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greg
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Wall St Week Ahead: Stocks' rally may stumble
Sun Jul 31, 2005 11:13 AM ET
By Vivianne Rodrigues
NEW YORK, July 31 (Reuters) - U.S. stocks may fail to extend their recent rally as a slowing growth outlook and higher interest rates offset strong second-quarter earnings.
Some investors said gains in stocks may be limited this week as equity prices already reflect prospects for the economy and corporate profits in the second half.
"The economic environment is becoming less friendly for many companies and the potential for considerable gains in earnings in the next quarters is lower," said David Joy, vice president for capital markets strategy at American Express Asset Management in Minneapolis, with $415 billion of assets.
"I would remain invested in stocks, but from now on, I would focus mainly on large companies, with steady growth."
Better-than-expected earnings reports and economic data pushed the Standard & Poor's 500 index up 3.6 percent in July and erased its year-to-date loss. The S&P 500 was up 1.8 percent for the year to date, through Friday's close.
The Dow Jones industrial average gained 3.4 percent during the month of July, but it was still down 1.3 percent for the year to date.
In July, both the Dow and the S&P 500 had their best performances since December 2003.
The Nasdaq Composite Index rallied 6.2 percent in July, nudging it up 0.4 percent for the year.
About 70 percent of the companies in the Standard & Poor's 500 have reported earnings for the last quarter, with most coming in better than expected. S&P currently projects profits for the quarter will grow 10.5 percent, higher than initial forecasts.
This week, earnings are expected from big companies like consumer goods giant Procter & Gamble Co. , which also is a Dow component, and others such as Tyson Foods Inc. , Comcast Corp. and Tyco International .
CRUDE AT HIGH ALTITUDE
"It will be interesting to see if the earnings season will close on a positive note across the board or if the strong results will be concentrated among companies in the energy sector," Joy said.
Last week, energy companies Exxon Mobil Corp. and ConocoPhillips , reported strong second-quarter earnings as a result of the increase in oil prices.
This week, energy companies reporting results will include Duke Energy Corp. and Alliant Energy Corp. .
Crude oil prices jumped 39 percent last quarter from a year earlier and touched an all-time high of more than $62 per barrel on the New York Mercantile Exchange on July 7. NYMEX September crude settled on Friday at $60.57, up 63 cents.
Edward Keon, chief investment strategist at Prudential Equity Group in New York, is recommending that clients remain invested in shares of energy companies.
"Stocks in general remain a cheap alternative, compared with other investments," Keon said. "And despite the good run on energy stocks, they continue to be very attractive."
Keon said Prudential's portfolios hold more energy stocks than the amount recommended in most benchmark indexes and that he has been increasing holdings of technology shares.
At Friday's close, stocks were mixed for the week. The blue-chip Dow dipped 0.1 percent, while the broad S&P 500 index edged up just 0.04 percent, and the tech-laced Nasdaq advanced 0.2 percent. Both the S&P 500 and the Nasdaq hit four-year closing highs this week.
That marked a slight break in the trend through the close on Friday, July 22, when the three stock indexes had scored four straight weeks of gains.
JULY JOBS ON THE RADAR SCREEN
A key economic indicator for investors this week will be the U.S. nonfarm payroll numbers for July, set for release on Friday. The forecast calls for the addition of 182,500 jobs in July, up from 146,000 in June, according to economists polled by Reuters.
But considering steady economic growth and low inflation, job creation should be stronger, and in turn, that may limit demand for stocks, said Bill Strazzullo, chief market strategist at State Street Global Markets in Boston.
"That's one piece of the puzzle that hasn't really fallen in place," Strazzullo said. "These numbers with all the stimulus we've had should be over 250,000 every month. So there's definitely some weakness there."
The Commerce Department said on Friday the U.S. economy expanded at an annual rate of 3.4 percent in the second quarter, below the rate of 3.8 percent in the previous three months. It was the ninth straight quarter of GDP growth exceeding 3 percent.
Another widely watched economic report due this week includes the ISM index, a gauge of manufacturing activity, which is expected to rise to a reading of 54.5 in July from 53.8 in June. The Institute for Supply Management, or ISM, index will be released on Monday.
On Tuesday, a reading on inflation tracked by the Federal Reserve, the core Personal Consumer Expenditure index, is likely to slow to a gain of just 0.1 percent, down from an increase of 0.2 percent in the previous month. 
Last edited by greg on Mon Aug 08, 2005 2:03 pm; edited 1 time in total |
Mon Aug 01, 2005 12:38 am |
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greg
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Stocks seek fresh earnings boost
July jobs data should cap strong week for Wall Street
By Mark Cotton, MarketWatch
Last Update: 12:06 AM ET July 30, 2005
NEW YORK (MarketWatch) -- U.S. stocks are expected to kick off August on a positive note amid hopes that the latest employment report and results from Time Warner, Nortel Networks, Sara Lee and others can help extend a five-week rally in equities.
"The market should have a good week next week," said Michael Malone, trading analyst at SG Cowen. "We saw a nice technical breakout over the last couple of days reaching new highs in many indexes. Importantly we saw this on good volume in what is historically a pretty slow time for the year. "
Stocks ended lower Friday but posted solid gains on the month as investors cheered what is shaping up to be an eighth quarter of double-digit earnings growth, backed by data showing the economy growing at a healthy clip.
Benign inflation data, reports showing the nation's manufacturing sector continuing to expand, and strong retail sales were some of the positive economic highlights for investors in July.
On Friday, the Dow Jones Industrial Average ($INDU) fell 64.64 points to 10,640.91 but wrapped up July with a gain of 3.6%
The Nasdaq Composite Index ($COMPQ) fell 13.61 points to 2,184.83 but was up 6.2% for the month. The S&P 500 Index ($SPX) slipped 9.54 points to 1,234.18. The broad gauge rose 3.2 in July, its best month in over a year.
"There is a lot of money on the sidelines and as investors are becoming increasingly confident that the numbers in the back half of the year won't be coming down," said Malone. "I think they will end up putting some of that money to work."
For Sam Stovall, senior investment strategist at Standard & Poor's, the market has "no reason not to go higher."
Stovall said stock valuations remain attractive and expectations are high companies could also see double-digit earnings growth in the third and fourth quarters.
Strong earnings season
With 74% of companies in the S&P 500 having reported their results, the second quarter is currently on track to post year-over-year earnings growth of 11.1%, based on data compiled by Thomson Financial.
"We're seeing more companies beat and fewer companies miss," said John Butters, research analyst at Thomson.
So far 69% of companies have beaten estimates while only 15% have posted results below expectations compared with a long-term average of 59% beating, and 20% missing.
"That's basically the trend we've seen over the last several quarters," said John Butters, research analyst at Thomson.
Butters said companies are beating estimates by about 4% versus a long-term average of 3.2% but a little below the eight-quarter moving average of 5%.
It is still a little premature to say whether U.S. companies are on a course to finish out the year with another two quarters of double-digit growth, although early estimates offer some room for hope.
"The growth rate for the third quarter is pretty much unchanged from where we were a week ago. We were at 15.8% last week, and it's actually ticked up slightly to 15.9% despite some negative pre-announcements," said Butters.
Should companies achieve another two quarters of double-digit growth, it would be only the third time in 50 years U.S. corporations have managed to post 10 straight quarters of double-digit growth.
Media companies in the spotlight
Earnings from a number of U.S. media companies will focus investor attention next week.
On Tuesday, Comcast (CMCSK) (CMCSA) , the nation's largest cable operator with more than 22 million subscribers, issues second-quarter results. Analysts polled by Thomson First Call expect the company to post a profit of 15 cents a share on revenue of $5.54 billion. In the year-ago period, Comcast earned $262 million, or 12 cents a share, on revenue of $5.07 billion.
Time Warner (TWX) , the world's largest media company, reports on Wednesday. It is seen posting a second-quarter profit of 19 cents a share on revenue of $11 billion. In the year-earlier period, the company earned $777 million, or 17 cents a share, on revenue of $10.9 billion.
Pixar Animation Studios (PIXR) reports on Thursday. Early this month, the company slashed its second-quarter earnings forecast to reflect lower-than-anticipated home video sales of "The Incredibles."
Analysts expect Pixar to report net income of 10 cents a share on revenue of $33 million. In last year's second quarter, its profit was $37.4 million, or 63 cents a share, on revenue of $66.3 million. The year-ago period was bolstered by home video proceeds from "Finding Nemo."
Charter Communications (CHTR) , Sirius Satellite Radio Inc. (SIRI) , Cox Radio Inc. (CXR) and Westwood One (WON) are some of the media companies also slated to report. See earnings outlook for media stocks
Other results on tap
Elsewhere, Sara Lee Corp. (SLE) is scheduled to report fiscal fourth-quarter earnings on Thursday. On July 20, the food and beverage giant said it will take fourth-quarter pretax charges totaling $472 million for severance and asset impairment.
The Chicago-based company is expected to post earnings of 31 cents a share on revenue of $5.04 billion compared with 44 cents on revenue of $5.14 billion in the year-ago quarter.
Telecom-equipment maker Nortel Networks Corp. (NT) is scheduled to release earnings on Wednesday. The company is expected to squeeze in a profit of a penny a share on revenue of $2.7 billion after managing to break even on revenue of $2.59 billion a year ago.
Gateway Inc. (GTW) meanwhile will deliver its delayed second-quarter earnings report on Thursday.
Gateway (GTW) was scheduled to report July 28, but delayed after saying it needed final guidance from the Securities and Exchange Commission regarding the proper accounting procedures for an April agreement with Microsoft Corp. (MSFT)
When Gateway reports, analysts will be looking for the company to earn 2 cents a share on $895 million in revenue. Read earnings outlook
The country's carmaker's will be in focus next Tuesday when most of them are slated to release their vehicle sales for July.
Nobody is looking for GM's (GM) July U.S. auto sales to approach last month's historic tally, but expectations are still running high for the industry with incentive sprees driving plenty of traffic to Big Three showrooms. Read outlook
Heavy week for data
With a number of key economic reports scheduled for release, investors will be hoping the latest data confirms that the first-quarter slow patch did not carry through into the second three months of three months of the year, according to Paul Nolte, director of investments at Hinsdale Associates.
He believes the data will be uneven and produce a sideways trading pattern, with the Dow industrials running up 60 to 70 points some days, then falling about the same amount on other days.
The release of the July employment report will be the major highlight of next week's economic calendar.
Economists polled by MarketWatch are currently forecasting the U.S. economy to have created 179,000 jobs in July, up from 146,000 in June. The jobless rate is expected to remain unchanged at 5%.
A much stronger-than-expected non-farm payrolls number however could spook the market, according to Stovall of Standard & Poor's.
"If we end up having numbers that are too robust, those forecasters who are saying the Fed will stop raising rates at 3.75% might have to agree with economists like our own that say it's more like 4% or that they might have to go even higher than that."
Currently, short-term interest rates stand at 3.25%. The U.S Federal Reserve is widely expected to raise rates by another quarter percentage point at its next meeting on August 9.
Among other data of note, investors will be playing particular attention on Monday to the latest reading of the Institute for Supply Management's index tracking manufacturing activity.
The ISM index is expected to come in 53.7%, a touch lower than the 53.8% recorded in June. Any reading over 50% indicates expansion.
"We've seen a recent pick up in manufacturing and we'd like to see that continue," said Malone of SG Cowen.
Over the last three weeks, investors have cheered solid reports on factory activity in the New York, Philadelphia and Chicago regions.
Other data due out are June construction spending figures on Monday. June factory orders and June personal income and outlays are slated for release on Tuesday. The Institute for Supply Management meanwhile releases its latest report on the nation's services sector on Wednesday. To cap off the week, June consumer credit figures are released at 3 p.m E.T on Friday.
Mark Cotton is a reporter for MarketWatch in New York.
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Mon Aug 01, 2005 3:36 am |
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greg
Senior Member
Cash: $ 127.49
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Joined: 23 Mar 2005
Location: One Monkey Don't Stop No Show
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| Last Week's Charts for C Fund and S Fund |
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Mon Aug 01, 2005 3:42 am |
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Andrew
Admin
Cash: $ 467.10
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Joined: 02 Nov 2003
Location: Texas
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Members need to be respectful of others, and this has been enough drama.
Time to move on mlk_man...
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Mon Aug 01, 2005 7:37 pm |
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greg
Senior Member
Cash: $ 127.49
Posts: 609
Joined: 23 Mar 2005
Location: One Monkey Don't Stop No Show
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| US stocks up as consumers buy, Nasdaq at 4-yr high |
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US stocks up as consumers buy, Nasdaq at 4-yr high
Tue Aug 2, 2005 05:47 PM ET
By Anupama Chandrasekaran
NEW YORK, Aug 2 (Reuters) - U.S. stocks rallied on Tuesday after a government report showed strong consumer spending in June, while a favorable industry outlook from chipmaker Maxim Integrated Products Inc.(MXIM.O) drove the Nasdaq to a fresh 4-year high.
Higher earnings from cable operator Comcast Corp. (CMCSA.O) and speculation that Microsoft Corp. (MSFT.O) is likely to raise its annual dividend also gave technology shares a boost. Microsoft, which is among the Dow's 30 stocks although it trades on Nasdaq, lifted both indexes as its shares rose 3.4 percent to $26.81.
The Dow Jones industrial average rose 60.59 points, or 0.57 percent, to end at 10,683.74. The Standard & Poor's 500 Index gained 8.77 points, or 0.71 percent, to finish at 1,244.12. The technology-laced Nasdaq Composite Index climbed 22.77 points, or 1.04 percent, to end at 2,218.15, after earlier rising as high as 2,219.00.
Tuesday's rally pushed several benchmark indexes to fresh highs, with the New York Stock Exchange Composite Index touching a lifetime high. Both the Russell 2000 small-cap index and the S&P Midcap closed at lifetime highs.
"You had good spending numbers, combined with the fact that the market has momentum," said Jim Awad, chairman of Awad Asset Management. "The economy is strong, inflation is low and earnings are great. That is a perfect cocktail for a bull market."
After the closing bell, shares of NetEase.com Inc.(NTES.O) , China's No. 2 online game company, jumped nearly 14 percent to $68.16 from a Nasdaq close at $59.70 after it reported profit more than doubled from a year earlier due to robust demand for online games.
In contrast, shares of Brocade Communications Systems Inc. (BRCDE.OQ) fell 12.5 percent to $3.93 in after-hours trading after its quarterly profit fell short of expectations.
Before Tuesday's regular session began, the U.S. Commerce Department said consumer spending advanced a robust 0.8 percent in June as shoppers flocked to auto showrooms and bought new vehicles, enjoying sales incentives.
The second quarter is on track for being the 13th quarter in a row with double-digit earnings growth.
Maxim Integrated rose 8.3 percent, or $3.49, to $45.50 after the semiconductor maker posted a 1 percent rise in quarterly profit, in line with its month-old target, and said an industry recovery could be near. The Philadelphia Stock Exchange semiconductor index rose 2.5 percent.
Comcast rose 1.3 percent, or 39 cents, to $31 after the top U.S. cable operator posted a 64 percent rise in second-quarter net income, boosted by new digital video products such as digital video recorders. Shares of rival Liberty Media International (LBTYA.O) rose 1.2 percent, or 58 cents, to $48.04.
ALCOA, STEEL SHARES, EARNINGS
Dow component Alcoa Inc. (AA.N) rose 3 percent, or 85 cents, to $28.76, lifted by higher aluminum prices.
Shares of steel companies climbed after Morgan Stanley raised its outlook for the sector. Nucor Corp. (NUE.N) advanced nearly 5 percent, or $2.76, to $58.43 and US Steel Corp. (X.N) rose 3 percent, or $1.28, to $44.01. The S&P Steel Index climbed 4 percent.
And back on the earnings front, Transocean Inc. (RIG.N) rose 3 percent, or $1.76, to $59.65 after the offshore drilling contractor said second-quarter earnings soared. Shares of rivals also rose, with Nabors Industries Ltd. (NBR.A) up 2.8 percent, or $1.83, at $67.89, and Noble Corp. (NE.N) up 2 percent, or $1.45, at $69.71.
But shares of Tyco International Ltd. (TYC.N) dropped 9.6 percent, or $2.96, to $27.86 after the diversified manufacturer cut its outlook for the year. Banc of America lowered its rating on Tyco shares to "neutral" from "buy."
M&A ACTION, CAR SALES
Shares of Chevron Corp. (CVX.N) climbed nearly 2 percent, or $1.13, to $59.56 after rival CNOOC Ltd. (0883.HK) dropped its bid for oil company Unocal Corp. (UCL.N) . Unocal shares edged up 0.3 percent, or 16 cents, to $64.53 on the NYSE.
Pipeline operator Kinder Morgan Inc. (KMI.N) rose nearly 7 percent, or $6.13, to $94.73, after hitting an all-time-high of $98.45 earlier. The company said on Monday it would acquire Canadian pipeline company Terasen Inc. (TER.TO) .
General Motors Corp.(GM.N) , the world's largest automaker and a Dow component, fell nearly 1 percent, or 33 cents, to $36.53 after GM's employee discount program led to a 19.1 percent gain in July U.S. sales following a hefty 41 percent increase in June.
Meanwhile, Ford Motor Co. (F.N) shares rose 0.3 percent, or 3 cents, to $10.88 and DaimlerChrysler (DCX.N) climbed 2.8 percent, or $1.37, to $50.74 after reporting better-than-expected double-digit U.S. sales for July.
Crude for September delivery (CLU5) rose 32 cents to settle at $61.89 a barrel on the New York Mercantile Exchange.
Volume was active, with 1.53 billion shares changing hands on the NYSE, above last year's daily average of 1.46 billion, while 1.79 billion shares traded on Nasdaq, slightly below last year's daily average of 1.81 billion.
Advancers outpaced decliners by a ratio of about 2 to 1 on the NYSE, and by about 3 to 2 on Nasdaq.
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Wed Aug 03, 2005 12:42 am |
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greg
Senior Member
Cash: $ 127.49
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Joined: 23 Mar 2005
Location: One Monkey Don't Stop No Show
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| US consumer confidence gauge falls in July 31 week |
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US consumer confidence gauge falls in July 31 week
Tue Aug 2, 2005 04:59 PM ET
NEW YORK, Aug 2 (Reuters) - U.S. consumers' confidence dropped in the latest week as high gasoline prices caused them to reconsider purchases, ABC News and the Washington Post said on Tuesday.
The ABC News/Washington Post Consumer Comfort Index fell to -11 in the week ending July 31 from -7 the previous week.
Consumers who thought it was a good time to buy things dropped to 33 percent, down from 37 percent in the previous week.
Consumers who had a positive view of the national economy slipped to 41 percent from 42 percent, and the number of people with a positive view of their personal finances dipped to 59 percent from 60 percent a week ago.
Confidence measures are generally viewed as a barometer of consumer spending, which accounts for two-thirds of the U.S. economy. However, economists note that consumers do not always act in accordance with their statements to surveys.
The ABC/Washington Post confidence index was based on a sample of about 1,000 interviews conducted in the four weeks ending July 31 and has a margin of error of plus or minus 3 percentage points.
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Wed Aug 03, 2005 12:43 am |
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greg
Senior Member
Cash: $ 127.49
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Joined: 23 Mar 2005
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| Small-cap stock rally defies skeptics |
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Small-cap stock rally defies skeptics
Wed Aug 3, 2005 01:02 PM ET
NEW YORK, Aug 3 (Reuters) - Investors who bet at the start of 2005 that the rally in small-cap stocks had run its course after five years are having second thoughts.
The Russell 2000 , the market's broadest benchmark for small-cap stocks, closed at a lifetime high on Tuesday and was up 5.7 percent year to date. Contrast that with a gain of just 2.7 percent for the big-cap Standard & Poor's 500 and a decline of nearly 1 percent for the blue-chip Dow Jones industrial average .
What's more, since the rally in benchmark stock indexes took root back in April, the Russell 2000 has surged nearly 19 percent.
Need more evidence? Small-cap core funds are the second-best performing among U.S. diversified equity portfolios this year, returning 6.3 percent as of July 28, according to Lipper data. That's almost double the rise in large-caps, which were expected to be the big winners.
Investors bet earlier this year that the place to find surging profits was big companies, which had cut staff and increased productivity in anticipation of higher lending costs and interest rates. Under these conditions, big companies tend to fare better because they have so many financing options available open to them.
But foreign demand for U.S. government debt has helped keep long-term interest rates low, and prices didn't accelerate enough to justify aggressive action by the Federal Reserve.
Fund managers say demand for companies with a market capitalization of between $500 million and about $1.8 billion may remain strong as long as interest rates don't increase sharply.
"A combination of low cost of capital and rapid earnings growth has been fueling demand for these companies," said John Augustine, chief investment strategist at Fifth Third Asset Management in Grand Rapids, Michigan, with $23 billion in assets. "Estimates for earnings growth in the sector remain very high."
The rally in small-cap shares started in 2000 and accelerated as the Fed slashed the benchmark interest rate to as low as 1 percent, a four-decade trough.
Since 2002, funds that invest in those stocks returned 22.6 percent, compared with a 20.5 percent return in mid-cap funds and a 13.5 percent gain in large-cap core funds, said Lipper, a unit of Reuters Group PC.
In the same period, the S&P 500 rose about 8.3 percent, while the Nasdaq Composite Index gained 13.4 percent.
Policy makers have raised the so-called fedfunds rate nine times since June 2004 to 3.25 percent, with another quarter percentage point increase expected when they meet next week. Still, the current rate is lower than the average 5.2 percent of the 1990s.
"A rapid increase in lending rates would be a risk for small companies," said Fifth Third's Augustine. "In that type of environment, investors tend to favor larger companies, with stronger balance sheets and diversified sources of financing."
MORE FOR MID-CAPS
To be sure, more money is starting to flow into mid-cap funds at the expense of small-caps. Over the past 12 months, a net $7.9 billion went into the latter category, well below the $22.5 billion for mid-caps, according to data compiled by Merrill Lynch & Co. Meanwhile, investors took $43.7 billion out of the large-cap group.
Other factors besides a more sluggish appetite for small-caps may be causing this trend.
About 14 percent of these funds are closed to new investors, compared with 3 percent of large-cap funds and 7 percent of mid-caps, according to Merrill Lynch.
"Many small-cap managers have closed their funds to new investors," Merrill Lynch small-cap strategist Satay Paduan wrote in a research note to clients. "Investors wishing to leave large-cap for lower capitalization exposure are forced to buy mid-cap products."
In fact, mid-cap stocks are on a tear, too. The S&P Midcap 400 has actually outgained the Russell 2000 thus far in 2005, rising more than 9 percent, although the small-cap surge from April's low has been more powerful.
"I've been amazed the last three or four months how well some of the small caps are doing," said Don Hodges, who oversees $140 million in assets at Hodges Capital Management Inc. in Dallas. "And it seems to be profit-driven, and not going up just on smoke."
Despite the run on small-cap companies this year, some analysts say market estimates that earnings will grow about 20 percent in 2005 may be too optimistic.
"There's still room for growth in small companies in sectors including technology, health care and consumer services," said Steven DeSanctis, a senior analyst for small-cap funds at Prudential Equity Group. "But many earnings estimates in the Street seem a bit unrealistic, and investors should also consider that valuations now are less attractive."
DeSanctis said small-cap companies are trading at an average premium of 10 percent over large-caps.
� Reuters 2005.
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Thu Aug 04, 2005 12:59 am |
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greg
Senior Member
Cash: $ 127.49
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| U.S. service sector growth slips in July |
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U.S. service sector growth slips in July
Wed Aug 3, 2005 04:28 PM ET
NEW YORK, Aug 3 (Reuters) - Growth in the vast U.S. services sector slowed in July but was still robust as new orders rose, an industry report showed on Wednesday, adding to evidence that the U.S. economy is on a solid growth path.
The services data from the Institute for Supply Management followed an ISM report on Monday showing the manufacturing sector grew more than expected last month despite the weight of higher oil prices.
Other data released on Wednesday indicated U.S. companies plan fewer lay-offs, while weekly mortgage applications fell last week, extending a drop from the previous week. The lay-off data could bode well for July non-farm payrolls data, which will be released on Friday and is expected to show an increase of 183,000 jobs.
Although higher energy costs added to inflationary pressures, most analysts focused on the headline number in the services report. It slipped to 60.5 last month from 62.2 in June and was just under Wall Street forecasts of 60.9. A number above 50 indicates growth.
The group represents purchasing managers in the services sector, which constitutes about 80 percent of the U.S. economy and includes businesses ranging from hair salons and restaurants to hotels and airlines.
"It's a little surprising that the overall index is down, given the strength we've seen in a variety of other PMI numbers recently," Steve Ricchiuto, chief U.S. economist at ABN Amro Inc., said of the purchasing managers index. "But looking at the breakdown, exports are up, deliveries are up, inventories are up.
"The surprise is in the headline," he added, "but most of the details look good."
The measure of prices paid rose to 70.3 from 59.8, while new orders rose to 61.9 from 59.5. The survey's jobs measure eased to 56.2 from 57.4.
"The survey holding north of 60 shows considerable strength," said Richard Iley, senior economist, North America, at BNP Paribas in New York.
Economists said the increase in prices could raise Federal Reserve concerns about inflation, particularly since the factory sector grew more than expected.
"It certainly ensures that the Fed carries on with its campaign to normalize the fed funds rate, with continued rises of 25 basis points for the foreseeable future with no pause in sight," said Iley.
The factory survey index rose to 56.6 in July from 53.8 in June.
Consulting firm Challenger, Gray & Christmas Inc. said planned layoffs in the United States fell 7 percent in July from June, led by job cuts in the consumer products, computer and financial industries.
Employers reported 102,971 job cuts in July, down from 110,996 in June but up 48 percent from a year earlier, according to the firm. While analysts say there is not a strong correlation between the lay-off numbers and the monthly payroll report, it is positive for Friday's jobs number.
The median forecast from analysts polled by Reuters put non-farm payrolls up 183,000 in July, up from 146,000 in June.
Applications for U.S. home mortgages fell last week as interest rates on 30-year loans rose more than in any week since March, an industry group said.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 0.3 percent to 752.1 in the week ending July 29, adding to the previous week's 5.8 percent loss. The four-week moving average is down 3.2 percent to 774.9 from 800.2.
Economists and the Fed say money from mortgage refinancing in recent years has supported consumer spending and the overall economy.
Separately, the National Association of Realtors said U.S. home affordability in the second quarter fell from the prior quarter and also was down from the second quarter of 2004.
The group's housing affordability index, which measures the ability of a family earning the median income to buy a home at the median price, dropped to 120.8 from 133.2 in the first quarter. It marked a sharp decline from the second quarter of 2004, when the index stood at 132.3.
Benchmark U.S. 10-year Treasury notes (US10YT=RR) added 10/32 to yield 4.30 percent.
Major U.S. stock indexes were little changed on the day.
� Reuters 2005.
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Thu Aug 04, 2005 1:01 am |
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greg
Senior Member
Cash: $ 127.49
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| U.S. blue chips inch up on lower oil, techs ease |
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U.S. blue chips inch up on lower oil, techs ease
Wed Aug 3, 2005 05:00 PM ET
NEW YORK, Aug 3 (Reuters) - U.S. blue-chip stocks edged up on Wednesday as crude oil prices fell from record levels, but the Nasdaq eased slightly a day after closing at a 4-year high.
Oil prices retreated from a record after U.S. data showed crude imports unexpectedly lifted oil inventories in the United States, the world's biggest consumer.
Oracle Corp. (ORCL.O) , one of the biggest weights on the Nasdaq, dropped 1.5 percent to $13.38 on speculation that the software company may raise its bid to secure a controlling stake in Indian banking software firm i-flex (IFLX.BO) .
The Dow Jones industrial average rose 13.85 points, or 0.13 percent, to close at 10,697.59. The Standard & Poor's 500 Index inched up just 0.92 of a point, or 0.07 percent, to finish at 1,245.04. The Nasdaq Composite Index fell 1.34 points, or 0.06 percent, to end at 2,216.81, after touching another 4-year high intraday at 2,219.91.
U.S. light sweet crude for September delivery (CLc1: ) fell $1.03 to settle at $60.86 on the New York Mercantile Exchange, after hitting a record $62.50 earlier in the day.
"You are seeing a little bit of a pause here, given the uncertainty related to oil prices," said John Caldwell, chief investment strategist at McDonald Financial Group. "After the great month we have had for stocks in July, a pause and even some profit taking is OK. I don't think investors should be too worried."
Lower oil prices are usually good for stocks because they lift the pressure on corporate costs and consumer spending.
But when the price of crude drops, it weighs on shares of oil companies like Exxon Mobil Corp. (XOM.N) and ConocoPhillips(COP.N) . Exxon Mobil fell 1.4 percent, or 81 cents, to $59 and dragged on the blue-chip Dow, while ConocoPhillips slipped 0.8 percent, or 48 cents, to $63.90.
On a positive note, Microsoft Corp. (MSFT.O) rose 1.6 percent, or 44 cents, to $27.25 on speculation the world's largest software maker will announce another large increase in its annual dividend. Its gain helped lift the Dow and limited the Nasdaq's decline.
MIXED EARNINGS
Shares of Time Warner Inc. (TWX.N) fell nearly 1 percent, or 15 cents, to $17.27 after the world's largest media company posted weaker-than-expected earnings after excluding a number of items.
CVS Corp. (CVS.N) slipped 1.5 percent, or 48 cents, to $30.77 after the No. 2 drugstore said quarterly profit rose 18 percent, but gave a cautious forecast for the rest of the year.
But Aon Corp. (AOC.N jumped 17 percent, or $4.32, to $29.88 after the world's second-largest insurance broker said its quarterly profit rose 10 percent, beating expectations.
Shares in Pinnacle Entertainment Inc. (PNK) soared about 13 percent, or $2.74, to $24.10 after the c*sino operator reported stronger-than-forecast results on Tuesday.
DEALS AND BONDS
Shares of sporting goods maker Reebok (RBK) surged 30 percent, or $13.19, to $57.14 on the NYSE on news that German rival Adidas will buy the company for $59 a share, or $3.8 billion, to expand its reach in the home market of industry leader Nike Inc. (NKE) .
Nike shares rose 1.3 percent, or $1.09, to $86.92 on the NYSE.
Meanwhile, the U.S. Treasury Department said it would resume selling 30-year bonds in early 2006 after a hiatus of more than four years, and scaled back its debt offerings this quarter to reflect an improved government budget outlook.
The yield on the benchmark 10-year U.S. Treasury note (US10YT=RR) slipped to 4.30 percent on Wednesday from 4.34 percent on Tuesday, while its price rose 11/32 to 98-21/32. The 30-year bond's yield fell to 4.51 percent from 4.55 percent on Tuesday, while its price climbed 23-32 to 113-5/32.
Volume was active, with about 1.52 billion shares changing hands on the New York Stock Exchange, above last year's daily average of 1.46 billion shares, while on the Nasdaq, about 1.82 billion shares traded, slightly above last year's daily average of 1.81 billion.
Decliners outpaced advancers on the NYSE by a ratio of about 9 to 8, and on Nasdaq, by about 9 to 7.
� Reuters 2005.
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Thu Aug 04, 2005 1:08 am |
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greg
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| Derivative traders see 178,000 new US jobs in July |
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Derivative traders see 178,000 new US jobs in July
Thu Aug 4, 2005 05:12 PM ET
NEW YORK, Aug 4 (Reuters) - Investors in a derivatives au
ction on Thursday bet that July U.S. payrolls would come in a bit below economists' expectations, but also hedged against surprises in both directions in the often unpredictable report.
The auction, the third of four, showed an implied market forecast of 178,000 jobs added to U.S. non-farm payrolls in July, seasonally adjusted, just below a median of 183,000 forecast by 24 economists in a Reuters poll.
Earlier legs of the auction yielded implied market forecasts of 188,000 on Thursday morning and 185,000 on Wednesday afternoon. The final leg of the auction will take place on Friday morning before the U.S. Department of Labor releases the payrolls data.
Players in the latest economic auction on Thursday afternoon began concentrating more of their bets a bit below economists' expectations than in Thursday's earlier auction.
For example, investors put a 12.2 percent probability of a result between 100,000 and 125,000 new jobs, up from just 8.9 percent early on Thursday.
Probability of a result ranging from 125,000 to 225,000 was 46.8 percent in the third auction on Thursday afternoon, about even with the 46.9 percent in the auction early on Thursday.
The U.S. Labor Department will release payroll numbers at 8:30 a.m. EST (1230 GMT) on Friday.
Economic derivatives, offered by Deutsche Bank, Goldman Sachs and interdealer broker ICAP, have had a good track record at revealing how market participants are positioned ahead of important economic indicators relative to economists' consensus forecasts.
� Reuters 2005.
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Thu Aug 04, 2005 10:22 pm |
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greg
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| U.S. stocks drop on weak retail sales, higher oil |
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U.S. stocks drop on weak retail sales, higher oil
Thu Aug 4, 2005 05:25 PM ET
By Anupama Chandrasekaran
NEW YORK, Aug 4 (Reuters) - U.S. stocks fell on Thursday as major retailers like Target Corp. (TGT.N) failed to meet July sales expectations and higher oil prices revived concerns that rising energy costs will hurt corporate profits.
Retailers' shares generally were down on the day after nearly 60 percent of the July sales reports from the chains came in below market forecasts. Target, the No. 2 U.S. discounter, fell 2.7 percent to $56.09.
U.S. crude oil futures rebounded as gasoline rallied amid declining supply and increasing refinery problems. Crude for September delivery (CLU5) settled up 52 cents, or 0.8 percent, at $61.38 a barrel,
The Dow Jones industrial average fell 87.49 points, or 0.82 percent, to end at 10,610.10. The Standard & Poor's 500 index slipped 9.18 points, or 0.74 percent, to finish at 1,235.86. The technology-laced Nasdaq Composite Index dropped 25.49 points, or 1.15 percent, to close at 2,191.32.
"Investors have been getting too enthusiastic here and we were vulnerable to a pullback and then you add in higher oil prices and the weak retail sales number, and that led to a little cleansing, a small air pocket, in the market today," said Steve Goldman, market strategist at Weeden & Co.
Thursday's pullback comes late in a week in which both the S&P 500 and the Nasdaq tested new four-year highs.
After the bell, shares of Microsoft Corp. (MSFT.O) rose 0.3 percent to $27.41 on the Inet electronic brokerage network after the world's largest software maker said it has appointed Kevin Turner, the CEO of Wal-Mart Stores Inc.'s (WMT.N) Sam's Club warehouse stores business, as its new chief operating officer. Wal-Mart's stock fell 2 cents to $49.27 on Inet.
During the regular session, negative investor sentiment toward retailers also weighed on the shares of blue-chip Wal-Mart even though its July sales were at the high end of expectations, and pressured stocks of retailers that did not report July sales, such as No. 1 U.S. home improvement chain Home Depot Inc. (HD.N) , also a Dow component.
Wal-Mart shares declined 0.8 percent, or 39 cents, to $49.29, while Home Depot slipped 2.3 percent, or 95 cents, to $41.28.
The jump in crude oil prices weighed on industrial stocks, which are considered benchmarks of the U.S. economy, with 3M Co. (MMM.N) down 1.1 percent, or 84 cents, at $73.35, and United Technologies Corp. (UTX.N) down 1.2 percent, or 58 cents, at $49.52.
RETAIL SALES DISAPPOINT
The Standard & Poor's 500 retailing index fell 2.2 percent, adding to Wall Street's worries. Retail sales are a broadly watched measure of consumer spending, which represents a bulk of U.S. economic activity.
In the apparel group, decliners outpaced gainers by nearly 5 to 1, with Aeropostale Inc. (ARO.N) sliding 7.6 percent, or $2.24, to $27.11, and Abercrombie & Fitch Co. (ANF.N) dropping 6.7 percent, or $4.68, to $65.56.
Department store operator Nordstrom Inc. (JWN.N) fell 8.2 percent, or $3, to $33.45, and J.C. Penney Co. Inc. (JCP.N) dropped 4.4 percent, or $2.50, to $53.92 after reporting weaker-than-expected sales.
Among retail and commerce-related shares that dragged the Nasdaq down were Bed Bath & Beyond (BBBY.O) , off 3.1 percent, or $1.40, at $43.75, and eBay Inc.(EBAY.O) , off 1.6 percent, or 72 cents, at $43.83.
EARNINGS AND EXXON
But Electronic Data Systems Corp. (EDS.N) shares surged 8.6 percent, or $1.83, to $23.12 and pharmacy benefits manager Caremark Rx Inc. (CMX.N) jumped 5.2 percent, or $2.30, to $46.96 after the companies offered strong outlooks.
Shares of most major oil companies got a lift from rising oil prices. ConocoPhillips (COP.N) rose 0.4 percent, or 28 cents, to $64.18, while Chevron Corp.(CVX.N) gained 0.1 percent, or 6 cents, to $60.41.
An exception to that trend was Dow component Exxon Mobil Corp. (XOM.N) , down nearly 1 percent, or 48 cents, at $58.52 after it said Chief Executive Lee Raymond, who steered the oil behemoth through booms and busts to its place as the world's most valuable company, will retire at the end of the year.
Volume was fairly active on the NYSE, where about 1.51 billion shares changed hands, above last year's daily average of 1.46 billion, while on Nasdaq, the pace was more moderate, with 1.65 billion shares traded, below last year's daily average of 1.81 billion.
Decliners outpaced advancers by about a 2-to-1 ratio on both the NYSE and the Nasdaq.
� Reuters 2005
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Thu Aug 04, 2005 10:31 pm |
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greg
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| BANKRUPTCIES IN UK HIT HIGHEST LEVEL SINCE 1960... |
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Personal insolvencies hit record high
Mark Tran
Friday August 5, 2005
Guardian Unlimited
The number of personal insolvencies in England and Wales has risen to its highest level in 45 years, official figures showed today.
In the April to June period, the number of personal insolvencies rose to 15,394, the highest since comparable records began in 1960, the Department of Trade and Industry said.
That was up 36.8% compared to a year ago and 11.7% on the quarter. The insolvencies were made up of 11,195 bankruptcies - also the highest on record - and 4,199 individual voluntary arrangements.
A company or individual with debts that they are unable to pay as they fall due is said to be insolvent. Figures for individual insolvencies comprise bankruptcy orders and individual voluntary arrangements.
The main British banks have all reported a rise in bad loans as more people have fallen into arrears with their loan and credit card payments. Barclays today said provisions for bad loans and other credit provisions rose 20% to �706m in the first quarter, although Barclays said the rise at its Barclaycard credit card unit was partly due to an increase in lending.
John Butler of HSBC said the rise in personal insolvencies may be exaggerated by a change in the bankruptcy laws that took effect in April 2004, but said the trend has been going up for some time.
"This upward trend pre-dates that change and is mirrored in Scotland where the laws have not been adjusted. The worrying element is that at a time of high employment and low interest rates insolvencies have been rising," Mr Butler said.
There are fears that the number of personal insolvencies will rise as economic conditions deteriorate.
"The recent overall signs that the labour market has started to soften means that there is a growing risk that individual insolvencies will climb markedly further over the coming months," said Howard Archer of the consultancy Global Insight.
Mr Archer also warned that the Bank of England's decision to cut interest rates to 4.5% from 4.75% yesterday may pose problems.
"While Thursday's cut in interest rates will provide some very modest relief to debtors, there is the danger that it could encourage people to borrow more," Mr Archer said. "This is something the Bank of England will need to keep a close eye on."
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Sat Aug 06, 2005 12:31 am |
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greg
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Wall St Week Ahead: Stocks to follow Fed's script
Fri Aug 5, 2005 07:12 PM ET
By Jennifer Coogan
NEW YORK, Aug 5 (Reuters) - U.S. stock investors will search for any sign from the Federal Reserve next week that an end to its interest-rate-hike cycle is near, which could lift the stock market over a speed bump.
But if the Fed indicates that rising rates are here to stay for the rest of the year, that could put a damper on Wall Street's mood after the S&P 500's and Nasdaq's recent climb to 4-year highs.
The Federal Open Market Committee will meet on Tuesday, when Wall Street forecasts that it will raise the fed funds rate another 25 basis points -- as it has done at each of the past nine straight meetings. Such a move would push the fed funds rate, or the rate for overnight bank loans, up to 3.5 percent on Tuesday.
Stock investors, however, may react more to the Fed's commentary on the economy and the direction of interest-rate policy rather than on the actual rate increase.
Financial markets see the fed funds rate hitting 4 percent by year end. But Friday's robust U.S. July payrolls report prompted some observers to bet it could move even higher.
The U.S. Labor Department reported nonfarm payrolls rose by a higher-than-expected 207,000 in July, compared with a revised increase of 166,000 in June. The forecast was for July growth of 183,000 jobs, according to economists polled by Reuters.
Average hourly wages also increased in July, raising concerns about inflation and giving the Fed more ammunition to justify its campaign to keep raising borrowing costs, some economists said.
Friday's strong July jobs data pushed the Dow Jones industrial average down 52.07 points, or 0.49 percent, to end at 10,558.03. The Standard & Poor's 500 Index fell 9.44 points, or 0.76 percent, to finish at 1,226.42. The technology-laced Nasdaq Composite Index closed down 13.41 points, or down 0.61 percent, at 2,177.91.
For the week, stocks fell, with the Dow down 0.8 percent, the S&P 500 off 0.6 percent, and the Nasdaq off 0.3 percent.
"The market's between a rock and a hard place," said Ralph Bloch, senior vice president at Raymond James Associates in Reston, Virginia. "The jobs data comes out better than expected. I'd always thought that was good for the economy, but the 'fundamentalists' are talking about how that's going to get the Fed to keep raising rates. It's just nuts."
Higher interest rates are seen as negative for stocks because they raise business costs and eat into consumers' discretionary spending.
EARNINGS: DELPHI, CISCO AND TARGET
With the bulk of second-quarter corporate earnings already reported, stock investors will watch to see if the remaining companies can keep up the trend that analysts have characterized as largely better-than-expected results.
On Monday, investors will also look out for results from Auto parts supplier Delphi Corp. (DPH.N) , which said on Friday said it is in talks with former parent General Motors Corp. (GM.N) and its main unions about a restructuring of its unprofitable operations. Delphi also said it would draw $1.5 billion from a $1.8 billion revolving credit facility.
Shares of Delphi fell 14.2 percent to close on Friday at $4.96 on the New York Stock Exchange.
Among those reporting on Tuesday are Cisco Systems Inc. (CSCO.O) and Dow component Walt Disney Co. (DIS.N) .
On Wednesday, Federated Department Stores Inc. (FD.N) , which posted disappointing same-store sales figures for July, will report its results for the second quarter.
Discount retailers Kohl's Corp. (KSS.N) and Target Corp. (TGT.N) will both report second-quarter results on Thursday.
DEFICIT WATCH: BUDGET AND TRADE
Several major U.S. economic indicators also may give stocks some direction next week.
On Wednesday, the Treasury Department will release the July federal budget deficit, expected to have narrowed to $57 billion from $69.2 billion a year earlier.
"What is likely to happen as a result of strength in the economy, I think government revenue will continue to exceed expectations, which means the budget deficit will come down faster," said Stanley Nabi, vice chairman at Silvercrest Asset Management Group in New York. "That is a marginal plus."
On Thursday the Commerce Department in expected to report U.S. retail sales rose 2.2 percent in July, compared with 1.7 percent in the previous month, according to economists polled by Reuters.
This week, stocks fell on Thursday after a majority of retailers reported July same-store sales that fell short of expectations.
In the week ahead, Friday's agenda includes a report from the Commerce Department on the June U.S. international trade gap. Analysts expect the U.S. trade deficit widened to $57.3 billion in June from about $55.4 billion in May, which was the narrowest shortfall in six months.
"We improved in May, but it looked too good, so we may have some payback and that could move the market," said Kurt Karl, senior U.S. economist at Swiss Re in New York. "The possibility of a record deficit would be a shock. It's a negative risk for the equity market." (Wall St Week Ahead runs weekly.)
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Sat Aug 06, 2005 12:38 am |
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greg
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US Treasury sees little inflation risk from jobs
Fri Aug 5, 2005 05:21 PM ET
WASHINGTON, Aug 5 (Reuters) - The U.S. economy still has enough excess capacity to absorb strong job growth without triggering inflation, a senior Treasury Department official said on Friday.
"We still have a lot of capacity in the economy. We can have a lot of job growth without inflation," Mark Warshawsky, Treasury's under secretary for economic policy, told CNBC.
Asked if continued job growth could spark inflationary pressures, Warshawsky said that could be possible at a later point, but added: "I don't think we're at that stage yet."
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Sat Aug 06, 2005 12:42 am |
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greg
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Hedge funds post third straight month of gains: S&P
Thu Aug 4, 2005 02:46 PM ET
NEW YORK, Aug 4 (Reuters) - Hedge funds eked out their third straight month of positive returns in July, but still underperformed a rising S&P 500 Index , according to the latest figures in the S&P Hedge Fund Index released on Thursday.
The S&P Hedge Fund Index, an investable benchmark with 41 constituent members across various hedge fund strategies, showed gains of 0.98 percent in July, the figures show.
The monthly gains, well down from previous years, were fueled by generally positive corporate earnings and stock market gains, along with China's currency revaluation, Standard & Poor's said. The S&P figures are generally the first of several indexes that reflect hedge fund performance on a monthly basis.
The economic factors contributed to a 3.6 percent rise in the S&P 500 index during the month, which generally benefits the roughly 50 percent of hedge funds that employ equity "long-short" strategies.
Hedge funds, which employ various trading strategies aimed at generating above-market returns, showed the strongest gains in long-short strategies, which typically look to hedge risk by balancing "long" stock positions against "short" ones. The S&P Equity Long/Short Index gained 2.08 percent in July, while the non-U.S. Global Equity L/S index gained 2.21 percent.
Funds that employ arbitrage strategies, including convertible bond and merger arbitrage, also showed gains of 0.73 percent, but returns well down from previous years when such strategies were more popular.
The only strategy that posted negative returns were those in managed futures, which trade in futures contracts. The S&P Managed Futures index posted returns of minus 0.72 percent for July, S&P said.
Justin Dew, S&P senior hedge fund specialist, said the Chinese revaluation of the yuan had a temporary positive effect on stock markets, which can benefit hedge funds. Stronger-than-expected second quarter earnings figures also contributed to stock market gains for the month.
"Indications of a bull market continue to occur as exemplified by the current positive economic growth, increasing earnings and low inflation," said Dew in a statement.
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Sat Aug 06, 2005 12:45 am |
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