange. AP PHOTO
NEW YORK — Wall Street extended its rally into a third month, shrugging off reminders of the recession and placing cautious bets on an economic recovery.
Advertisement
Stocks ended higher Friday after a day of quiet back-and-forth trading as investors determined that they could add to the gains of March and April despite mixed economic data and earnings reports.
The advance left the stock market’s major gauges with gains of about 1.5 percent for the week.
Wall Street has been growing more optimistic about the economy stabilizing, but the reports Friday confirmed that business conditions remain difficult and that any recovery is likely to be gradual.
Results are mixed
A private group’s measure of the manufacturing industry showed a slower contraction in April than March.
However a separate government report said orders to U.S. factories fell more than expected during March. Companies also reported mixed results.
Earnings reports have been a major market driver over the past few weeks. The S&P 500 index rose 9.4 percent in April, the biggest monthly jump since March 2000.
"After the big run-up everyone is just trying to step back and trying to put their game plan together for the next month,” said Sean Simko, head of fixed income management at SEI Investments in Philadelphia.
The Dow Jones industrial average rose 44.29, or 0.5 percent, to 8,212.41, its highest close since Feb. 9.
The S&P 500 index rose 4.71, or 0.5 percent, to 877.52, and the Nasdaq composite index rose 1.90, or 0.1 percent, to 1,719.20.
The rally could easily falter, however, after the government releases results from its "stress tests” of major banks to see which ones will need more aid. Word came Friday that announcement of the results was pushed back from Monday to Thursday.
Alan Lancz, money manager at Alan B. Lancz & Associates, in Toledo, Ohio, said financial stocks could face some hurdles next week.
"Everyone is looking at the glass as half full right now and that tends to worry us, especially with the financials,” he said
by the associated press
Stocks ended higher Friday after a day of quiet back-and-forth trading as investors determined that they could add to the gains of March and April despite mixed economic data and earnings reports.
The advance left the stock market’s major gauges with gains of about 1.5 percent for the week.
Wall Street has been growing more optimistic about the economy stabilizing, but the reports Friday confirmed that business conditions remain difficult and that any recovery is likely to be gradual.
Wall Street comeback extends to third month
Comments 0
Buzz up!BY THE ASSOCIATED PRESS
Published: May 2, 2009
A trader works Friday on the floor of the New York Stock Exchange. AP PHOTO
NEW YORK — Wall Street extended its rally into a third month, shrugging off reminders of the recession and placing cautious bets on an economic recovery.
Advertisement
Stocks ended higher Friday after a day of quiet back-and-forth trading as investors determined that they could add to the gains of March and April despite mixed economic data and earnings reports.
The advance left the stock market’s major gauges with gains of about 1.5 percent for the week.
Wall Street has been growing more optimistic about the economy stabilizing, but the reports Friday confirmed that business conditions remain difficult and that any recovery is likely to be gradual.
Results are mixed
A private group’s measure of the manufacturing industry showed a slower contraction in April than March.
However a separate government report said orders to U.S. factories fell more than expected during March. Companies also reported mixed results.
Earnings reports have been a major market driver over the past few weeks. The S&P 500 index rose 9.4 percent in April, the biggest monthly jump since March 2000.
"After the big run-up everyone is just trying to step back and trying to put their game plan together for the next month,” said Sean Simko, head of fixed income management at SEI Investments in Philadelphia.
The Dow Jones industrial average rose 44.29, or 0.5 percent, to 8,212.41, its highest close since Feb. 9.
The S&P 500 index rose 4.71, or 0.5 percent, to 877.52, and the Nasdaq composite index rose 1.90, or 0.1 percent, to 1,719.20.
The rally could easily falter, however, after the government releases results from its "stress tests” of major banks to see which ones will need more aid. Word came Friday that announcement of the results was pushed back from Monday to Thursday.
Alan Lancz, money manager at Alan B. Lancz & Associates, in Toledo, Ohio, said financial stocks could face some hurdles next week.
"Everyone is looking at the glass as half full right now and that tends to worry us, especially with the financials,” he said
by the associated press
Friday, May 1, 2009
Wall Street Healing
NEW YORK — April was Wall Street’s best month in nine years — offering some of the most powerful evidence yet that maybethe economy is about to begin a turnaround.
The Standard & Poor’s 500 index, considered the most reliable measure of the broader market, climbed 9.4 percent in April, its best performance since March 2000, the peak of the dot-com bubble. The Dow Jones industrial average shot up 7.4 percent in April, on top of a 7.7 percent gain in March.
That’s more than a relief for investors — it’s a potential economic indicator, because the stock market tends to get back on its feet before the economy does.
In downturns over the past 60 years, the S&P hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.
"The market is saying that the economy would hit its trough this summer,” said Al Goldman, chief market strategist at Wachovia Securities who has spent 50 years monitoring Wall Street.
Are things improving?
Even with the gains in March and April, the Dow is still down 42 percent from its peak in October 2007, and the S&P 500 index is off 44 percent.
Stocks mostly held steady Thursday, the same day that Chrysler filed for bankruptcy reorganization. Only two months ago, a more jittery market would have plunged if one of the Big Three said it couldn’t pay its bills.
U.S. stocks gained nearly $1 trillion in value in April alone. And the S&P’s March-April gain of 18.7 percent is its best two-month rise since 1975.
The rally began in March when Citigroup surprised investors by announcing it had made money in the first two months of the year. Other banks followed suit, and last week many big banks posted results that weren’t as bad as feared. In April, economic readings on home construction, retail sales and orders for manufactured goods improved or at least didn’t slide as quickly as they did during the meltdown last fall.
But sometimes the market speaks too soon.
For example, it jumped 20 percent from late November to the start of January only to slide to new lows by early March when additional bad economic news arrived.
by the associated press
The Standard & Poor’s 500 index, considered the most reliable measure of the broader market, climbed 9.4 percent in April, its best performance since March 2000, the peak of the dot-com bubble. The Dow Jones industrial average shot up 7.4 percent in April, on top of a 7.7 percent gain in March.
That’s more than a relief for investors — it’s a potential economic indicator, because the stock market tends to get back on its feet before the economy does.
In downturns over the past 60 years, the S&P hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.
"The market is saying that the economy would hit its trough this summer,” said Al Goldman, chief market strategist at Wachovia Securities who has spent 50 years monitoring Wall Street.
Are things improving?
Even with the gains in March and April, the Dow is still down 42 percent from its peak in October 2007, and the S&P 500 index is off 44 percent.
Stocks mostly held steady Thursday, the same day that Chrysler filed for bankruptcy reorganization. Only two months ago, a more jittery market would have plunged if one of the Big Three said it couldn’t pay its bills.
U.S. stocks gained nearly $1 trillion in value in April alone. And the S&P’s March-April gain of 18.7 percent is its best two-month rise since 1975.
The rally began in March when Citigroup surprised investors by announcing it had made money in the first two months of the year. Other banks followed suit, and last week many big banks posted results that weren’t as bad as feared. In April, economic readings on home construction, retail sales and orders for manufactured goods improved or at least didn’t slide as quickly as they did during the meltdown last fall.
But sometimes the market speaks too soon.
For example, it jumped 20 percent from late November to the start of January only to slide to new lows by early March when additional bad economic news arrived.
by the associated press
Thursday, April 23, 2009
Bank's have stress , however the Stock market does not
NEW YORK — Investors set aside some of their worries about banks and the economy Friday after the government unveiled its methods for testing the health of banks.
The Federal Reserve report was light on details, but didn’t bring any bad news. Investors were also pleased about quarterly results from Ford Motor Co., American Express Co. and Microsoft Corp.
That cleared the way for a 119-point gain in the Dow Jones industrial average, leaving it down slightly for the week.
The Dow and the S&P 500 broke their six-week winning streak, but the Nasdaq extended its string of weekly gains to seven.
The Fed, in outlining the tests’ methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won’t be allowed to fail — even if they fared poorly on the stress tests.
Separately, bank executives were briefed on their test results in meetings across the country. By law, the banks cannot publicize the results without the government’s permission, but Wall Street buzzed with anticipation and most financial stocks rose.
The day was not without volatility, however. After the Fed’s release, the stock market at times gave up huge chunks of gains before finishing solidly higher. Financial stocks, were leading the way.
The Dow rose 119.23, or 1.5 percent, to 8,076.29, after rising by as many as 170 points. For the week, the Dow slipped 0.7 percent, the S&P 500 dipped 0.4 percent, and the Nasdaq rose 1.3 percent.
Steve Sachs, director of trading at Rydex Investments, in Rockville, Md., said market has held up well during a week in which about a quarter of the companies in the S&P 500 index have released earnings, including the major banks.
"We are looking for the signs of economic recovery,” he said. "The market clearly is comfortable that it sees the signs of economic stability that it needs to see.”
by the associated press
The Federal Reserve report was light on details, but didn’t bring any bad news. Investors were also pleased about quarterly results from Ford Motor Co., American Express Co. and Microsoft Corp.
That cleared the way for a 119-point gain in the Dow Jones industrial average, leaving it down slightly for the week.
The Dow and the S&P 500 broke their six-week winning streak, but the Nasdaq extended its string of weekly gains to seven.
The Fed, in outlining the tests’ methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won’t be allowed to fail — even if they fared poorly on the stress tests.
Separately, bank executives were briefed on their test results in meetings across the country. By law, the banks cannot publicize the results without the government’s permission, but Wall Street buzzed with anticipation and most financial stocks rose.
The day was not without volatility, however. After the Fed’s release, the stock market at times gave up huge chunks of gains before finishing solidly higher. Financial stocks, were leading the way.
The Dow rose 119.23, or 1.5 percent, to 8,076.29, after rising by as many as 170 points. For the week, the Dow slipped 0.7 percent, the S&P 500 dipped 0.4 percent, and the Nasdaq rose 1.3 percent.
Steve Sachs, director of trading at Rydex Investments, in Rockville, Md., said market has held up well during a week in which about a quarter of the companies in the S&P 500 index have released earnings, including the major banks.
"We are looking for the signs of economic recovery,” he said. "The market clearly is comfortable that it sees the signs of economic stability that it needs to see.”
by the associated press
Tuesday, April 21, 2009
Health of banks worries Wall Street
WASHINGTON — Anxiety is growing again over the health of the nation’s largest banks, and with Congress hesitant to commit more money, the Obama administration is exploring ways to strengthen them in the face of an unrelenting recession.
Results of the federal government’s "stress tests” on big banks are due May 4, and Wall Street is increasingly worried they will show some banks are in worse shape than expected.
The renewed bank fears drove the stock market down on Monday in its worst showing in six weeks.
Bank of America stock lost nearly a quarter of its value, and the Dow Jones industrial average fell almost 290 points.
Bank of America reported a first-quarter profit of $2.8 billion, joining other banks whose earnings reports have looked positive at first blush. But some analysts say accounting steps are concealing the depth of the financial industry’s woes.
19 banks face tests
The banks have been helped by income from trading and cheap borrowing, but they are still struggling with bad debt, said Joe Saluzzi, co-head of equity trading at Themis Trading LLC.
Investors are "looking at bank numbers and are saying they are not that great,” he said.
Among the ideas being explored by the administration is converting the government’s loans into equity stakes, which would improve the banks’ bottom lines by increasing their capital reserves.
The Treasury Department will outline Friday how it plans to structure the stress tests, which aim to gauge the health of 19 big banks.
So far, investors have been too optimistic about the results, warned Jaret Seiberg, a financial services policy analyst at Washington Research Group.
"What we’re seeing is a re-evaluation of those positions,” he said. "Until we have finality on what the stress tests will tell us, the markets will be very jittery about the banks.”
Results of the federal government’s "stress tests” on big banks are due May 4, and Wall Street is increasingly worried they will show some banks are in worse shape than expected.
The renewed bank fears drove the stock market down on Monday in its worst showing in six weeks.
Bank of America stock lost nearly a quarter of its value, and the Dow Jones industrial average fell almost 290 points.
Bank of America reported a first-quarter profit of $2.8 billion, joining other banks whose earnings reports have looked positive at first blush. But some analysts say accounting steps are concealing the depth of the financial industry’s woes.
19 banks face tests
The banks have been helped by income from trading and cheap borrowing, but they are still struggling with bad debt, said Joe Saluzzi, co-head of equity trading at Themis Trading LLC.
Investors are "looking at bank numbers and are saying they are not that great,” he said.
Among the ideas being explored by the administration is converting the government’s loans into equity stakes, which would improve the banks’ bottom lines by increasing their capital reserves.
The Treasury Department will outline Friday how it plans to structure the stress tests, which aim to gauge the health of 19 big banks.
So far, investors have been too optimistic about the results, warned Jaret Seiberg, a financial services policy analyst at Washington Research Group.
"What we’re seeing is a re-evaluation of those positions,” he said. "Until we have finality on what the stress tests will tell us, the markets will be very jittery about the banks.”
by the associated press
Wednesday, April 8, 2009
Economists await News for March Business
NEW YORK — Did shoppers splurge on spring outfits or gardening gear in March — or keep their wallets shut?
Signs about whether consumers have started shopping again will appear Thursday when retailers report their March sales figures. But any gains are likely to be fragile, as shoppers still are being buffeted by conflicting reports about whether the economy is stabilizing.
While there are some pieces of good news — consumer confidence steadied in March after falling to an all-time low in February — the unemployment rate is the highest since late 1983 may be keeping people from spending more freely.
After the sharp drop in consumer spending last year, Moody’s chief economist John Lonski said he expects it to edge up in the first quarter as people start to believe that "the Great Depression 2 is not at hand.”
"Consumers, while not very confident about the economy, no longer fear Armageddon,” Lonski said. "Consumers cut back so sharply on spending in the final quarter of 2008, in order to simply maintain their customary standard of living, or approach it, they’re essentially forced to step up expenditures.”
Overall, analysts expect that sales at stores open at least one year, a key retail metric known as same-store sales, are likely to fall for the sixth straight month in March. The decline could moderate, though — in February, same-store sales fell less than expected.
Michael P. Niemira, chief economist at the International Council of Shopping Centers predicts Thursday’s tally of same-store sales will be anywhere between a 1 percent decline to flat.
Analysts polled by Thomson Reuters, on average, predict same-store sales will fall 1 percent, slightly more than the 0.7 percent sales fell in March last year.
An earlier Easter helped last year’s results. The later Easter this year will depress March’s tally by about 1 percentage point, but boost April’s figure by the same amount, Niemira said.
Shoppers still are responding to sales and low prices. Standard & Poor’s analyst Marie Driscoll said she thinks sales growth at discounters will be driven by grocery purchases, although some discretionary spending areas such as home goods and electronics may show signs of stabilizing .
Signs about whether consumers have started shopping again will appear Thursday when retailers report their March sales figures. But any gains are likely to be fragile, as shoppers still are being buffeted by conflicting reports about whether the economy is stabilizing.
While there are some pieces of good news — consumer confidence steadied in March after falling to an all-time low in February — the unemployment rate is the highest since late 1983 may be keeping people from spending more freely.
After the sharp drop in consumer spending last year, Moody’s chief economist John Lonski said he expects it to edge up in the first quarter as people start to believe that "the Great Depression 2 is not at hand.”
"Consumers, while not very confident about the economy, no longer fear Armageddon,” Lonski said. "Consumers cut back so sharply on spending in the final quarter of 2008, in order to simply maintain their customary standard of living, or approach it, they’re essentially forced to step up expenditures.”
Overall, analysts expect that sales at stores open at least one year, a key retail metric known as same-store sales, are likely to fall for the sixth straight month in March. The decline could moderate, though — in February, same-store sales fell less than expected.
Michael P. Niemira, chief economist at the International Council of Shopping Centers predicts Thursday’s tally of same-store sales will be anywhere between a 1 percent decline to flat.
Analysts polled by Thomson Reuters, on average, predict same-store sales will fall 1 percent, slightly more than the 0.7 percent sales fell in March last year.
An earlier Easter helped last year’s results. The later Easter this year will depress March’s tally by about 1 percentage point, but boost April’s figure by the same amount, Niemira said.
Shoppers still are responding to sales and low prices. Standard & Poor’s analyst Marie Driscoll said she thinks sales growth at discounters will be driven by grocery purchases, although some discretionary spending areas such as home goods and electronics may show signs of stabilizing .
by the associated press
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