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richtan
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19-Aug-2009 10:00

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“This is a bull market, and it will continue to do OK,” said Craig Hodges, a fund manager at Dallas-based Hodges Capital Management Inc., which oversees about $750 million. “There are necessary corrections you need in order for it to stay healthy. It’s a tug of war.”

“There’s some room to the upside for companies if people get excited about the prospects for growth over the next couple of months, which I think they will,” said Jason Trennert, chief investment strategist at Strategas Research Partners, in an interview on Bloomberg Radio.

“Treasuries may have been rich after the recent rally and once the stock market started taking off at some point it was going to start weighing on Treasuries,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities Corp., one of the 18 primary dealers that trade with the Federal Reserve. “The pendulum is swinging back to stocks.”

richtan ( Date: 19-Aug-2009 09:53) Posted:

U.S. Markets Wrap: Stocks, Oil Advance as Target Tops Estimates

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By Kayla Carrick and Stuart Wallace

Aug. 18 (Bloomberg) -- U.S. stocks rose, helping global equities rebound from the worst drop since April, following better-than-estimated earnings at Home Depot Inc. and Target Corp. Crude oil rose for the first time in three days, while Treasuries and the dollar fell.

The MSCI World Index added 1.1 percent at 4:05 p.m. in New York, with 20 of 23 developed markets advancing. The Standard & Poor’s 500 Index climbed 1 percent to 989.67 as financial, commodity and technology companies led gains.

“This is a bull market, and it will continue to do OK,” said Craig Hodges, a fund manager at Dallas-based Hodges Capital Management Inc., which oversees about $750 million. “There are necessary corrections you need in order for it to stay healthy. It’s a tug of war.”

The advance in equities today restored less than half of yesterday’s 2.8 percent slump in the MSCI World Index. The global benchmark index has rallied 52 percent from a 13-year low in March on speculation the worst of the global recession is over. The Dow Jones Industrial Average gained 82.6 points, or 0.9 percent, to 9,217.94 today. Europe’s Dow Jones Stoxx 600 Index added 1.3 percent after German investor confidence increased.

Home Depot, the largest home-improvement retailer, added 3.1 percent to $26.93 to help lead the gain in the Dow industrials. The world’s largest home-improvement chain said second-quarter profit, excluding costs to close the company’s Expo business, was 67 cents a share. That beat the average estimate of 59 cents in a Bloomberg survey.

Target Jumps

Target rallied 7.6 percent to $44.32. Second-quarter net income declined to $594 million, or 79 cents a share, from $634 million, or 82 cents a share, a year earlier. Analysts estimated profit excluding some items of 66 cents, the average in a Bloomberg survey.

Per-share earnings topped analysts’ estimates by 10 percent on average for the 471 companies in the S&P 500 that have reported results since June 17, according to data compiled by Bloomberg. Profits slumped about 29 percent in the period, a record eighth straight quarter of falling earnings.

“There’s some room to the upside for companies if people get excited about the prospects for growth over the next couple of months, which I think they will,” said Jason Trennert, chief investment strategist at Strategas Research Partners, in an interview on Bloomberg Radio.

European Shares Rally

American Express Co. advanced the most in the Dow Jones Industrial Average, adding 4.3 percent to $31.69. The biggest U.S. credit-card issuer by purchases was upgraded to “outperform” by Keefe, Bruyette & Woods Inc., which cited “improving trends in credit.”

Goldman Sachs Group Inc. rallied 2.1 percent to $160.48. The company, which was the biggest U.S. securities firm before converting to a bank last year, was raised to “buy” from “neutral” at Pali Capital Inc.

European shares rallied after the ZEW Center for European Economic Research’s index of German investor and analyst expectations rose to 56.1 in August from 39.5 in July, exceeding the median forecast in a Bloomberg News survey for a reading of 45.

Crude oil rose for the first time in three days, surging the most this month, as the dollar dropped against the euro, bolstering the appeal of commodities.

Oil Rises

“Oil is rising today because stocks are up and the dollar is a little weaker,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “This market is getting smacked around a lot. It’s following what’s occurring elsewhere.”

Crude oil for September delivery increased $2.44, or 3.7 percent, to settle at $69.19 a barrel at 2:44 p.m. on the New York Mercantile Exchange. It was the biggest gain since July 31. Oil has advanced 55 percent this year.

Treasuries fell for the first time in four days after single-family home starts rose in July for a fifth month, indicating further stabilization in the housing industry.

Ten-year note yields rose from near the lowest levels in almost four weeks as single-family home starts increased 1.7 percent from June to a 490,000 annual pace. Producer prices fell 0.9 percent in July, more than forecast, capping the biggest 12- month drop on record.

‘Pendulum Swinging Back’

“Treasuries may have been rich after the recent rally and once the stock market started taking off at some point it was going to start weighing on Treasuries,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities Corp., one of the 18 primary dealers that trade with the Federal Reserve. “The pendulum is swinging back to stocks.”

The yield on the 10-year note rose five basis points, or 0.05 percentage point, to 3.52 percent at 4:16 p.m. in New York, according to BGCantor Market Data. The 3.625 percent security maturing in August 2019 fell 3/8, or $3.75 per $1,000 face amount, to 100 7/8.

Yields touched 3.46 percent yesterday, a level not seen since July 22, as the decline in stocks spurred investors toward the relative safety of U.S. debt.

The dollar fell against the euro for the first time in three days as the increase in German investor confidence added to evidence a global economic recovery is taking shape.

Dollar Drops

The pound increased from near a one-month low versus the dollar after a report showed the U.K. inflation rate was higher in July than economists forecast as the nation’s recession eased. The dollar and yen declined against major counterparts including the South African rand as stocks and commodities advanced, reducing demand for relative safety.

“Economic growth looks better, and capital flows into commodity-sensitive currencies,” said Warren Naphtal, who oversees $870 million in assets as the chief investment officer at P/E Investments in Weston, Massachusetts. “For the flight- to-quality trade to be taken to the next level, you really need very negative news.”

Europe’s currency increased 0.6 percent to 133.86 yen at 4:25 p.m. in New York, from 133.08 yesterday. The euro appreciated 0.3 percent to $1.4127 after touching $1.4046 yesterday, the lowest level since July 30. The yen weakened 0.3 percent to 94.74 per dollar, from 94.50 yesterday, when it reached 94.21, the strongest level since July 29.

To contact the reporters on this story: Stuart Wallace in London at swallace6@bloomberg.net; Kayla Carrick in New York at kcarrick1@bloomberg.net Last Updated: August 18, 2009 17:25 EDT

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richtan
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19-Aug-2009 09:53

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U.S. Markets Wrap: Stocks, Oil Advance as Target Tops Estimates

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19-Aug-2009 07:09

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Stocks bounce on consumer hopes

Wall Street rises after two down sessions thanks to Home Depot and Target earnings, but concerns about consumer spending remain.

By Alexandra Twin, CNNMoney.com senior writer

Last Updated: August 18, 2009: 5:55 PM ET

After the close, Hewlett-Packard (HPQ, Fortune 500) reported lower quarterly sales and earnings that topped analysts estimates.

The Dow Jones industrial average (INDU) added 82 points, or 0.9%. The S&P 500 (SPX) index rose 10 points, or 1%. The Nasdaq composite (COMP) gained 25 points, or 1.3%.

Stocks slipped for two straight sessions, with the major gauges each losing over 3% on worries that a struggling consumer could pressure an already fragile recovery.

But Tuesday brought some better news from the retail sector and investors used it as an opportunity to move back into the market, albeit on light trading volume.

"There's going to be a lot of volatility day-to-day as we try to figure out how much economic growth we're going to have," said Robert McGee, portfolio manager at CS McKee.

A weaker-than-expected consumer sentiment report Friday and Lowe's disappointing profit report Monday sparked the selling, which followed a roughly five-month advance.

But Tuesday brought better profit news from Dow component Home Depot and discount retailer Target, helping to mitigate some consumer worries. On the downside, the morning's housing market report missed growth forecasts but investors sought out some good news when it came to single-home construction.

The S&P 500 is 46% higher since bottoming March 9. Year-to-date, it's just up 9.6% as of Tuesday's close.

"I think the rally is a little ahead of what the economy and fundamentals are indicating," McGee said. "We're probably near the highs of the year and could see some give back through the fall."

Wednesday brings no market-moving quarterly results or economic news. The weekly oil inventories report from the Energy Information Administration is due in the mid-morning.

Retail: Home Depot (HD, Fortune 500) reported earnings of 66 cents per share, versus 77 cents a year ago, as the recession cut into its business. But results were better than expected and the home improvement retailer boosted its full-year earnings outlook. Shares of the Dow component gained 3% Tuesday.

Target (TGT, Fortune 500) reported earnings of 79 cents per share versus 82 cents a year earlier, topping expectations, due to cost cutting and reduced inventories. But revenue and same-store sales slipped, as consumers remained cautious. Shares gained 7.6%.

Economy: Housing starts and building permits both slipped in July, according to a Commerce Department report released Tuesday. The report surprised Wall Street economists who were looking for an improvement.

Housing starts fell to a 581,000 annualized rate in July from a revised 587,000 in June. Economists thought starts would rise to 599,000, according to a Briefing.com survey.

Building permits, which indicate builder confidence, fell to a 560,000 annualized rate in July from a revised 570,000 annualized rate in June. Economists thought it would rise to a 576,000 annualized rate.

On the upside, the report showed that single-family housing construction rose 1.7% in July, advancing for the fifth straight month and at the fastest pace since October.

A separate report showed that inflation at the wholesale level remains in check. The Producer Price Index (PPI) fell 0.9% in July after rising 1.8% in June. Economists thought it would fall to 0.3%. The core PPI, which strips out volatile food and energy prices, fell 0.1% in July versus forecasts for a rise of 0.1%.

General Motors: The automaker is boosting production in the second half of the year and bringing 1,350 of its North American employees back to work as a result of increased demand from the government's Cash for Clunkers program.

Separately, GM (GM, Fortune 500) said it made a deal to sell its money-losing Saab to Swedish luxury sports car maker Koenigsegg.

Other stock movers: Huron Consulting Group (HURN) rallied 37.6% in unusually active Nasdaq trading after the business consultant reported higher quarterly revenue and earnings that topped estimates.

American Axle & Manufacturing Holdings (AXL) rallied 117% in unusually active New York Stock Exchange trading after saying it will get up to $210 million in help from former parent GM. The auto parts manufacturer is trying to restructure its debt outside of bankruptcy court.

Market breadth was positive and trading volume was light. On the New York Stock Exchange, winners topped losers by almost four to one on volume of 991 million shares. On the Nasdaq, advancers topped decliners three to one on volume of 1.77 billion shares.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.51% from 3.47% Monday. Treasury prices and yields move in opposite directions.

0:00 /2:44Mixed signals on the recovery

Other markets: In global trading, European and Asian markets climbed.

U.S. light crude oil for September delivery rose $2.44 to settle at $69.19 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $3.40 to settle at $939.20 an ounce.

In currency trading, the dollar fell versus the euro and gained against the Japanese yen.

First Published: August 18, 2009: 9:47 AM ET

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richtan
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18-Aug-2009 21:50

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Stocks, Metals Gain as German Confidence Indicates Recovery

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By Stuart Wallace

Aug. 18 (Bloomberg) -- European stocks and U.S. futures advanced and industrial metals climbed as a biggest-than- estimated increase in German investor confidence and earnings from Home Depot Inc. indicated the global economy is recovering.

The MSCI World Index of 23 developed nations added 0.2 percent at 2:12 p.m. in London, rebounding from its biggest retreat since April. Futures on the Standard & Poor’s 500 Index gained 0.3 percent. Aluminum rose 3.3 percent and nickel 2.4 percent on the London Metal Exchange after a two-day drop. The yen fell against every one of the most-traded currencies tracked by Bloomberg except the Swiss franc.

The ZEW Center for European Economic Research index of investor and analyst expectations rose to 56.1 in August from 39.5 in July, exceeding the median forecast in a Bloomberg News survey for a reading of 45. Stocks trimmed some of their earlier gains after a Commerce Department report showed U.S. housing starts unexpectedly fell in July.

“There is still much to be optimistic about for the second half of the year,” said Bill O’Neill, the London-based strategist at Merrill Lynch Global Wealth Management, which has $1.1 trillion in assets. “This ‘two steps forward, one step back’ pattern is typical of phases covering the end of a recession.”

The Dow Jones Stoxx 600 Index of European shares added 0.6 percent, recovering from the biggest one-day drop since July 2, as raw-material producers gained with metals. A 43 percent rebound since March 9 has left the regional measure valued at 40.2 times the profits of its companies, near the most expensive since 2003, weekly data compiled by Bloomberg show.

Mining Company

Rio Tinto Group, the world’s third-biggest mining company, gained 1.9 percent in London, while BHP Billiton Ltd., the largest, added 1.2 percent.

HSBC Holdings Plc rose 1.9 percent. Europe’s biggest bank was raised to “buy” from “neutral” at Goldman Sachs Group Inc., which said provisions and losses at HSBC may decline.

Home Depot, the largest home-improvement retailer, rose 2.7 percent in German trading after reporting second-quarter profit that fell less than analysts estimated and increasing its full- year earnings forecast.

Copper for delivery in three months rose 0.3 percent to $6,065 a metric ton on the LME, paring an earlier advance of as much as 3.3 percent. The average U.S. home contains 440 pounds (0.2 ton) of copper, according to the Copper Development Association.

Stocks and commodities tumbled yesterday after foreign direct investment in China fell and Japan’s economy grew less than economists estimated, reigniting concern the rally was overdone.

Economic Confidence

Confidence in the world economy surged to a 22-month high in August on signs the first global recession since World War II is approaching an end, a Bloomberg survey of users on six continents showed last week. The U.S. unemployment rate dropped in July for the first time since April 2008, data from the Labor Department showed this month, while the German and French economies unexpectedly grew last quarter, government figures indicated last week.

Emerging-market stocks rose from a four-week low and bonds snapped a six-day losing streak.

The MSCI Emerging Markets Index added 0.4 percent to 823.14 after dropping the most in 5 1/2 months yesterday.

Bond rose, pushing the extra yield investors demand to own developing nations’ debt instead of U.S. Treasuries down 3 basis points to a 3.81 percentage points., according to JPMorgan Chase & Co.’s EMBI+ Index. The decline snaps six days of increases, the longest streak since November.

Composite Index

China’s Shanghai Composite Index increased 1.4 percent, the most two weeks, and Poland’s WIG20 benchmark added as much as 1.3 percent to a three-day high after the country’s equities were raised to “overweight” from “equal-weight” by Morgan Stanley.

Treasuries declined, sending the yield on the benchmark 10- year note up 2 basis points to 3.49 percent. The 30-year yield increased 1 basis point to 4.34 percent.

The yen dropped most against the South African rand, weakening 1.4 percent, and fell 0.3 percent against the euro, amid revived demand for higher-yielding currencies.

To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net Last Updated: August 18, 2009 09:20 EDT

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richtan
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18-Aug-2009 19:00

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German Investor Confidence Rose to Highest Since 2006 (Update2)

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By Frances Robinson

Aug. 18 (Bloomberg) -- German investor confidence jumped to its highest level in more than three years in August after government stimulus and rising exports pulled Europe’s largest economy out of recession.

The ZEW Center for European Economic Research said its index of investor and analyst expectations rose to 56.1 from 39.5 in July. Economists predicted a gain to 45, according to the median of 35 forecasts in a Bloomberg News survey. That’s the highest since April 2006. The survey aims to predict economic developments six months in advance.

Germany’s economy expanded 0.3 percent in the second quarter, a report showed last week, bringing an end to the worst slump since World War II sooner than forecasters had expected. While rising exports and government programs may keep growth on track, higher unemployment threatens to restrain the recovery.

“The German economy is out of recession, but not out of the woods,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “In all the enthusiasm about the recent numbers and the near-term outlook, there are still some impediments to a real recovery, the most pressing one being the worsening labor market.”

The euro rose as much as 0.2 percent after the ZEW figures, climbing as high as $1.4154. It traded at $1.4119 at 12.25 p.m. in Frankfurt.

GDP Boost

ZEW’s gauge of the current economic situation rose to minus 77.2 from minus 89.3 in July, an improvement that the Mannheim, Germany-based institute said was helped by last week’s GDP figures. A survey of 19 economists expected a reading of minus 85. The Economy Ministry has said its forecast for a 6 percent economic contraction this year may now be too pessimistic.

“The recent GDP development shows that the previous expectations of the financial-market experts have come true,” said Wolfgang Franz, president of the ZEW. “There is, however, no reason for euphoria. The German economy develops parallel to the world economy and should, hence, recover only gradually.”

Chancellor Angela Merkel, who faces national elections next month, is spending about 85 billion euros ($120 billion) in an effort to rekindle growth, including a 2,500-euro payment for consumers who scrap their old car and buy a new one. New vehicle registrations in Germany rose 22.8 percent in the first five months of the year from the same period in 2008, the statistics office said yesterday.

Volkswagen AG, Europe’s largest carmaker, this month forecast a 5 percent decline in 2009 sales, half the drop it had previously anticipated.

Stock Rally

“In recent weeks there have been positive developments in equity markets, and signs global trade is improving, which helps Germany,” said Joerg Lueschow, an economist at WestLB in Dusseldorf, Germany. The country’s benchmark DAX share index has advanced 43 percent since March 6.

A record 83 percent of Germans predicted Merkel will serve a second four-year term after elections on Sept. 27, according to an Emnid poll published by Bild am Sonntag on Aug. 16. That compares with 9 percent of respondents who opted for Social Democrat Frank-Walter Steinmeier, the newspaper said.

Foreign demand for German goods is picking up as the global economy improves. Japan’s economy emerged from recession in the second quarter as well, expanding an annual 3.7 percent, and German exports jumped 7 percent in June from May, the most in nearly three years.

Global Economy

All 13 of the industry subindexes tracked by ZEW, which range from banking to telecommunications, rose in August, according to today’s report.

“Sentiment is improving in the most export-centric sectors, like electronics, technology and machinery, which is significant as Germany is so export-dependent,” Andreas Rees, said an economist at Unicredit in Munich.

Exports will grow about 4 percent in 2010 after slumping 17 percent in 2009, the DIHK trade association said earlier today, citing a survey of German companies operating in more than 80 countries.

Unemployment Risk

Still, with unemployment at the highest since 2007, there’s a risk the recovery will falter when stimulus programs expire. Germany’s “cash-for-clunkers” subsidy is due to run out at the end of the year, as is a similar program in neighboring France.

The number of people out of work increased 52,000 to 3.46 million on an unadjusted basis, the Nuremberg-based Federal Labor Agency said July 30.

The stronger euro could also hurt exports as it makes German goods more expensive abroad. Europe’s single currency has gained 13 percent against the dollar since February.

“The economy will weaken again in 2010, as we’re expecting a ‘W’ shaped recession,” Jean-Christophe Caffet, an economist at Natixis in Paris said. “Before things stabilize there will be another correction, although the second dip of the ‘W’ might not be as deep as the first.”

To contact the reporter on this story: Frances Robinson in Frankfurt at frobinson6@bloomberg.net Last Updated: August 18, 2009 06:28 EDT

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ronleech
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18-Aug-2009 15:09

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Yells: "Believe in yourself. Ride with the waves......"

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13:35

Reuters

China yields flat as c.bank ends liquidity tightening

Sure up up and away....S-chip

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richtan
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18-Aug-2009 15:06

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Asia

Europe

America

Commodity(** = 30 mins delayed)

Index	Last	Change	%	High	Low	Time
STI	2567.68	21.70	0.85%	2570.59	2532.72	15:05:30
Hangseng	20405.84	268.77	1.33%	20409.19	19916.28	15:05:32
Nikkei225	10284.96	16.35	0.16%	10325.06	10181.10	15:00:43
SSE	2910.88	40.25	1.4%	2920.64	2827.11	15:00:26
KLCI	1163.28	-5.77	-0.49%	1169.05	1156.19	15:05:31
SET	630.30	-1.75	-0.28%	633.64	625.83	12:30:11

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richtan
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18-Aug-2009 11:14

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18-Aug-2009 09:30

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SSE still drop, now is -25points (-0.88%) , close to -ve 1% .... damn it ....

hope HSI will ignore this ..... we all should ignore this as well .....

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richtan
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18-Aug-2009 09:21

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STI tends to follow the Futures, Nikkei, HSI.

DOW Futures up now

bennykusman ( Date: 18-Aug-2009 09:19) Posted:

is this showing that the last night DJ not affecting STI today ? correction has been finished ?

i780samsung ( Date: 18-Aug-2009 08:39) Posted:

nikkei jumps from opening index ...

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bennykusman
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18-Aug-2009 09:19

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is this showing that the last night DJ not affecting STI today ? correction has been finished ?

i780samsung ( Date: 18-Aug-2009 08:39) Posted:

nikkei jumps from opening index ...

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18-Aug-2009 08:39

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nikkei jumps from opening index ...

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18-Aug-2009 08:36

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1 of 1

A car plant in Chicago.

WASHINGTON: A key US manufacturing survey showed improvement for the first time in a year, the Federal Reserve Bank of New York said on Monday in a fresh sign the economy may be emerging from recession.

The Empire State Manufacturing Survey's general business conditions index increased 13 points, to 12.1, its best reading since November 2007, the month before the world's largest economy officially entered recession.

"For the first time in considerably more than a year, the Empire State Manufacturing Survey indicates that conditions for New York manufacturers have improved," the New York Fed said in a statement.

The August reading topped the 3.0 points that analysts had expected and followed a negative 0.55 reading in July. Zero marks the division between growth and contraction.

The last time the index registered growth was in August 2008, at a meagre 2.2 points.

The Empire State survey lent further ammunition to hopes of recovery in the embattled manufacturing sector that could bolster growth in gross domestic product (GDP), a broad measure of economic activity.

"Manufacturing may provide a larger-than-expected boost to third-quarter GDP," said Ryan Sweet of Moody's Economy.com.

"The index is well above its second-quarter average of negative 9.5 and suggests that the manufacturing expansion that began last month is accelerating," Sweet said.

In a surprisingly robust report last week, the Federal Reserve said that manufacturing led a 0.5 percent increase in US industrial production in July, the first rise in industrial output in nine months.

"This month the Empire State index continues to point the way higher with a large rise and with an outsized improvement in the employment sub-index," said Robert Brusca of FAO Economics.

In the Empire State survey, respondents were decidedly more upbeat about conditions in the coming six months.

The future general business conditions index leapt 14 points to 48.2, and the capital expenditures index advanced 16 points to 18.1, its highest level in over a year.

Current employment conditions rose for the sixth consecutive month but remained negative. The index for the number of employees rose 13 points to negative 7.5, the highest level in 10 months.

Analysts, however noted, that manufacturers lacked pricing power amid sluggish demand in the recession-mired economy.

Federal Reserve policymakers, concluding a two-day monetary policy meeting last week, maintained the central bank's near-zero base interest rate while saying that "economic activity is levelling out" amid the steep downturn.

Amid worries that the burgeoning recovery could be stamped out by job insecurity and still-tight credit conditions, the Fed and the US Treasury extended a multibillion-dollar credit program for consumers and businesses into mid-2010.

"The markets for asset-backed securities backed by consumer and business loans and for commercial mortgage-backed securities are still impaired and seem likely to remain so for some time," they said in extending the Term Asset-Backed Securities Loan Facility (TALF) programme that was set to expire on December 31.

Consumers, whose spending drives about two-thirds of US economic growth, have snapped their wallets shut in the face of rising unemployment, falling home values and uncertainty about when the economy will recover from the worst recession since the Great Depression.

A survey published on Monday showed that a majority of Americans believe that a 787-billion-dollar stimulus package passed six months ago with support from President Barack Obama has had no effect or even made the US economy worse.

A USAToday/Gallup poll found that 41 percent of Americans think the spending has made the US economy better, but 57 percent believe it has either made no difference or worsened the recession.

Over three-quarters of those questioned - 78 percent - said they were either "very worried" or "somewhat worried" that money from the economic stimulus was being "wasted." - AFP/de

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Blastoff
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18-Aug-2009 08:36

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Nikkei green, there is a possibility that STI may be green today.... just my view.

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Blastoff
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18-Aug-2009 08:18

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Stocks tumble on consumer fears

Wall Street retreats as worries about the economy cause investors to bail out, after lifting stocks by 50% in five months.

By Alexandra Twin, CNNMoney.com senior writer

Last Updated: August 17, 2009: 5:40 PM ET

NEW YORK (CNNMoney.com) -- Wall Street slumped Monday, falling for the second straight session, as worries that nervous consumers will pressure a fragile recovery dragged stocks lower after a five-month advance.

The Dow Jones industrial average (INDU) lost 186 points, or 2%, after having lost as much as 204 points earlier. The S&P 500 (SPX) index fell 24 points, or 2.4%.

Both the Dow and S&P 500 closed at 3-week lows.

The Nasdaq composite (COMP) lost 55 points, or 2.8%, ending at a one-month low.

A roughly five-month rally hit a roadblock last week after a worse-than-expected consumer sentiment report Friday. Signs that the economy is stabilizing -- combined with extraordinary amounts of fiscal and monetary stimulus -- have more or less lifted stocks since March, with the S&P 500 gaining 50%.

In the last month alone, the S&P 500 gained 15%. After such a run, a pullback was predictable, but it's unlikely to signal a bigger retreat, said Stephen Goldman, market strategist at Weeden & Co.

"You have a market that's seen most sectors and stocks rise in tandem and and so we should see a pretty orderly pullback," Goldman said. "We're still only down 2% or 3% from the highs."

As of last Thursday, the Dow was at a nine-month high and the Nasdaq and S&P 500 were at 10-month highs.

Goldman said he sees a continued advance through the fall. But he said the difference is that from now on, it's going to be a lot more choppy, with investors having already anticipated a lot of the economic improvement.

The CBOE Volatility (VIX) index, also known as the Vix, Wall Street's so-called fear gauge, spiked 15%, signaling a bigger stock pullback could be brewing.

"People are worried we've run too far, too fast and that we still have a long way to go in terms of the economy," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "There are concerns about a double-dip recession."

Consumer issues: Meanwhile, concerns about consumers could limit the pace of the economic recovery.

While the housing and manufacturing sectors have started to stabilize, a weak labor market and higher oil and gas prices have kept consumers on the sidelines. With consumer spending fueling roughly two-thirds of economic growth, participation is necessary for a bigger economic recovery to take hold.

Underscoring the weakness in consumer spending, home improvement retailer Lowe's (LOW, Fortune 500) on Monday reported a worse-than-expected drop in second-quarter profit. Lowe's also issued a second-half outlook that is short of analysts' estimates. Shares plunged 10.3% and dragged on other retailers.

Home Depot (HD, Fortune 500) and other retailers are due to report results later in the week.

Stock declines Monday were broad-based, with 28 of 30 Dow stocks sliding, led by IBM (IBM, Fortune 500), Boeing (BA, Fortune 500), Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and 3M (MMM, Fortune 500).

Overseas markets slip: U.S. investors also reacted to a plunge in global stock markets.

In Asia, Japan's Nikkei index plunged 3.1% after a report showed the economy emerged from recession in the second quarter, but analysts said that the outlook was choppy. China's main index slumped almost 6% on worries about a stock market bubble.

In Europe, major markets all fell around 2%.

Manufacturing: The hard-hit sector continues to show signs of improvement. On Monday, the Empire State Manufacturing survey, a measure of activity in the New York area, rose to 12.1 in August versus a reading of negative 0.6 in July, according to the Federal Reserve Bank of New York. Any reading that is positive shows expansion in the sector.

The week brings a slew of economic news. On Tuesday, the government reports on July housing starts and building permits, and July producer prices, a measure of wholesale inflation.

Later in the week, reports are due on leading economic indicators, jobless claims, state-by-state unemployment and existing home sales.

Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.47% from 3.56% Friday. Treasury prices and yields move in opposite directions.

0:00 /01:49'My personal recession isn't over'

Other markets: U.S. light crude oil for September delivery fell 76 cents to settle at $66.75 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery fell $12.90 to settle at $935.80 an ounce.

In currency trading, the dollar gained versus the euro and fell against the Japanese yen.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by eight to one on volume of 1.22 billion shares. On the Nasdaq, decliners topped advancers by nearly five to one on volume of 1.94 billion shares.

First Published: August 17, 2009: 9:44 AM ET

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Goldman Sachs’s Cohen Says Recession Is Ending ‘Now’ (Update1)

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By Thomas R. Keene and Lynn Thomasson

Aug. 17 (Bloomberg) -- The U.S. recession is ending “right now,” said Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc.

The economy may grow by 3 percent in the next couple of quarters and expand by 1.5 percent to 2 percent next year, Cohen said. While consumer spending is likely to rise, it probably won’t increase as fast as at the end of prior periods when the U.S. was emerging from a recession, she said.

“Clearly the economy is on the mend,” Cohen said in an interview with Bloomberg Radio. “We do think that profit growth will be more substantial going forward.”

Cohen, known for her optimistic forecasts for stocks during the 1990s stock-market rally, was replaced in March 2008 as the bank’s chief forecaster for the U.S. equity market. She predicted in a May 1 interview that the Standard & Poor’s 500 Index might jump 20 percent to 1,050 in the next 6 to 12 months. The index climbed 15 percent to 1,010.48 through Aug. 7 before retreating 0.6 percent last week.

The S&P 500 has rallied 48 percent from a 12-year low on March 9 as 76 percent of companies in the benchmark reported better-than-estimated second quarter results and economic reports showed improvement. Equities fell last week for the first time in five weeks as a drop in consumer confidence fueled concern the steepest rally since the 1930s isn’t justified by economic prospects.

So-called fair value for the S&P 500 is between 1,050 and 1,100, Cohen said. David Kostin, who replaced Cohen as Goldman Sachs’s chief U.S. market forecaster, estimates the index will end the year at 1,060 and earn $52 a share for 2009.

“The bottom line looks pretty good,” she said. “The companies that are still in business are showing that they have pretty good margins.”

To contact the reporters on this story: Thomas R. Keene in New York tkeene@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net. Last Updated: August 17, 2009 09:27 EDT

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Cohen Says Recession Ending Now, Sees No `Double Dip'

Cohen Says Recession Ending Now, Sees No `Double Dip'

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U.S. Economy: New York Factories Grow for First Time Since 2008

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By Shobhana Chandra

Aug. 17 (Bloomberg) -- Manufacturing in the New York region grew in August for the first time in more than a year, reinforcing signs the worst recession since the 1930s is nearing an end.

The Federal Reserve Bank of New York’s general economic index climbed to 12.1, higher than forecast and the first expansion since April 2008, the bank said today. Readings above zero for the Empire State index signal manufacturing is growing.

Today’s report, the first regional factory measure for the month, indicates the government’s stimulus plan and record inventory cutbacks are starting to help companies such as ITT Corp. rebound. Economists project growth will resume this quarter, helped by stabilization in manufacturing and housing.

“Inventories were drawn down to such amazingly low levels that companies need to start bringing them back,” said Tom Porcelli, a senior economist at RBC Capital Markets in New York. “We are coming out of the recession. It’s probably over at this point.”

Stocks fell around the world as investors speculated the recent rally in riskier assets had outpaced prospects for economic growth. The Standard & Poor’s 500 index was down 2.2 percent at 10:02 a.m. in New York to 981.73. The yield on the benchmark 10-year note was 3.49 percent, down from 3.57 percent at the end of last week.

Exceeds Forecast

Foreign investors renewed purchases of U.S. financial assets in June as Japan and the U.K. increased demand for Treasuries while China pared its holdings, a report from the Treasury Department also showed today. Total net purchases of long-term equities, notes and bonds were $90.7 billion, compared with net sales of $19.4 billion a month earlier.

Economists projected the Empire State index would rise to 3, according to the median of 41 estimates in a Bloomberg News survey. Forecasts ranged from 8 to minus 5.

“We think the recession is ending right now,” Abby Joseph Cohen, senior investment strategist at Goldman Sachs Group Inc., said in an interview today on Bloomberg Radio. The economy may grow by 3 percent in the next couple quarters and by 1.5 percent to 2 percent next year, Cohen said.

Pre-Recession Level

The August reading on the New York Fed index was the highest since November 2007, the month before the recession began. The index was at minus 0.6 in July.

Manufacturers account for 6 percent of New York’s $1.1 trillion economy.

The New York Fed’s report showed orders and shipments increased, while inventories and employment contracted at a slower pace.

The index of prices paid climbed to 13.8, while the gauge of prices received dropped to minus 12.8, signaling that factories are not able to pass along increasing raw-material costs to their customers.

Factory executives in the New York Fed’s district, which encompasses New York state, northern New Jersey and one county in Connecticut, turned more optimistic about the future. The gauge measuring the manufacturing outlook rose to 48.2, the highest level since July 2007, from 34.

Production Rebounds

Chrysler Group LLC, the U.S. automaker run by Fiat SpA, will make more light trucks than it had planned in the second half to meet growing demand, a person with knowledge of the situation said last week. Chrysler plans to run two plants on overtime and is operating a third shift at another factory to restock dwindled inventory on dealer lots, said the person.

Businesses in the region that are raising forecasts include White Plains, New York-based ITT. The company said on July 31 that 2009 profit will be higher than its prior forecast after second-quarter expenses fell.

“There’s signs of life” in some markets, Chief Executive Officer Steve Loranger said on a conference call on July 31.

Loranger said ITT’s municipal water business has begun to stabilize as federal economic-stimulus money starts trickling in. Benefits from the stimulus plan aren’t likely to aid the company’s results until next year, he said.

“We’re still not forecasting any significant stimulus benefit this year because the actual distribution of those funds has been very slow,” Loranger said. “We certainly will get our fair share.”

Cash-for-Clunkers

Industrial production rose for the first time in nine months in July as the federal “cash-for-clunkers” program spurred demand for cars and automakers completed mid-year overhauls of their factories, a Fed report showed last week.

The auto plan, which provides cash incentives for fuel- efficient cars, already is boosting vehicle sales and is likely to help lift production this quarter.

A report from the Philadelphia Fed, due on Aug. 20, may show manufacturing in that region shrank this month at the slowest pace in almost a year, according to a Bloomberg survey.

A Bloomberg monthly survey of economists showed the economy will expand 2 percent or more in four straight quarters through June 2010, the first such streak in more than four years, as the effects of the government’s fiscal stimulus broaden.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net Last Updated: August 17, 2009 10:04 EDT

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BEIJING: China expects its exports, which have fallen year-on-year for nine straight months, to return to positive growth before the end of 2009, the government said Monday.

"It's possible the decline in China's exports will narrow in the second half and even grow in some months given the low base effects in the second half of 2008 due to the financial crisis," said commerce ministry spokesman Yao Jian.

China's exports have been shrinking since November as foreign demand has dropped amid the global crisis.

Shipments abroad slumped 22 per cent in the first seven months of the year from the same period last year, customs figures showed.

However, July exports of US$105.4 billion pointed to some recovery as it marked an increase of 10.4 per cent from June, according to official data.

Yao said the decline in labour-intensive exports including toys, apparel and shoes was much smaller than the overall drop, and the market share of Chinese goods actually increased in places such as the United States, Japan and Brazil.

"Chinese exporters' competitiveness has remained strong mainly because our exports still focused on labour-intensive goods... which are not so easily affected by income changes in the international market," Yao said.

But he warned that there were still many uncertainties in the global economy on several fronts, such as retail sales growth and the general stability of the financial system.

"So we maintain a rather prudent view on the export trend," Yao said.

Andy Xie, an independent economist based in Shanghai, said a rebound in the figures could be seen after October, as exports collapsed in November last year, but cautioned such a result would not necessarily signal a real recovery.

"It's meaningless, it's just a game of numbers. China's exports are driven by demand in consumption in developed countries," he told AFP.

"Retail sales in major economies, which indicate end demand, did not grow and declined month-on-month, although at a slower pace than in the past.

"So there might not be a turnaround in China's exports as they are mainly consumer goods."

- AFP/yb

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Updated: 17th August 2009, 1846 hrs

Economy has weathered the worst of global crisis, with some bright spots ahead

By Channel NewsAsia's Rachel Kelly

Economists are generally optimistic that Singapore has weathered the worst of the global recession.

But they warn that the external environment will still be a major factor for the country's recovery.

They were responding to comments by Singapore's Prime Minister at the National Day Rally on Sunday.

And new and emerging industries are also expected to give the economy a boost as it emerges from the current crisis.

Singapore's homegrown furniture, and interactive and digital media sectors are making inroads into the global market and attracting international players to the country.

Even though these industries may not contribute much to the economy now, observers believe this could change with the right nurturing and guidance.

These were just some of the growing sectors highlighted by Singapore's Prime Minister yesterday during his national day address.

And while Singapore Prime Minister Lee Hsien Loong's National Day Rally this year addressed uncertain times ahead, some are still optimistic.

HSBC Senior Asian Economist, Robert Prior-Wandesforde

"We've seen the recovery begin in the second quarter, in Q2 it was pharmaceutical-driven, but since then we've had so much better exports numbers form their low in January. We saw last week very good retail sales as well. It is early days, but it does seem that the economy is broadening out, and I expect the third quarter not just to be strong but also the fourth quarter, a sustained recovery into 2010."

And experts say as sentiment continues to improve, Singaporeans will start spending again, boosting retail sales.

Experts note that the financial sector too has started to recover and will remain a key driver for the economy, along with the services industry.

Regional Head of Research at Standard Chartered Bank, Tai Hui.

"I think the services sector is going to play a crucial role. We spend a lot of time talking about manufacturing which has been the more volatile sector. But I think the trade services are going to be very much the bread and butter of Singapore economy. Of course financial services have been very much battered back in the fourth quarter of last year and first quarter this year, but has come back in the second quarter. I think financial services that introduce investment into Asia, that is going to be very interesting area of growth for the next two to three years."

And while Christmas may still be a few months away, orders are already starting to tickle in for the manufacturing sector.

But market watchers say the outlook remains cautious, and is dependent on external conditions and global demand.

Mr Renny Yeo, president, Singapore Manufacturers' Federation
"In manufacturing sector, there is usually a time lapse of orders vs actual demand. For Christmas orders, the production output will begin in Q3. While we can see pockets of slight improvements in orders for Q3, this observation is not broad-based nor huge increment. Our manufacturers also shared that they are uncertain if more significant increments can be sustained in the forthcoming quarters. Overall, the visibility for manufacturing outlook for Q4 and beyond still remains cautious, depending on the recovery rate for external conditions and global demand. Most of our members are, however, confident that we have already hit bottom."

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