Posts Tagged ‘blogs

14
Mar

Retail sales rise as shoppers fight winter blues

WASHINGTON (Reuters) – U.S. retail sales rose unexpectedly last month despite heavy snow storms that were thought to have kept shoppers at home and bolstered hopes of a sustainable economic recovery.

Optimism about Friday's report was tempered by a slip in consumer confidence early this month. Worries about stubbornly high unemployment held back sentiment, even though the economy appears to be on the cusp of creating jobs.

"The manufacturing recovery is starting to broaden out to the key consumer area of the economy. Consumers are keeping up their end of the bargain to ensure the recovery from recession is a sustainable one," said Chris Rupkey of the Bank of Tokyo-Mitsubishi in New York.

Sales rose 0.3 percent, the Commerce Department said, as consumers bought an array of goods from necessities to luxury items. Analysts had expected sales to slip 0.2 percent. January sales, however, were revised down to a gain of 0.1 percent from the previously reported 0.5 percent rise.

U.S. stocks initially rose on the retail sales data but lost steam, and major indexes ended flat on the surprise drop in consumer confidence. U.S. government debt prices rose as investors focused on the weak sentiment data, while the dollar tumbled to a one-month low against the euro.

The sales report was the latest in a series of data hinting at building underlying strength in an economic recovery that has been largely driven by government stimulus and a swing toward inventory building by businesses.

Officials from the Federal Reserve meet on Tuesday and are expected to hold overnight interest rates in a range of zero to 0.25 percent and maintain a pledge to keep them ultra-low for an "extended period" to foster a more robust recovery.

Stronger data, however, could spark a lively discussion at the meeting, as some officials have raised concerns about the inflationary impact of keeping rates too low for too long.

Treasury Secretary Timothy Geithner said on Friday the economy was gradually strengthening across the board, but cautioned it would take time to fully recover.

The rise in spending came even as consumers were turning more sour. Thomson Reuters/University of Michigan's Surveys of Consumers' index on consumer sentiment slipped to 72 cash advance to savings account.5 from 73.6 in February. That was below market expectations for 73.6.

LABOR MARKET KEY

Economists, however, warned against placing too much weight on the dip in sentiment, saying it was not a good predictor of future sales. Consumer spending has continued to surprise on the upside even with confidence trending lower.

"What is more important is what happens in the job market and that market is improving. February was distorted by storms, but the underlying trend is up and March will be strong," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

Sluggish consumer spending had fed worries the economy's recovery from the worst downturn in seven decades could falter when support from government stimulus and the swing in the inventory cycle disappears.

Motor vehicle and parts purchases extended their decline last month, falling 2 percent, likely reflecting a drop in demand by consumers nervous about vehicle recalls by Toyota Motor Corp. Excluding motor vehicles, retail sales rose 0.8 percent, building on a 0.5 percent rise the prior month.

Even more encouraging, core retail sales — which correspond most closely with the consumer spending component of the government's gross domestic product report — increased 0.9 percent after rising 0.6 percent in January.

"This implies that personal consumption is on track to exceed 2.0 percent for the first quarter of the year and bodes well for a greater than 3.0 percent print on gross domestic product," said Joseph Brusuelas, chief economist at Brusuelas Analytics in Stamford, Connecticut.

A second report from the Commerce Department showed business inventories were unchanged in January after falling by 0.3 percent in December.

Inventories are a key component of gross domestic product changes over the business cycle and a sharp slowdown in the pace of inventory liquidation handed the economy its fastest growth rate in six years in the fourth quarter.

(Additional reporting by Glenn Somerville in Washington and Caroline Valetkevitch in New York; Editing by Chizu Nomiyama)

Retail sales rise as shoppers fight winter blues

04
Mar

Greece prepares tax rises, debt continues to mount

ATHENS (AFP) – Greece, fighting to avert bankruptcy, was to reveal a third wave of tax rises and welfare cuts on Wednesday to win support from the European Union and a reprieve from debt markets.

Prime Minister George Papandreou, who warned lawmakers on Tuesday that the country faced a "wartime situation", was expected to announce the new draconian measures after briefing President Carolos Papoulias.

The latest round of crisis action is believed to include a two-percent increase in sales tax, a pension freeze, heavier benefit cuts for civil servants and steeper tobacco and fuel duties.

The European Commission, the EU's executive arm, insists that Greeks must sort out their fiscal mess — which includes a public debt of nearly 300 billion euros (407 billion dollars) — before expecting any outside help.

Greece must avoid "a nightmare of bankruptcy in which the state would not be able to pay salaries or pensions," Papandreou told lawmakers in Athens. He said: "We find ourselves today in a wartime situation."

That would create a huge headache for its European partners which are alarmed that Greece's problems could cause lasting damage to the credibility and discipline which underpin the eurozone. Related article:EU unveils 2020 vision

Greece needs more than 20 billion euros (27 billion dollars) by May to redeem old debt falling due. It also needs to borrow heavily to finance a public deficit which is close to 13 percent of gross domestic product (GDP).

Overall, the government is desperate to improve its downgraded credit rating and thereby reduce the crippling interest rate, currently slightly above 6.0 percent, which it has to pay to borrow from international investment funds.

And time is short. Papandreou has said that financing needs are assured until the middle of March.

A total of 54 billion euros will have to be raised this year to cover the public deficit which has swollen way beyond the three-percent EU limit make quick cash. Moody's rating agency has estimated that about 15 percent of tax revenues will be absorbed by debt charges this year.

A team of analysts from the Standard and Poor's rating agency is currently in Athens for talks with Greek ministers.

Meanwhile, the sentiment on financial markets about the course of events in Greece is highly uncertain, although there is a suspicion that if the latest round of measures satisfies EU authorities, some sort of support for Greece may emerge in the next week or so.

A Greek official told Dow Jones Newswires that Athens would issue a 10-year bond to raise between three and five billion euros "within days of the announcement of the austerity package."

And economist Neil MacKinnon at VTB Capital told AFP that a rescue "has to be agreed, whether it is some sort of loan package contingent on evidence of Greek budget cuts or debt purchases by EU governments and/or state owned entities or some sort of debt guarantees."

The Greek prime minister flies to Berlin on Friday for talks with German Chancellor Angela Merkel, widely regarded as holding the key to any eurozone bailout.

Papandreou has undertaken to use the crisis to restructure the economy, and cure Greece of decades of fiscal mismanagement and deeply entrenched corruption, but statistics released on Tuesday show that he faces a titanic reform task as bribery is on the rise.

The local branch of Transparency International said that bribes last year rose by 50 million euros from 2008 to 790 million euros (1.1 billion dollars), paid to all parts of the economy, from hospitals to tax officials.

Greece prepares tax rises, debt continues to mount

13
Feb

Euro Hovers Near Nine-Month Lows

HONG KONG — European leaders’ declaration of support for Greece may have helped ease global worries of a debt default, but it did little to lift the euro, which hovered around nine month lows against the dollar on Friday.

Any gains in the currency shared by 16 European countries were undermined by lingering concerns about the fragile finances of several nations in the euro zone, analysts said.

The euro has sagged sharply against the dollar and the yen since January, as worries about a potential debt default by Greece began to surface.

At the start of this year, a euro bought around $1.45 and 133 yen; by midday in Asia on Friday, it bought only $1.37, and 122.5 yen.

Friday’s levels were a touch lower than Thursday’s — despite the European support for Greece — meaning the single currency remains around its weakest level against the U.S. currency since May last year. The last time the euro was at such levels against the yen was a year ago.

Stock markets, too, took only limited comfort from Thursday’s news out of Brussels, which was little more than a statement from European leaders to aid Greece during its debt crisis, if needed. Leaders offered no details on what that support would entail.

The main stock market indexes in the Asia-Pacific region were mixed, with muted rises in Japan, Hong Kong and Australia, and equally limited falls in South Korea.

The Nikkei 225 index in Tokyo was 0.9 percent higher by early afternoon. The Hang Seng in Hong Kong and the Straits Times index in Singapore gained about 0.3 percent, and the benchmark index in Australia edged up 0.1 percent In South Korea, the Kospi index slipped 0 free credit scores.3 percent by around noon.

On Thursday, the Dow Jones industrial average gained 105.81 points, or 1.05 percent, to close the day at 10,144.19. European markets ended Thursday mixed.

“Yesterday’s news on Greece did not actually provide much more than had been widely expected. The market was hoping for more specifics, so the reaction is now quite muted,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.

Activity across much of the region was also dampened ahead of the Lunar New Year holiday, which will shut much of the region — notably China, Hong Kong, Singapore and Taiwan — on Monday.

“Risk appetite should gradually resume — unless we get massive violence in the streets of Greece,” Mr. Kowalczyk added, referring to worries that the Greek government’s efforts to reduce its deficit will be constrained by mass popular opposition.

Striking civil servants brought public services to a halt across Greece on Wednesday, in a largely peaceful one-day protest against the tough austerity measures that officials have said are necessary to stave off a mounting financial crisis. A much broader strike is planned for Feb. 24. “Feb. 24 will be a day to watch,” Mr. Kowalczyk said.

Better-than-expected news Thursday from the closely-watched U.S. jobs market failed to set spark strong gains. The number of Americans filing first-time unemployment claims fell by more than expected last week.

Euro Hovers Near Nine-Month Lows

10
Feb

Earnings Preview: PepsiCo Inc.

NEW YORK – PepsiCo Inc., maker of soft drinks and snacks, reports its fourth-quarter results before the market opens Thursday.

WHAT TO WATCH FOR: Changes in the way consumers are buying snacks and soft drinks as they continue watching their wallets. PepsiCo Inc.’s beverage sales have fallen in North America as people either cut out the expense or started switching to healthier juices and teas. Snack sales have held up better as people buy more food at grocery stores and eat out less often.

Analysts expect PepsiCo to report that its beverage sales remained soft in the fourth quarter. They will focus on the company’s snack division, Frito-Lay, maker of brands like Doritos, where growth could slow in the quarter.

Competition in the snack business is intense, wrote Bill Pecoriello, an analyst who heads ConsumerEdge Research LLC.

“Frito has been losing share even as year-over-year price increases and promotional intensity come more in line with historical norms,” he said short term personal loan.

He said international growth trends need to hold up as well because they have been driving the company’s growth.

WHY IT MATTERS: PepsiCo makes products that people at varying income levels buy, so its results offer a window into how shoppers are spending their money.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect PepsiCo to earn 90 cents per share on revenue of $13.27 billion.

LAST YEAR’S QUARTER: PepsiCo reported profit of $719 million, or 46 cents per share a year earlier. Excluding restructuring and other one-time items, the company earned $1.39 billion, or 88 cents per share.

Earnings Preview: PepsiCo Inc.

02
Feb

Geithner says economy improved from year ago

WASHINGTON – Treasury Secretary Tim Geithner (GYT’-nur) says the nation’s economy is stronger than it was a year ago, yet the government must continue to act to stimulate job growth.

Geithner told the Senate Finance Committee Tuesday that the Obama administration is trying to balance the desire to add jobs with the need to rein in ballooning budget deficits.

President Barack Obama has proposed giving companies a $5,000 tax credit for each new worker they hire in 2010 no credit check payday loan. Businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay.

Geithner says economy improved from year ago

Hot News: Oil rises above $75 on China, U.S. economy prospects

01
Feb

News Analysis: Is the Day of Tiny Ads Finally Here?

Every year around this time, a few brave forecasters declare that advertising on mobile devices is poised to become the next big thing in marketing. And every year, the results disappoint.

But this year, with technology powerhouses like Apple and Google introducing whole new mobile devices and buying up ad firms specializing in the small screen, the forecasts may finally be right.

By now, the sales pitch is familiar: The mobile phone offers advertisers all the benefits of traditional Internet ads, including the ability to track their effectiveness. And it lets marketers reach consumers on the go, on a gadget they clutch intimately.

Why, then, according to Juniper Research, did worldwide spending on mobile advertising last year amount to only $1.4 billion — less than one third of one percent of total ad revenue?

For one thing, some marketers remain wary about trying it, for fear of annoying consumers by intruding on their personal space. A technical toolbox poorly equipped to work with small screens has also hurt; after all, banner ads the size of thumbnails don’t make a big impression.

Industry analysts say that now, with the introduction of Apple’s iPad tablet, an entirely new approach to mobile ads could be near.

That is because the iPad, a cross between a laptop and an iPhone, looks more like an iPhone from an ad perspective. It does not support Adobe Flash, the software used for much PC-based advertising. So, to make their ads available to iPad users, marketers may have to develop new kinds of ads, rather than simply adapting existing Web ads no faxing payday loan.

Apple, seeing big potential in mobile advertising, recently agreed to acquire a specialist in that business, Quattro Wireless. That followed a deal by Google to buy one of the largest players in the field, AdMob. The combined $1 billion-plus cost was of a scale not previously seen in the world of advertising on the tiny screen.

“It’s a pretty exciting time for the market,” said Oliver Roxburgh, managing director of the British operations of YOC, a mobile ad agency. “It’s starting to grow up a little.”

Mr. Roxburgh’s enthusiasm has been buoyed by the efforts of Apple and Google and is shared by a growing chorus of industry experts.

Indeed, Windsor Holden, a principal analyst at Juniper Research, predicts that mobile ad spending worldwide will more than quadruple, to $6 billion, by 2014. And he does not shrink from the prediction.

“Everybody has been hoping for about the last five years that the next year would be the one when mobile advertising takes off,” Mr. Holden said. “There are a number of pointers to the possibility that this will be the year when we get some significant traction.”

News Analysis: Is the Day of Tiny Ads Finally Here?

Hot News: Economic Preview: Too soon to say recovery will last

30
Jan

Davos leaves questions over global bank rules push

DAVOS, Switzerland (MarketWatch) — Bankers and politicians agreed on little in public during this week’s World Economic Forum gathering of top CEOs and policymakers in the Swiss Alps, other than the desire to see regulations coordinated around the globe.

But some attendees say it’s not clear that’s going to happen.

Bankers and politicians met behind closed doors at the annual meeting Saturday, though the discussions didn’t appear to produce any concrete agreements.

Bankers have acknowledged they are going to see more regulation, said U.S. Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, after the meeting.

Deutsche Bank chief executive Josef Ackermann, who has emerged as an unofficial spokesman for the bankers at this year’s WEF , told an audience at a panel discussion later Saturday that “something has to happen quickly to restore confidence in the banking system.”

Ackerman, who chairs the forum’s committee of finance CEOs, on Friday said the bankers were in favor of higher capital requirements, better liquidity management and improved market infrastructure, as well as measures that would ensure failed banks could be wound up without bringing down the system. Read about Ackermann’s presentation.

Davos: Jacob Zuma Promotes World Cup at Forum

South African President Jacob Zuma goes on a public relations blitz at the Davos economic forum to promote the World Cup in South Africa. WSJ reporter Roman Kessler has more.

Meanwhile, questions surround the ability of regulators to internationally coordinate new banking rules.

Ensuring some degree of uniformity in new banking rules amid intense public anger around much of the world was always going to be a tough task.

The importance of policy coordination was a “key lesson of the crisis,” International Monetary Fund Managing Director Dominique Strauss-Kahn said on Saturday. “I’m a bit afraid we’re not going in this direction.”

“The big unknown is the attitude of the United States,” said Barry Eichengreen, an economics professor at the University of California Berkeley, in an interview.

The Obama administration’s introduction last week of the “Volcker rule,” a proposal that would limit the size of commercial banks, barring them from trading for their own account and operating private equity and hedge funds,

British Chancellor of the Exchequer Alistair Darling contends that approach wouldn’t solve the problems that created the crisis fast payday loans. He’s put the emphasis on increased capital requirements and “living wills” that would detail how to close down failed banks.

French President Nicolas Sarkozy told Davos bankers and other luminaries earlier this week that the Obama measures were correct, but that no nation could go it alone. Efforts must be coordinated by the Group of 20 nations, which agreed in April that the Basel, Switzerland-based Financial Stability Board would oversee negotiations. Read about Sarkozy’s speech in Davos.

Banks say that a lack of coordination would make for an un-level playing field. Policy makers say banks would game differences in a damaging round of regulatory arbitrage.

European Central Bank President Jean-Claude Trichet told a Davos audience that failure to coordinate measures “would be a catastrophe.”

Frank has said the Obama plan would be passed within months.

In a panel discussion earlier this week, he dismissed ideas that pressing ahead with the plan threatened efforts to coordinate measures across the globe as a “false dichotomy.”

While Frank was in high demand this week, Obama administration officials were thin on the ground in Davos.

On Saturday, Eichengreen introduced a high-powered panel discussion of central bankers and business leaders on the issue of financial reform, noting that the panel lacked only a representative of the Obama administration. “But why should this panel be any different from others here at Davos this year,” he said.

White House economic adviser Lawrence Summers delivered remarks in Davos Friday, but no other high-profile administration officials were in attendance for the event that began Wednesday.

Eichengreen said a U.S. policy that insists on elements of the Obama plan such as the ban on proprietary trading by commercial banks would make it difficult to reach international agreement.

Davos leaves questions over global bank rules push

Hot News: Batch of Bad News Weighs on Asian Stock Markets

23
Jan

Market Snapshot: U.S. stocks drop for third straight session

NEW YORK (MarketWatch) — Stocks closed with steep losses for a third straight day Friday, paced by technology shares, which suffered from analyst downgrades and sky-high earnings expectations.

The selling picked up in the afternoon as fears swirled regarding the possibility that Ben Bernanke might not get confirmed to a second term as Federal Reserve chairman.

The Dow Jones Industrial Average slid 216.90, or 2.1%, to 10,172.98, off 5.2% over its three-day slide. For the week, the Dow was off 4.1%.

Hot Stocks: Energy under pressure

Energy stocks end a punishing week with more losses as a result of lower crude prices, broader-market weakness and less-than-inspiring results from Schlumberger. MarketWatch’s Steve Gelsi reports.

The S&P 500 Index plunged 2.2% to 1,091.75, off 3.9% for the week. The tech-heavy Nasdaq Composite Index ended down 2.7%, the worst decline of the major indexes. It was hurt in part by a 5.7% slide in Google , despite the Internet giant’s surge in fourth-quarter earnings. The company’s earnings and revenue came in well above analysts’ estimates, but investors seemed to have been looking for more.

“Expectations have gotten elevated over the last three quarters and it becomes a very tough short-term bar to clear,” said Jeff Markunas, portfolio manager of the RidgeWorth Large Cap Core Equity Fund. “There’s been a lot of nit-picking.”

Also weighing on the tech sector: Citigroup cut its ratings on seven semiconductor-equipment stocks, citing the risk of a correction of perhaps 30% in the sector for the short term, though a broader bullish trend remains intact.

S&P 500 (1 YEAR)

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Of the companies downgraded by Citi, the hardest hit were Entegris , off 11 payday loans with no fax.9%; Brooks Automation , off 9.6%; and Applied Materials , off 7%.

The declines in major averages gathered some steam in late afternoon as President Barack Obama spoke at a town hall meeting regarding his plan to impose tougher limits on big banks’ speculative activity. His proposal fueled a 213-point slide in the Dow when it was unveiled on Thursday and continued to be a hot topic among investors during the latest trading session.

Investors also weighed reports that some congressional Democrats are growing skittish about confirming Bernanke to a second term as Fed chairman.

“The chief sponsor of the economy, the Fed, will be in disarray if Bernanke doesn’t get reappointed,” said strategist Bruce Bittles, of R.W. Baird & Co. “That’s a big concern for investors right now.”

Financial bellwethers extended the previous session’s sharp losses. Goldman Sachs Group was down 4.2%, while Bank of America , which focuses more on traditional banking, was off 3.7%.

General Electric rose 0.6% after reporting fourth-quarter earnings above analysts’ estimates and forecasting a return to growth in 2011. McDonald’s , meanwhile, climbed 0.3%. The fast-food giant’s fourth-quarter earnings rose 23% as same-store sales climbed across all its regions.

American Express fell 8.5% despite a tripling in its quarterly net income. The report topped Wall Street estimates, but fell short of investor expectations. The market may have already priced in the improvements, anticipating the credit card issuer’s strengthening, analysts said.

In other markets Friday, crude-oil prices fell below $75 per barrel. Gold futures also slipped.

The dollar weakened against both the euro and the yen, while Treasurys were little changed. The 10-year note was recently off 2/32 to yield 3.601%.

Market Snapshot: U.S. stocks drop for third straight session

18
Jan

China markets set for new phase in 2010

SHANGHAI (AFP) – Shanghai's stock market is set for major changes in 2010 that could help close the gap with London and New York as the Chinese city strives to become a global financial centre, analysts say.

China began the year with a strong signal that it is serious about its goal of turning Shanghai into a leading finance hub by 2020, approving a raft of measures that give investors more sophisticated investment options.

Previously, mainland investors were only able to bet on stocks going up, but the State Council, or Cabinet, has approved trials of short-selling and margin trading that would allow investors to profit from falling markets as well.

"The ultimate introduction of the new investment options is, without doubt, a revolutionary move for China's capital markets," said Zhang Jian, a Beijing-based analyst with BOC International, Bank of China's brokerage unit.

Margin trading allows investors to borrow money from financial institutions to buy shares they expect to rise.

If the share price goes up, they can easily pay back the borrowed money. If the price goes down, investors must still pay back the full amount borrowed.

Short-selling allows investors to sell borrowed shares when they expect the price to decline. If the price falls, they can buy the shares at the lower price and return them to the lender.

"It opens a new chapter for China's domestic equity market. With these new rules, the A-share market will no longer be a 'one-way street,' as shorting and hedging become possible," Deutsche Bank economist Jun Ma wrote in a note.

"It is also a major step towards the internationalisation of the Chinese market," he added.

The central government has also approved a stock index futures market that will also give investors opportunities to profit when the market falls and help them hedge risks.

Preparations for the index futures market began years ago, with mock trading already running for three years. Margin and short trading systems tests began in late 2008.

Now that Beijing has given the green light, the new trading options could begin within three months, analysts said guaranteed online payday loans.

"These steps will speed up the pace for Shanghai to become an international financial centre," said Peng Yunliang of Shanghai Securities.

The changes come on top of expectations that the Shanghai Stock Exchange will see its first foreign listing in 2010 — HSBC has said it hopes to be the first, with a listing that could come as early as March, according to reports.

The developments — combined with the launch on October 30 of China's Nasdaq-style ChiNext board, which aims to boost start-ups as well as small and medium-sized companies — mark huge strides for Chinese capital markets and show growing confidence.

Both shorting and margin trading magnify risks, but experts say the practices could help reduce volatility over the long run by increasing liquidity.

Shanghai's market has seen huge swings in recent years. The benchmark Shanghai composite index soared 80 percent last year, but that came after a 65.5 percent plunge in 2008. So far this year the index is down 1.6 percent.

But China's asset prices are expected to continue to take off in 2010, with the economy expected to expand at roughly 10 percent, and investors will want to keep profiting from growing earnings, Macquarie Bank said in a note.

What impact will index futures trading have on the market?

Goldman Sachs studied the mock trading in China, which has seen eligible brokerages and the general public practising in simulations that involve no money since 2007.

The simulations suggest a maturing market with a bias towards long positions, or bets prices will rise, the US investment bank said in a research note, adding volatility declined as the mock trading progressed.

"The developments bring China a step closer to being ready to start foreign listings and attract world-renowned foreign companies to list in a market that is getting more mature and international," Shanghai Securities' Peng said.

China markets set for new phase in 2010

16
Jan

Stocks & Bonds: Dow Plunges 100 Points on JPMorgan’s News

Stock prices fell sharply on Friday, the worst day of trading this year, as worries over the strength of the American consumer eclipsed a round of mostly positive earnings reports.

On its surface, the news that JPMorgan Chase had doubled its 2009 profits from 2008 might seem reason for elation among investors. But on Friday, Wall Street traders took one look at the results and began to sell.

By the end of trading, the three major indexes were down about 1 percent, with the Dow Jones industrial average falling nearly 101 points. The dollar strengthened, and bond yields fell.

Traders saw promise and peril in JPMorgan Chase’s financial report. The bank said it earned $11.7 billion last year and that its profit quadrupled in the fourth quarter, beating expectations. But the firm’s chief executive noted that losses on consumer loans remained high and would remain an issue in 2010.

“It does continue to bring up old fears,” said James W. Paulsen, chief investment strategist for Wells Capital Management.

The Dow Jones industrial average declined 0.94 percent, or 100.90 points, to 10,609.65. The Standard & Poor’s 500-stock index fell 1.08 percent, or 12.43 points, to 1,136.03. The Nasdaq composite index dropped 1.24 percent, or 28.75 points, to 2,287.99.

For the week, the Dow industrials slipped 0.1 percent, the S.& P. 500 index lost 0.8 percent and the Nasdaq fell 1.3 percent.

All sectors posted losses, with shares of banks leading the retreat. JPMorgan Chase declined 2.26 percent, and Bank of America fell 3.33 percent. Many banks will report earnings next week.

Two weeks into the new year, Wall Street finds itself searching for direction. Over the next few weeks, companies will continue to announce fourth-quarter earnings, and the results are expected to be mostly positive.

Expectations this quarter, however, have shifted, and investors are looking for indications that businesses have moved beyond cost-cutting and have started to bring in revenue.

After the market closed on Thursday, Intel reported a 28 percent increase in revenue and the largest gross profit margin in its history. Overnight, its shares climbed, but they closed down 3 payday cash loans.17 percent on Friday.

That seemingly irrational behavior, selling even as a company exceeds expectations, brought an adage to the minds of several investors: “Buy the rumor, sell the news.”

“It is an interesting juxtaposition,” said Hank B. Smith, chief investment officer for Haverford Investments. “These all beat expectations, but by the time all the news is disseminated, there’s concern this may be the peak for profit margins for these companies.”

Mr. Smith said he did not believe the worries were valid. But he said Wall Street’s negative reaction to the cheery reports could indicate that investors were using the earnings season as a selling opportunity.

“It would be healthy for the market to consolidate and pull back,” Mr. Smith said. “It’s very normal to have a correction — defined as 10 percent or more — in a bull market.”

After an energetic rebound in the stock market last year, equities are expected to rise modestly through 2010. The Dow is approaching a psychologically important milestone — 11,000 points, a level not seen since before the financial crisis — and the S.& P.’s 500-stock index is nearing 1,150 points.

Economic data released on Friday provided little relief from investors’ concerns over profits. A report said manufacturing activity fell slightly in December, and a barometer of consumer sentiment released by the University of Michigan rose slightly this month but fell short of expectations.

Still, there were signs that the near-zero interest rates may remain in place for some time, a boon for stocks. A Labor Department report suggested inflation was largely in check, with consumer prices increasing just 0.1 percent in December.

Interest rates were lower Friday. The Treasury’s 10-year note rose 15/32, to 97 16/32, and the yield fell to 3.68 percent from 3. 74 percent late Thursday.

United States markets are closed on Monday for Martin Luther King’s Birthday.

Stocks & Bonds: Dow Plunges 100 Points on JPMorgan’s News

Hot News: London Markets: Man Group underperforms in mildly higher FTSE 100

13
Jan

Foreign Firms Resent Beijing’s Many Rules

HONG KONG — Google is far from alone among Western companies in its growing unhappiness with Chinese government policies, although it is highly unusual in threatening to pull out of the country entirely in protest.

Western companies contend that they face a lengthening list of obstacles to doing business in China, from “buy Chinese” government procurement policies and growing restrictions on foreign investments to widespread counterfeiting.

These barriers generally fall into two broad categories. Some relate to China’s desire to maintain control over internal dissent. Others involve its efforts to become internationally competitive in as many industries as possible.

Google, which complained Tuesday about attacks on its computers from China and called for an end to censorship of search results, is not the first company to run afoul of the Communist Party’s fears of social instability and strong desire to keep tabs on dissidents and limit freedom of expression.

China has long restricted the sale of foreign movies, books, songs and other media, and it continues to do so while appealing a World Trade Organization ruling in August that these policies violate China’s legally binding commitments to the international free trade system. More recently, China has sought to strengthen its domestic encryption industry — for which the government has easy access to all the decryption codes — while withholding the government certification that foreign-owned encryption companies in China need to sell their products to many users.

Jörg Wuttke, president of the European Chamber of Commerce, said that no E.U. companies had pulled out of China yet. But the encryption dispute would be the most likely cause if any did in the near future, he said.

Duncan Clark, the chairman of BDA, a Beijing consulting firm that advises major telecommunications and technology companies, said that Google’s difficulties were indicative of broader troubles for foreign companies in China.

“There has been a raft of decisions and unpredictability, a kind of unpleasantness about what’s happening here,” Mr. Clark said. “There has been this received wisdom that no one can afford not to be in China, but that is being questioned now — there’s kind of an arrogance that’s characterizing government policy toward multinationals.”

To be sure, doing business in China has never been easy. Foreign companies have long complained of being cheated by joint venture partners who set up parallel businesses on the side or abscond with assets. Many other countries also have policies that favor home-grown companies, although the opportunity for industrialized countries to do so is limited because they operate under tighter W.T.O. rules than China.

Chinese officials and academics dispute whether government policies are discriminatory toward foreign companies. Hu Yong, an associate professor of journalism and communication at Peking University, said that the government was leery of the rapid expansion of the Internet and mistrustful of private Chinese companies as well as foreign businesses.

“I think, in the information technology sector, not only foreign companies are under very heavy pressure, but also private domestic companies,” he said. “The general trend is that the government wants state-owned companies to occupy major positions in this field.”

Other strains between China and the West over commercial policies have been over government policies that shield Chinese companies from international competition. These policies allow companies to grow in a large home market and prepare to export to less-protected markets abroad.

The newest frictions, particularly in the past year, have been over government procurement policy. When China joined the W.T.O. in November 2001, it promised to negotiate as quickly as possible to join the W.T.O.’s side agreement requiring free trade in procurement guaranteed high risk personal loans. But it has never actually done so, leaving the Chinese government free to use its enormous buying power to steer contracts to Chinese-owned companies.

The National Development and Reform Commission, country’s top economic planning agency, ordered national, provincial and local government agencies on June 4 to buy only Chinese-made products as part of the country’s nearly $600 billion economic stimulus program; imports were only allowed when no suitable Chinese products were available.

China has also restricted exports of a long list of minerals for which it mines much of the world’s supply, like zinc for making galvanized steel and so-called rare earth elements for manufacturing hybrid gasoline-electric cars.

Those restrictions, from steep export tariffs to tonnage quotas and even export bans, have made it cheaper for many manufacturers to locate their factories in China so as to make sure they have a plentiful supply of raw materials free from export taxes. On June 23, the United States and the European Union filed a W.T.O. case challenging Chinese restrictions on zinc and bauxite exports. The Chinese government has denied any wrongdoing.

China’s weak protections for patents and trademarks — and the resulting widespread counterfeiting — have produced large industries making goods in direct competition with Western competitors, but without comparable spending on research and marketing. Many Western companies have tried to respond by limiting the intellectual property they transfer to China.

Oded Shenkar, a professor of business management at Ohio State University and the author of “The Chinese Century,” said that very few companies would be willing to leave a market as big as China’s and that it might make sense only for a company like Google whose primacy rests almost entirely on intellectual property.

“The U.S. is the world’s greatest innovator, and China is the world’s greatest imitator,” Mr. Shenkar said. “Google? What do they have other than intellectual property? If by being in China you’re at risk of losing it, maybe you don’t want to be there.”

But the Chinese market is so large and so competitive that many multinationals choose to offer their latest technology for fear of losing market share if they do not.

Volkswagen used dated technology in the cars that it sold here in the 1980s and 1990s, so the Chinese government asked multinational automakers in the mid-1990s which would offer the most advanced technology in exchange for the right to enter the market and build a factory in Shanghai. General Motors won the contest and brought its latest robots and automotive designs to a joint venture with Shanghai Automotive.

China has become the world’s largest auto market, yet it still limits foreign automakers to 50 percent stakes in assembly plants in China and assesses very steep tariffs on imported cars. Chinese automakers that formed joint ventures with multinationals, like First Auto Works and Shanghai Automotive, have grown into giants that are now beginning to produce their own models, designed and built almost entirely in China.

When the European Chamber of Commerce issued a report last September warning that China was starting to become less open for foreign investors, the Chinese Ministry of Commerce responded by declaring that “China has been making efforts to create a sound and fair environment for foreign businesses.”

A Ministry of Commerce spokeswoman would not elaborate on this policy over the phone Wednesday afternoon, requesting that questions be faxed instead. There was no immediate reply to the fax.

David Barboza reported from Shanghai. Michael Wines contributed reporting from Beijing.

Foreign Firms Resent Beijing’s Many Rules

07
Jan

Wall St dips after ISM services, ADP jobs data

NEW YORK (Reuters) – U.S. stocks slipped on Wednesday after ISM data showed the U.S. services sector grew in December, but at a marginal pace, and a report said the rate of job losses slowed at U.S. private employers.

The Institute for Supply Management said its services index rose to 50.1 in December from 48.7 in November. The reading was below economists' forecast of 50.5, according to a Reuters survey. A reading above 50 indicates expansion.

"Pretty much right on spot," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

"The market seems like it wants to go higher, but we will need confirming numbers on Friday morning. In the meantime, precious little will take place."

The non-farm payrolls report from the U.S. Labor Department is due on Friday, with economists now forecasting 8,000 jobs lost overall in December versus the 11,000 lost in November.

Earlier data on Wednesday in the ADP Employment Services report, a precursor to Friday's payrolls report, showed job losses slowed in December from November's pace. The ADP data showed the private sector lost 84,000 jobs in December, down sharply from the 145,000 jobs lost in November, but exceeding economists' forecasts for a December loss of 73,000 jobs.

The Dow Jones industrial average (.DJI) dipped 7.26 points, or 0.07 percent, to 10,564.69. The Standard & Poor's 500 Index (.SPX) shed 1.08 points, or 0.10 percent, to 1,135.44. The Nasdaq Composite Index (.IXIC) slipped 7.13 points, or 0.31 percent, to 2,301.58.

Earlier, two of the three major indexes hit fresh 52-week highs. The S&P 500 climbed to an intraday 52-week high at 1,138.17, and the Nasdaq advanced to an intraday 52-week high at 2,314.07.

Weighing on the Dow was Travelers Companies (TRV cheap credit report.N), down 1.7 percent at $47.79, after FBR cut the stock of the auto and home owners' insurer to "market perform" from "outperform."

But 3M Co (MMM.N), up 2.1 percent at $84.20, supported the Dow after Goldman Sachs added the stock to its Americas "conviction buy" list and said stronger-than-expected results in October-November likely continued for the diversified manufacturer in December.

Another bright spot came from Family Dollar Stores Inc (FDO.N), which shot up 11.6 percent to $30.68 after the retailer reported first-quarter earnings that beat expectations. Rival 99 Cents Only Stores (NDN.N) climbed 7.4 percent to $14.34.

In contrast, Walgreen Co (WAG.N) shed 0.5 percent to $36.80 after the retailer said sales at its drugstores open for at least a year fell in December instead of rising as Wall Street had expected.

Dow Chemical Co (DOW.N) jumped 2.2 percent to $31.14 after Barclays Capital upgraded the stock to "overweight" from "equal-weight."

U.S. Senate Banking Committee Chairman Christopher Dodd was expected to announce he will not seek re-election, sources said. The Connecticut Democrat has been dogged by questions over his financial industry connections and faces a tough re-election bid. The S&P Financial Index (.GSPF) added 0.4 percent and the KBW Bank Index (.BKX) rose 1.2 percent.

At 2 p.m. (1900 GMT), the Federal Open Market Committee will release minutes from its mid-December meeting.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

Wall St dips after ISM services, ADP jobs data