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Analysis: Markets have hope but Obama speech may change little

admin — Thu, 08 Sep 2011 10:15:54 +0000

NEW YORK | Thu Sep 8, 2011 8:10am EDT

NEW YORK (Reuters) – After learning the economy added no new jobs in August, investors say they are ready for bold ideas from Washington to put people to work.

The problem is, few are convinced that politicians can deliver, particularly with the 2012 election barely a year off and acrimony among Democrats and Republicans running high.

That means President Barack Obama will be preaching to a pretty tough crowd on Thursday when he details plans to boost employment.

“In many respects, his hands are tied. It takes time to create jobs,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. “And he’s not going to have much cooperation from the other side of the aisle.”

Still, the stakes for the economy and financial markets are high. Obama’s speech comes with the jobless rate at or above 9 percent for a fifth straight month and his own approval ratings hovering near their lowest level since his 2008 election.

Greg Salvaggio, vice president of trading at Tempus Consulting in Washington, called it “a make-or-break moment.”

“People would welcome almost anything at this point, but we need something bold, something that will pump money into consumers’ hands and boost confidence,” he said. “The market has been disappointed by the approach the White House has taken so far. They’re looking for definitive leadership.”

Media have reported Obama will push a $300 billion job creation package that includes tax cuts, infrastructure spending and aid to state and local governments. The White House has refused to comment on the estimated cost.

“To get the markets excited, a fiscal package would have to include some tax cuts and some infrastructure spending,” said Ray Humphrey, senior vice president and senior portfolio manager at Hartford Investment Management Co, with $160.8 billion in assets under management.

“But the problem is, even if the spending increases and tax cuts are ‘paid for’ with some entitlement (reductions), there’s no guarantee that this Republican Congress will go along with it because, frankly, by doing what they’re doing, it’s worked out for them in that the president has become less popular,” Humphrey said.

Some traders said a nearly 3 percent rise in the benchmark S&P 500 index on Wednesday and a pullback in gold prices may reflect optimism that Obama will come out swinging.

But there’s also scope for disappointment. Doug Cliggott, U.S. equity strategist at Credit Suisse, said tax cuts would probably have to be big and permanent to stoke a serious stock market rally, “and that won’t be easy to do.”

He recently reduced his year-end S&P 500 forecast to 1,100 from 1,275, saying earnings will contract in 2012 as nominal growth weakens, labor costs edge up and the dollar stabilizes as risk-averse investors bring money back home. A weak dollar helps overseas earnings for many S&P 500 firms.

David Brownlee, head of fixed income at Montpelier, Vermont-based Sentinel Asset Management, which oversees $28 billion in assets, said “You have to create incentives for corporations to invest. Most are sitting on boatloads of cash but have no sense that final demand is going to be there.”

If Obama can’t sway legislators, his speech may turn into little more than a quick trading opportunity.

“Most people realize there is no magic dust here,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “He can’t wave a wand and create a million jobs.”

ACRIMONY IN WASHINGTON

U.S. lawmakers have not inspired confidence this year on Wall Street or on Main Street. An acrimonious fight over the budget and the rising U.S. debt burden this summer led Standard & Poor’s to strip the country of its AAA credit rating.

Markets did not react well to the resolution of the debt-ceiling fight, and the subsequent downgrade ignited an even bigger stock market sell-off while sending business and consumer confidence tumbling.

Since 2012 is an election year, hopes that Democrats and Republicans can cooperate at all are thinner than ever, with politicians likely to stand idly by watching as confidence continues to wane.

What’s more, the mood in Washington, as elsewhere in the developed world, has turned sharply toward deficit reduction, leaving little appetite for more government spending.

Republicans criticized an earlier $800 billion fiscal stimulus program pushed by the White House, saying it had little real impact on the economy.

More than two years since the country emerged from recession, some 14 million Americans remain out of work. The budget deficit is running near 10 percent of total output, among the highest as a percentage of GDP since World War II.

“What makes this so daunting is there is no consensus on what would be a constructive set of actions to pursue,” Credit Suisse’s Cliggott said. “There’s agreement that the patient is not well, but there seems to be a huge disagreement among the consulting physicians about what the right course of treatment might be.”

One thing Obama may have on his side is the element of surprise. Krosby said markets rose smartly in 2010 when he dropped his earlier opposition to extending Bush era tax cuts.

“Expectations are rather low,” she said, “so the president may come out again and surprise the market to the upside.”

(Additional reporting by Ellen Freilich; editing by Dan Grebler)

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Obama to propose $300 billion jobs package: report

admin — Tue, 06 Sep 2011 02:27:54 +0000

WASHINGTON | Tue Sep 6, 2011 10:46pm EDT

WASHINGTON (Reuters) – President Barack Obama, facing waning confidence among Americans in his economic stewardship, plans to lay out a $300 billion job-creation package on Thursday, CNN reported, citing Democratic sources.

The proposed new spending, to be announced by Obama in a nationally televised speech to Congress, would be offset by budget cuts, the report said, signaling that the Democratic president hopes to mollify the concerns of Republican fiscal hawks resistant to his jobs ideas.

There was no immediate comment from the White House.

Obama’s aides have refused to go public with the estimated cost of Obama’s package or provide many specifics in advance, except to say that the proposals will have a “quick and positive” impact on boosting jobs at a time of stubbornly high U.S. unemployment.

Confidence in Obama’s management of the economy has been hit by months of bad economic news and several polls on Tuesday showed fresh declines in his job approval ratings.

Obama hopes to start reversing this trend in an address to a joint session of Congress on Thursday, in which he will try to convince voters that he has a better economic recovery plan than his Republican opponents.

“We need to do things that will have a direct impact in the short-term to grow the economy and create jobs and the president will put forward proposals that will do just that,” White House spokesman Jay Carney said.

Obama fought Republicans all summer to lift the U.S. debt ceiling in a bitter debate that saw rating agency Standard & Poor’s cut the U.S. AAA credit rating, and he must now get lawmakers to back additional spending that many oppose.

However, the president is seeking congressional support at a time when his own prospects of re-election have worsened.

An NBC News/Wall Street Journal poll showed Obama’s job approval rating at a low of 44 percent, while an ABC News/ Washington Post poll found that six in 10 Americans now rate the president’s job on the economy and jobs negatively.

A third survey by Politico and George Washington University found that 72 percent of voters believe the country is either strongly or somewhat headed in the wrong direction, a jump of 12 percent since last May.

Obama must get unemployment down from levels currently above 9 percent to improve his chances of winning a second White House term in the November 2012 election.

The president has already touched on a various steps Congress could take to lift growth and hiring, including infrastructure spending, business tax breaks, and extending a payroll tax cut and aid for the long-term unemployed.

Carney declined to lay out any specifics but said the measures Obama would recommend would yield a “direct, quick and positive impact” on the U.S. economy if they were enacted by Congress.

Republicans criticized Obama for not including them in discussions on the package before his big speech and indicated any jobs bills could face tough passage through Congress, where they control the U.S. House of Representatives.

“I have no doubt the president will propose many things on Thursday that, when looked at individually, sound pretty good, or that he’ll call them all bipartisan. I’m equally certain that, taken as whole, they’ll represent more of the same failed approach,” said the top Senate Republican, Mitch McConnell.

Republican House leaders separately wrote to Obama urging him to repeal “excessive, job-destroying regulations” and laying out possible areas of common ground, including reforms to the unemployment system and free trade agreements.

(Reporting by Alister Bull, Laura MacInnis, Matt Spetalnick, Joanne Allen and David Morgan; editing by Cynthia Osterman)

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Obama, Republicans clash at health summit

admin — Thu, 25 Feb 2010 10:52:03 +0000

Obama, Republicans clash at health summit
President Barack Obama and Republicans clashed frequently on Thursday at a summit on his stalled healthcare overhaul, battling over the size and cost of the proposal and moving no closer to a compromise agreement.
Obama told about 40 congressional leaders his comprehensive overhaul was “absolutely critical” to a sustained economic recovery, but Republicans said he should scrap the current plans and start over with a smaller approach.
“There are some fundamental differences between us that we cannot paper over,” Jon Kyl, the No. 2 Senate Republican, told Obama, adding his plan gave Washington too much power over the health system and took it away from patients and doctors.
“We do not agree about the fundamental question of who should be in charge,” Kyl said.
Obama hoped the day-long summit at Blair House, the presidential guest house across the street from the White House, would revive momentum in Congress for his faltering attempt to make healthcare more affordable and extend coverage to tens of millions of uninsured Americans.
He admitted it might not be possible to bridge the differences with Republicans but said “I thought it was worthwhile for us to make this effort.”
Afterward, Republican Senate leader Mitch McConnell said he was “discouraged” by the summit’s outcome and thought it was clear Democrats planned to ram through a version of the Senate-passed healthcare plan.
Senate Democratic leader Harry Reid seemed to reinforce that view, telling reporters: “It is time to do something and we are going to do it.”
Obama had urged lawmakers to go beyond political theater and partisan finger-pointing during the summit, but the polite tone was interrupted several times by tense exchanges with Republicans, including his 2008 presidential foe John McCain.
When McCain questioned whether Obama had delivered on the political change he promised, Obama curtly reminded him: “We’re not campaigning anymore. The election is over.” McCain responded with a laugh: “I’m reminded of that every day.”
Republican Senator Lamar Alexander and Obama also clashed on whether Democratic plans would raise insurance premiums, with each interrupting the other to make their points.
Health insurer stocks closed slightly higher on Thursday, performing better than the broader U.S. market as investor concerns waned about a sweeping healthcare reform that would hurt profits. Analysts said they expected a much more diluted version of the plan would eventually be adopted.
Shares in WellPoint rose 2.2 percent, Aetnagained 1.4 percent and Humana rose 0.5 percent. The Morgan Stanley Healthcare Payor Index was nearly unchanged.
“I think that investors recognize that all the bad news about how reform might affect insurance companies is already behind us,” said Dave Shove, analyst for BMO Capital Markets.
The summit debate broke no new ground in the healthcare debate, with Republicans calling the bills too costly and saying they would mean more taxes, more regulations and higher premiums for consumers.
“This 2,700-page bill will bankrupt our country,” said House Republican leader John Boehner. The Congressional Budget Office has said the bills would reduce the budget deficit by about $100 billion over the next 10 years.
Obama dominated the speaking time at the 7-hour summit, rebutting many of the Republican charges and sometimes chiding Republican critics for reverting to “talking points” in their comments.
“He actually consumed more time than all the Republicans combined and Democrats combined,” Republican Kyl said. “It wasn’t a matter of just inviting us down and listening to our ideas, he wanted to argue with us.”
Republicans promoted their own scaled-back approach to boost competition across state lines, create high-risk insurance pools and curtail medical malpractice lawsuits. They stacked the Democratic bill on their table to show its size and said their opposition represented the view of most Americans.
“We have to start by taking the current bill and putting it on the shelf and starting from a clean sheet of paper,” Alexander said. “This is a car that can’t be recalled and fixed.”
Obama and his fellow Democrats made it clear they have no intention of starting over, but Obama hopes to win over wavering Democratic lawmakers and rally support among voters who have lost enthusiasm for the effort to reshape the $2.5 trillion U.S. healthcare industry.
The bills passed by the Democratic-controlled House and Senate late last year were designed to rein in costs, regulate insurers and expand coverage to more than 30 million more Americans.
But efforts to merge them and send a final version to Obama collapsed in January after Democrats lost their crucial 60th Senate vote in a special election in Massachusetts amid broad public dissatisfaction with the healthcare drive.
Democrats are considering trying to ram a bill through Congress using a procedure called reconciliation that would bypass the need for Republican support. Republicans denounced the idea.
“You can say that this process has been used before, and that would be right. But it’s never been used for anything like this,” Alexander said, quoting Democratic Senator Robert Byrd’s description of the process as ramming the bill through like “a freight train.”
Reid defended the procedure and noted Republicans had used it before “for major things” like tax cuts and reform of Medicare, the federal health program for the elderly.
The White House also has a scaled-back alternative plan it could push if a more comprehensive approach fails. It would extend coverage to about 15 million Americans rather than the 31 million envisioned by the larger plan.
Asked as he entered the summit if he had a Plan B, Obama replied: “I’ve always got plans.”
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Obama’s 2010 budget: deficit soars amid job spending

admin — Mon, 01 Feb 2010 17:06:34 +0000

WASHINGTON (Reuters) – President Barack Obama pledged on Monday to halve a record 2010 budget deficit by the end of his first term in office, but made tackling double-digit unemployment his immediate priority with a spending plan that risked public ire and a rough battle in Congress.
Criticized by Republicans for raising taxes on wealthy Americans, Obama is under pressure to convince investors and vital creditors like China that he has a credible plan to control the U.S. deficit and debt over time.
“We won’t be able to bring down this deficit overnight, given that the recovery is still taking hold,” Obama said after laying out $3.8 trillion in spending plans for the fiscal year to September 30, 2011.
“We will continue, for example, to do what it takes to create jobs. That is reflected in my budget. It is essential,” he said in a televised statement from the White House.
Obama’s blueprint now goes to a Congress deeply split on how to handle the twin woes of a massive deficit and high unemployment amid a still fragile emergence from recession.
Lawmakers girding for the annual budget battle will be in no mood to anger voters ahead of congressional elections in November, and could reshape it extensively during negotiations that may stretch into the year.
The budget forecast a $1.56 trillion deficit in 2010, or 10.6 percent of gross domestic product (GDP), up from a 9.9 percent share of GDP in 2009.
But the shortfall was forecast to shrink to 8.3 percent of GDP in 2011. By the time his term ends in January 2013, it would have halved from the level Obama inherited on taking office last year, keeping a key pledge. That supposes Obama gets Congress to agree to spending cuts and that the economy rebounds strongly enough to sharply lift tax revenues.
Even if all goes to plan, the budget still forecasts U.S. public debt rising above 71 percent of GDP by 2013, up from 53 percent in 2009, and almost 80 percent by 2020 — levels that could spook investors.
Financial markets largely ignored the budget numbers, which had been extensively previewed, but analysts were not assured.
“We’re playing with fire. Foreign countries are noticing our governance failures,” said Bill Galston, a senior fellow at the Brookings Institution, a Washington think-tank.
“The dollar’s standing as the world’s reserve currency and our economy’s standing as the world’s leader are both in jeopardy,” he said.
The deficit’s rise in 2010 was partly due to the $787 billion stimulus package Obama pushed through Congress early last year to fight the recession.
Obama, a Democrat, said he had inherited the financial mess from his Republican predecessor President George W. Bush, but did not pretend that the budget would please many people.
“Budget day is like tax day — it’s never fun. No matter what, it’s big numbers,” he said.
Republicans seized on the grim fiscal forecast to criticize Obama’s handling of the economy.
Senator Judd Gregg, the top Republican on the Senate Budget Committee, warned the country was sinking into a “quagmire” of debt and said Obama’s stimulus plan had failed to create jobs.
“These circumstances call for a bold, game-changing budget that will turn things around, put in place a plan to restrain spending, reduce the debt and tackle the big entitlement programs that are growing out-of-control,” he said. “Instead, the president has sent us more of the same.”
The budget outlined some expected savings from the reform of Medicare and Medicaid entitlement programs that care for elderly and poor Americans. But his health reforms have stalled in Congress and Obama did not dwell on healthcare in detail.
Republicans complain the projected improvements in the country’s fiscal position come mainly through higher taxes and stronger growth, while spending emerges largely unscathed.
Obama plans to allow tax cuts to expire on affluent American families who make more than $250,000 a year, which is expected to raise $678 billion over the next decade.
He will extract $90 billion from big banks with a fee to recoup taxpayer losses for bailing out the industry during the financial crisis during 2008. Scrapping subsidies to oil, coal and natural gas companies will raise a further $40 billion.
Obama also plans to save $250 billion between 2011 and 2020 by curbing 120 federal projects, including $23 billion next year. These cuts included the country’s powerfully symbolic space mission to return to the moon, but the White House says it will also invest more in education and research.
Polls show voters are worried by the weak condition of U.S. finances, and Obama plans to create a bipartisan fiscal commission to figure out options on taxes and spending.
Much of the improvement in the fiscal picture is driven by underlying forecasts in the budget for solid economic growth — which will not necessarily be shared by all economists.
The economy is projected to expand by 2.7 percent in 2010, but then pull at an above-average 3.8 percent in 2011 and rise above 4 percent for the following 3 years.
The budget also assumes unemployment will remain high, edging to 8.2 percent in 2012 from 10 percent this year, while inflation stays mild and interest rates rise only slightly.
Discontent over the jobless rate translated into a slap for Obama’s Democrats in an election last month for the U.S. Senate in Massachusetts, costing the party a crucial Senate seat and foreshadowing potentially big losses in the November congressional elections.
Unemployment is a key concern for voters who will elect all 435 members in the House of Representatives and more than a third of the 100 Senate members in November.
To boost jobs, Obama is setting aside $100 billion in 2010 in tax credits aimed at small businesses as well as investments in clean energy and infrastructure, before starting to tighten the country’s fiscal belt the following year.
Economists say withdrawing policies aimed at boosting growth too soon helped prolong the Great Depression in the 1930s, a mistake Obama is determined to avoid repeating.
Democrats control both chambers in Congress. But with Republicans united in opposition to Obama’s agenda, he still faces a struggle pulling together Democrats — who badly need to show voters they are taking steps on jobs, but face a voter backlash over aggressive spending to boost the economy.
Reflecting the challenge Obama faced pushing through his domestic agenda in his first year in office, the budget dropped $646 billion in revenues from a cap-and-trade system to curb greenhouse gases — signaling pessimism Congress will pass a bill with this provision.
, editing by Frances Kerry)

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Stocks show mildly positive reaction to Obama (AP)

admin — Sat, 30 Jan 2010 06:19:37 +0000

.
Stock index futures are moderately higher after Obama’s address, perhaps because of what he didn’t say. The president did not mention his plan to restrict the size of the nation’s banks, or the risky trading practices that brought them big profits. That plan is one of investors’ biggest concerns right now — stocks plunged last week after Obama announced that he wanted to increase regulation of the banks.
.
are up 55 points, or 0.5 percent, at 10,250, while
futures are up 8.40, or 0.8 percent, at 1,103.

us.rd.yahoo.com

Fed, techs lift Wall St; futures cheer Obama

admin — Wed, 27 Jan 2010 23:01:43 +0000

Fed, techs lift Wall St; futures cheer Obama
NEW YORK (Reuters) – Stocks rose on Wednesday after the U.S. Federal Reserve pledged to keep interest rates near zero and stock futures signaled more gains ahead after President Barack Obama struck a conciliatory tone on banks in his State of the Union speech.
Stock index futures shot up in late after-hours trading as Obama pushed job creation to the top of his agenda to bring down high unemployment, proposing the use of $30 billion of bank bailout repayments to boost lending to small businesses.
Analysts said investors were relieved that Obama’s speech did not slam banks and Wall Street anew after days of heightened unease about restrictions on bank risk-taking that Obama proposed last week, which helped fuel a global market sell-off.
Financial shares were poised to be among the standouts heading into Thursday’s session.
“In my opinion he articulated the crowning achievement of his administration so far, which is the stabilization of our banking system. I think he articulated that very well and why that’s important and that this country’s banking system is no longer on the brink,” said Haag Sherman, co-founder and chief investment officer of Salient Partners, an investment firm in Houston.
“As it relates to pushing stock futures higher tomorrow, I think that maybe there’s some degree of relief that there weren’t more radical proposals that came out of this State of the Union address. It was largely conciliatory and somewhat balanced.”
S&P 500 futures rose about 0.7 percent or 8 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures gained 0.5 percent or 55 points, and Nasdaq 100 futures added 0.6 percent or 10.50 points.
Obama also promised not to abandon his struggling overhaul of the healthcare system, making it likely that healthcare stocks would also be in the spotlight on Thursday. The backdrop for the speech was the Democrats’ loss of the 60-vote hold in the Senate after a Republican upset victory in Massachusetts last week.
Ahead of Obama’s speech, U.S. stocks had garnered a late surge as technology shares advanced after Apple Inc, a technology bellwether, unveiled the iPad, its new portable computer.
Market analysts said the Fed’s rate decision was not surprising, but the somewhat more optimistic tone of its accompanying statement shifted sentiment after a wave of unexpected news from Washington the past two weeks caused the stock market to buckle.
The Fed offered a more guardedly upbeat view of the U.S. economy than previously, and appeared to put more faith in the sustainability of a nascent economic rebound.
“The market rallied because there wasn’t anything overtly negative that could be taken from the Fed statement,” said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
The Dow Jones industrial average gained 41.87 points, or 0.41 percent, to end at 10,236.16. The Standard & Poor’s 500 Index rose 5.33 points, or 0.49 percent, to 1,097.50. The Nasdaq Composite Index climbed 17.68 points, or 0.80 percent, to 2,221.41.
After the closing bell, Qualcomm Inc tumbled 8.9 percent to $43.00 after the biggest maker of cellphone chips cut its revenue estimate for the first quarter and current fiscal year, citing a slow economic recovery.
During the regular session, Apple’s shares rose 0.9 percent to $207.88, reversing course from a drop of more than 3 percent earlier in the day after the company unveiled its iPad tablet computer.
The Nasdaq also got a boost from Gilead Sciences Inc, which jumped 7.1 percent to $48.04 after the biotech company posted fourth-quarter earnings that topped Wall Street’s estimates and forecast a sales increase of about 10 percent for 2010. The NYSE Arca Biotech index gained 1.3 percent.
Boeing was the Dow’s top advancer, up 7.3 percent at $61.93, after the world’s second-largest aircraft manufacturer reported stronger-than-expected quarterly results and forecast a profitable 2010.
But Dow components Caterpillar and United Technologies Inc slipped after giving cautious forecasts.
Caterpillar’s shares slid 4.3 percent to $53.44, while United Tech’s stock lost 1.3 percent to $67.61.
Volume was light on the New York Stock Exchange, with about 1.3 billion shares changing hands, below last year’s estimated daily average of 2.18 billion. On the Nasdaq, about 2.49 billion shares traded, above last year’s daily average of 1.63 billion.
Advancing stocks just barely outnumbered declining ones on the New York Stock Exchange, with 1,517 shares rising and 1,515 falling.
On the Nasdaq, the winner’s advantage was more pronounced, with about 16 stocks rising for every 11 that fell.

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Fed, techs lift Wall St; futures cheer Obama (Reuters)

admin — Wed, 27 Jan 2010 18:41:43 +0000

NEW YORK (Reuters) –
Stocks rose on Wednesday after the U.S. Federal Reserve pledged to keep interest rates near zero and
struck a conciliatory tone on banks in his State of the Union speech.
Stock index futures shot up in late after-hours trading as Obama pushed job creation to the top of his agenda to bring down high unemployment, proposing the use of $30 billion of
repayments to boost lending to small businesses.
anew after days of heightened unease about restrictions on bank risk-taking that Obama proposed last week, which helped fuel a global market sell-off.
Financial shares were poised to be among the standouts heading into Thursday's session.
“In my opinion he articulated the crowning achievement of his administration so far, which is the stabilization of our banking system. I think he articulated that very well and why that's important and that this country's banking system is no longer on the brink,” said Haag Sherman, co-founder and chief investment officer of Salient Partners, an investment firm in Houston.
“As it relates to pushing stock futures higher tomorrow, I think that maybe there's some degree of relief that there weren't more radical proposals that came out of this
. It was largely conciliatory and somewhat balanced.”
futures rose about 0.7 percent or 8 points and were above
, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract.
futures gained 0.5 percent or 55 points, and Nasdaq 100 futures added 0.6 percent or 10.50 points.
Obama also promised not to abandon his struggling overhaul of the healthcare system, making it likely that healthcare stocks would also be in the spotlight on Thursday. The backdrop for the speech was the Democrats' loss of the 60-vote hold in the Senate after a Republican upset victory in Massachusetts last week.
Ahead of Obama's speech, U.S. stocks had garnered a late surge as technology shares advanced after
.O), a technology bellwether, unveiled the iPad, its new portable computer.
Market analysts said the Fed's rate decision was not surprising, but the somewhat more optimistic tone of its accompanying statement shifted sentiment after a wave of unexpected news from Washington the past two weeks caused the stock market to buckle.
The Fed offered a more guardedly upbeat view of the U.S. economy than previously, and appeared to put more faith in the sustainability of a nascent economic rebound.
“The market rallied because there wasn't anything overtly negative that could be taken from the Fed statement,” said Michael James, senior trader at
in Los Angeles.
The Dow Jones industrial average (.DJI) gained 41.87 points, or 0.41 percent, to end at 10,236.16.
& Poor's 500 Index (.SPX) rose 5.33 points, or 0.49 percent, to 1,097.50. The
(.IXIC) climbed 17.68 points, or 0.80 percent, to 2,221.41.
,
.O) tumbled 8.9 percent to $43.00 after the biggest maker of cellphone chips cut its revenue estimate for the first quarter and current fiscal year, citing a slow economic recovery.
During the regular session, Apple's shares rose 0.9 percent to $207.88, reversing course from a drop of more than 3 percent earlier in the day after the company unveiled its iPad tablet computer.
.O), which jumped 7.1 percent to $48.04 after the
posted fourth-quarter earnings that topped Wall Street's estimates and forecast a sales increase of about 10 percent for 2010. The NYSE Arca Biotech index (.BTK) gained 1.3 percent.
.N) was the
's top advancer, up 7.3 percent at $61.93, after the world's second-largest aircraft manufacturer reported stronger-than-expected
and forecast a profitable 2010.
.N) and
.N) slipped after giving cautious forecasts.
Caterpillar's shares slid 4.3 percent to $53.44, while United Tech's stock lost 1.3 percent to $67.61.
, with about 1.3 billion shares changing hands, below last year's estimated daily average of 2.18 billion. On the Nasdaq, about 2.49 billion shares traded, above last year's daily average of 1.63 billion.
Advancing stocks just barely outnumbered declining ones on the New York Stock Exchange, with 1,517 shares rising and 1,515 falling.
On the Nasdaq, the winner's advantage was more pronounced, with about 16 stocks rising for every 11 that fell.

us.rd.yahoo.com

Obama share scare: Market drop shows vulnerability (AP)

admin — Sun, 24 Jan 2010 09:19:46 +0000

NEW YORK – It was the fat cats’ fault before. But now it’s becoming Obama’s.
stubbornly high, people were already shifting blame for their economic woes to
one year into his presidency. Last week, investors joined them.
For 10 months, the stock market climbed at breathtaking speed. But the
suffered its worst week since dropping to a 12-year low in early March. It fell 552 points Wednesday through Friday, including 216 on Friday.
on Tuesday. When Obama responded on Thursday with a broadside against big banks, the market plunged. On Friday, investors feared mounting opposition in the Senate could derail
. Disappointing corporate earnings and concern that
will slow its economy added to the jitters.
The question now: If the bad news continues, will Obama, who is trying to win votes in the fall elections with his populist attacks, end up losing them instead? Put another way, can Obama win over
statements again?
“The longer we’re in (power) the more it becomes our problem,” said
, a Democratic media consultant and former senior adviser in
Sen. John Kerry
’s 2004 campaign for president. He added, “This is a
in the presidency when he needs to reassure voters that their future is secure.”
And that’s especially true for voters who have a stake in the stock market. For years the number that politicians worried about was the
. In the 1970s a second figure was added — the inflation rate.
Now, with 45 percent of households owning mutual funds, up from 6 percent in 1980, there’s a third: the Standard & Poor’s 500 Index.
It’s anyone’s guess whether jobs and stocks will be up when Americans head to the polls in November. And even before the events of the past week, the stock market was jittery. Investors had driven shares up at their fastest pace in decades, and analysts said many were looking for an excuse to sell.
A clear sign the market was in trouble came a week ago Friday. Chip maker Intel announced profits were a lot higher last quarter than analysts had expected.
Its stock fell anyway.
. holiday, the indexes hit 18-month highs in anticipation of Republican Scott Brown’s likely victory in the race to replace the late
Sen. Edward Kennedy’s seat
.
and pharmaceutical companies led the gains because a Brown victory endangers the massive health care bill favored by Obama and the Democratic majorities in Congress.
announced plans to slow its economy. They fell again the next day after Obama’s speech calling for limits on the size of banks and their risk taking.
The coup de grace for the market came Friday. In a nod to voter anger at
, a few Democrats said they wouldn’t vote to reappoint Bernanke, whose
. 31. But many investors have faith that Bernanke has the tools, the know-how and the political backbone to reel in the unprecedented amount of money pumped into the economy during the
and avoid a crushing round of inflation. Bernanke still has Obama’s support.
is expected to vote on giving him a second term by the end of the week.
closed the week at 1,091.76, down 5.1 percent in three days — its biggest drop since March 2009.
Hank Smith, chief investment officer of equity at Haverford Investments in
Radnor, Pa
., warned investors to expect more stock gyrations.
“The market is overdue for a pause, a pullback, even a correction,” he said, referring to a fall of 10 percent from a peak.
This week is chock-a-block with news that could help shares retrace their lost ground, or sink further.
meets on interest rates, Bernanke faces that reappointment battle in the Senate, a cavalcade of earnings reports is due and the government gives its first estimate of how the economy performed during the final three months of 2009.
Politicians will be watching the market’s reaction closely.
, the conservative head of
, said the nation’s investor class is increasingly calling the shots in elections. He says Obama is hurting himself with his bank bashing.
“A lot of Americans own 401(k)s — and he’s just made them a lot poorer,” he said, creating “a lot of bitterness” among voters.
Just how much bitterness, if any, voters will have depends on which numbers they fixate on. Even after the recent drop, the
is up 61 percent since its low in March, three months after Obama took office. Then again, the index is still 30 percent below its
peak.
Of course, it’s not just Obama. The vote in
scared all incumbents. It’s now every man and woman for himself or herself in Washington. That helps explain the opposition to Bernanke.
There’s another view, too: Policy counts more than ever in this
, but the market, and the fragile economic recovery upon which it hinges, is still largely the work of big, impersonal forces — even if impatient voters don’t see it that way.
UBS economist George Magnus said a big issue today is that banks and consumers, two years after the recession began, still need to rid themselves of debt. And this painful deleveraging could continue long after the salutary effect of monetary and fiscal stimulus runs out, he said.
He doesn’t think that’s likely to lead to a double-dip recession, but he’s not ruling that out either.
“We’re in a bungee jump recovery,” he said, meaning we’re bouncing back from last year’s deep plunge. But that could be a prelude to a scary fall again. If so, he said, Obama “will get the blame anyway.”

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Asia stocks slide on Obama plan (Reuters)

admin — Sat, 23 Jan 2010 13:01:09 +0000

U.S. President Barack Obama
proposed new restrictions on banks that spurred selling of risky assets.
European shares (.FTEU3) were also expected to fall on the proposals, which would prevent banks or
that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.
, but analysts said passage of the proposals in the U.S. congress was not assured and it was too early to read too much into the market reaction.
“There is little doubt that the president's actions are unwelcome by the financial markets, or that the president himself is clearly annoyed at the current largesse of this year's bonus round,” said Sean Keane, an analyst at Triple T Consulting in Wellington and former head of
in Singapore.
“Whether or not this 'war' will see a real shot fired remains to be seen however, with the proposals needing Congressional approval before they can become law.”
Japanese stocks (.N225) fell 2.56 percent to a three-week closing low as the yen surged against the dollar and the euro and as falling metal and
weighed on shares of resource-related firms.
were also badly hit. South Korea's benchmark (.KS11) fell 2.19 percent while Hong Kong (.HSI) slid as much as 2.5 percent during the day. Banks have a heavy weighting in many global benchmark share indexes.
Asia-Pacific index excluding Japan (.MIAPJ0000PUS) was down 2.1 percent and looked set for a loss of 4.8 percent this week.
Commodity prices fell because the proposed U.S. regulations were seen as diminishing capital flows from banks, which have provided liquidity for investors.
Oil and copper languished near four-week lows, gold flirted with a three-week low and platinum lost ground, while agricultural commodities sagged.
U.S. stocks fell as much as 2 percent overnight, the worst one-day percentage fall since October, as financial shares in particular were hit by Obama's plan. (.N)
, unrelated to serving customers, for their own profit. These bets have been enormously profitable for the banks but can hold huge risks for the financial system if they go wrong.
“Obama is trying to restrict leverage… (but) it doesn't make a lot of sense. The basic premise in banking is to transfer risk and a riskless bank doesn't make sense — or money,” said Steve White, director at Sydney-based treasury advisory firm Noah's Rule.
Global markets had already recoiled in recent weeks on fears that Chinese demand would slow as Beijing taps the brakes on its roaring growth to stave off inflation and keep the economy from overheating.
Mixed data from the United States, meanwhile, have fueled concerns that the pace of its economic recovery may be slowing, and that corporate profits may not be as strong as first expected this year.
Other factors were at play in Tokyo as well.
(7203.T) lost 3.2 percent after it said on Thursday it would recall 2.3 million vehicles in the United States to fix potentially faulty accelerator pedals, broadening a recall that already ranked as its largest ever.
Shares of Shin-Etsu Chemical (4063.T) lost 6 percent after the world's biggest maker of silicon wafers used to make semiconductors reported a 53 percent fall in quarterly
, hurt by weak prices and a strong yen, and it said it expected its annual profit to halve from a year earlier.
Earlier, the euro, which has been under pressure from Greece's debt troubles, hit a nine-month low against the yen at 126.55 yen, taking the dollar down with it.
The dollar lost ground and fell to its lowest in five weeks against the yen, dropping as far as 89.85 yen before steadying around 90.00. Support for the dollar is seen around 88.80/90 yen.
The dollar index (.DXY) was down about 0.13 percent around 78.217, just below its 200-day moving average at 78.48, which was seen as a zone of short-term resistance.
. Benchmark 10-year U.S. Treasuries rose 14/32 of a point overnight before pulling back.
futures rose 0.25 point to 139.23 after hitting 139.46, their highest since the start of the month. The benchmark 10-year
to 1.320 percent.

us.rd.yahoo.com

World stocks tumble as Obama targets banks (AP)

admin — Fri, 22 Jan 2010 19:11:55 +0000

LONDON – World markets fell Friday, led by bank stocks after
to avert future financial crises.
or cost taxpayer money in bailouts.
The announcement spooked investors, causing a sell-off in Europe after sharper falls in the U.S. and Asia.
Britain’s FTSE 100 stock index was down 1.0 percent at 5,280.82 and
shed 1.0 percent to 5,691.31.
’s CAC-40 lost 1.0 percent to 3,823.01.
Wall Street fell for a third day on the open, with the
down 0.6 percent at 10,330.18 and the Standard & Poor’s 500 index down 0.5 percent at 1,110.87.
’s recent moves to prevent its economy from overheating amid worries of inflation and asset bubbles.
Bank stocks were hit hardest, with Barclays Plc down 5.8 percent,
3.8 percent and
4.2 percent lower.
Adding to the uncertainty are questions about whether this year’s economic prospects justify more gains after the run-up in stock prices that began in early 2009, said Mark Matthews, strategist at Macquarie Capital Securities in
.
Last year “was such an amazing ride and people are starting to wonder if the recovery that we’re seeing in 2010 was already priced in,” Matthews said.
Upbeat earnings from McDonald’s,
and Kimberly-Clark failed to reassure investors, who moved to cash in on their gains on a 10-month rally in equities.
In Europe, attention remained focused on the debt problems of Greece, with officials stressing the country will not need a bailout but will manage its funding on the market. The possibility that other countries, such as Portugal or
, could also have trouble handling their debt has kept markets on edge, pushing the euro to 5-month lows against the dollar.
The euro recovered somewhat on Friday, to $1.4118 from $1.4082 late Thursday. The dollar weakened to 90.25 yen from 90.49 yen.
In the U.K., officials statistics confirmed that British consumers splurged on food and drink during the holidays, with retail sales rising 3.6 percent in December. The rise, however, was not a strong as some analysts expected, suggesting recovery from recession will be gradual.
In Asia earlier,
led the drop, with the
stock average diving 2.6 percent to 10,590.55.
dropped 0.7 percent to 20,726.18 and Korea’s main market index lost 2.2 percent to 1,684.35.
Elsewhere, China’s Shanghai benchmark fell 1 percent, India’s Sensex shed 1 percent and Australian stocks retreated 1.6 percent.
While banks in the U.S. fell steeply, shares in
performed better, with many closing the session higher. Japanese lender
edged up 0.2 percent and China’s ICBC gained 2.3 percent in
. Other industries like commodities suffered big drops as concerns about future global demand prompted investors to scale back their riskier bets.
edged lower, with benchmark crude for March delivery down 40 cents at $75.68 a barrel. The contract dropped $1.66 to settle at $76.08 overnight.
AP Business Writer Jeremiah Marquez contributed to this report from Hong Kong.

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