Asian Stocks Head for Three-Month High Ahead of U.S. Data

Asian stocks rose, with the regional benchmark index heading for a three-month high, ahead of reports on U.S. housing and durable goods this week that are expected to show the world’s biggest economy is improving, overshadowing concern about Europe’s debt crisis.

Samsung Electronics Co. (005930), the world’s No. 1 mobile-phone maker by sales, gained 1 percent in Seoul. Asia Pacific Breweries Ltd. jumped 4.8 percent in Singapore after Heineken NV raised its offer for a controlling stake in the maker of Tiger beer. Woodside Petroleum Ltd., Australia’s second-largest oil producer, climbed 2.2 percent as crude traded near a three-month high.

The MSCI Asia Pacific Index added 0.3 percent to 121.07 as of 10:49 a.m. in Tokyo, heading for its highest close since May 8. About three shares rose for every two that fell in the gauge. The measure advanced in the past three weeks on expectations China will ease monetary policy and amid signs the U.S. economy is strengthening.

“U.S. economic data has been better, with the housing sector turning around,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion in assets. “Eventually, Asian exports will rebound. Asian equities aren’t overvalued after recent gains and Chinese equities are dearth cheap. China’s economic slowdown remains a key concern.”

By Jonathan Burgos
Read More: Bloomberg

Jobs, trade data supports modest economic growth

(Reuters) - The number of Americans filing new claims for jobless benefits fell last week while the trade deficit in June was the smallest in 1-1/2 years, hopeful signs for the struggling economy.

Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 361,000, the Labor Department said on Thursday, suggesting a modest improvement in the jobs market.

Economists polled by Reuters had forecast claims rising to 370,000 last week. The four-week moving average of new claims, a better measure of labor market trends, rose 2,250 to 368,250.

A second report from the Commerce Department showed the shortfall on the trade balance narrowed 10.7 percent to $42.9 billion, the smallest since December 2010, as low oil prices curbed imports.

That was way below economists' expectations for a $47.5 billion deficit. The petroleum import bill fell as the average price per barrel of crude oil dropped by the most since January 2009.

By Lucia Mutikani
Read More: Reuters

U.S. Stocks Rise to Highest Level Since May on Jobs Data

U.S. stocks rallied, sending the Standard & Poor’s 500 Index to the highest level since May, after a report showed payrolls climbed more than forecast even as the jobless rate unexpectedly rose to a five-month high.

Bank of America Corp., Alcoa Inc. (AA) and Caterpillar (CAT) Inc. increased at least 2.2 percent. Knight Capital Group Inc. (KCG) surged 57 percent, after tumbling 75 percent in two days, as it secured a funding lifeline and more customers resumed routing orders. Kraft Foods Inc. (KFT) and Procter & Gamble Co. (PG) advanced more than 3.1 percent after reporting better-than-estimated earnings.

About nine stocks gained for every two that fell on U.S. exchanges at 4 p.m. in New York. The S&P 500 rose 1.9 percent to 1,390.99, after falling 1.5 percent in four days. It rose a fourth week, the longest streak since March. (SPX) The Dow Jones Industrial Average added 217.29 points, or 1.7 percent, to 13,096.17. Volume for exchange-listed stocks in the U.S. was 6.8 billion shares, or about in line with the three-month average.

“The jobs report is neither here nor there,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “There’s not enough evidence for the Fed to act imminently. At the same time, the numbers are not so good, which means that Fed could still do something. On balance, the number was decent.”

Equities gained as payrolls last month increased 163,000 following a revised 64,000 rise in June. Economists projected a gain of 100,000. Unemployment rose to 8.3 percent. The Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers about 90 percent of the economy, rose to 52.6 in July, beating estimates.

By Rita Nazareth
Read More: Bloomberg

Jobs up in July, but jobless rate rises to 8.3 percent

(Reuters) - U.S. employers in July hired the most workers in five months, but an increase in the jobless rate to 8.3 percent could keep prospects of further monetary stimulus from the Federal Reserve on the table.

Nonfarm payrolls rose 163,000 last month, the Labor Department said on Friday, snapping three straight months of job gains below 100,000 and offering hope for the ailing economy.

But the unemployment rate rose from 8.2 percent in June, even as more people gave up the search for work and a survey of households showed a drop in employment.

"As long as the unemployment rate is high, the central bank will have to consider further stimulus," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.

The Federal Reserve on Wednesday sent a stronger signal that a new round of major support could be on the way if the recovery did not pick up. The labor market has slowed after hefty gains in the winter, spelling trouble for President Barack Obama.

By Lucia Mutikani
Read More: Reuters

Fed to signal more easing but stop short of big steps

(Reuters) - The Federal Reserve is likely to show on Wednesday that it is ready to act against a weakening economy but stop short of aggressive measures for now.

Economists say the central bank could well push back its guidance for when it sees the need for an eventual rate hike into 2015 from the current Fed consensus of late-2014, a move that could signal the depth of the central bank's concerns about the economy and hint at new measures ahead.

Wall Street is braced for another round of Fed bond purchases, and some see an off chance that it might even come this afternoon. But analysts believe policymakers will wait until at least September, giving them more time to lay out the case for their preferred method for easing policy in speeches between now and then.

"We do not expect any new initiative from the Fed," said Eric Green, economist at TD Securities. "A dovish statement signaling willingness to do more will manage frustrated expectations for more (monetary easing)."

Fed officials will hint at their intent to deliver further stimulus in part through what most analysts envision as a substantially weaker outlook on the U.S. economy than that delivered in June.

By Pedro da Costa
Read More: Reuters

Dow Rallies Above 13,000 on Speculation ECB to Buy Bonds

The Dow Jones Industrial Average (INDU) climbed above 13,000, capping its longest weekly advance since January, amid speculation the European Central Bank will buy bonds to help lower borrowing costs and preserve the euro.

Alcoa Inc. (AA) and Caterpillar (CAT) Inc. rose more than 3.1 percent to pace gains in the biggest companies. Merck & Co. (MRK) and Amgen Inc. (AMGN) added at least 4 percent, driving health-care shares higher, as earnings beat estimates. Expedia Inc. (EXPE) surged 20 percent as the online-travel company raised its dividend. Facebook Inc. (FB) fell 12 percent to a record low after its results.

About nine stocks rose for every two falling on U.S. exchanges at 4 p.m. New York time. The Standard & Poor’s 500 Index advanced 1.9 percent to 1,385.97. The Dow average rallied 187.73 points, or 1.5 percent, to 13,075.66. Both climbed to the highest levels since May and completed three straight weeks of gains. Volume for exchange-listed stocks in the U.S. was 7.9 billion shares, or 18 percent above the three-month average.

“They’ve got to buy bonds,” Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston, said in a phone interview. “There’s been a lot of rhetoric as far as opening up the checkbook for whatever needs to be done to stabilize the euroland. It’s a giant deal if they actually do what they say they are prepared to do.”

American stocks joined a global rally after two central bank officials said ECB President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in an effort to overcome the biggest stumbling block to a new raft of measures including bond purchases. German Chancellor Angela Merkel and French President Francois Hollande echoed yesterday’s pledge by Draghi that they will do everything to protect the euro.

By Rita Nazareth
Read More: Bloomberg

U.S. Stocks Rise as ECB’s Draghi Vows to Defend Euro

U.S. stocks gained, snapping a four- day drop in the Standard & Poor’s 500 Index, as European Central Bank President Mario Draghi pledged to defend the euro while American jobless claims fell and durable-goods orders rose.

Sprint Nextel Corp. surged 16 percent as sales at the wireless carrier beat analysts’ estimates. Visa Inc. (V), the world’s largest payments network, rose 2.6 percent on better- than-estimated earnings. Zynga Inc. (ZNGA), the biggest developer of games played on Facebook Inc.’s social network, plunged 38 percent amid disappointing profit and revenue. Facebook slumped 5.3 percent before reporting its quarterly results.

The S&P 500 rose 1.7 percent to 1,360 at 9:40 a.m. New York time. The benchmark index for American equities lost 2.8 percent in the previous four days. The Dow Jones Industrial Average added 214.11 points, or 1.7 percent, to 12,890.16.

“We’re seeing another instance of central bankers trying to save the day with the threat of their printing machine,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote in a note today. “Whenever Draghi talks about ’policy transmission’ being hampered, it’s his Morse code for restarting their bond buying program.”

Global stocks rallied as Draghi suggested policy makers may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. The ECB mothballed its bond-buying program in March as it pushed governments to do more to control their deficits.

In the U.S., fewer people than forecast filed first-time claims for unemployment insurance payments last week. Orders for U.S. durable goods climbed more than projected in June as a surge in demand for aircraft and military hardware overshadowed a slump in business equipment spending.

By Rita Nazareth
Read More: Bloomberg

S&P 500 Falls Amid Housing Data as Apple Tumbles

The Standard & Poor’s 500 Index (SPX) declined a fourth straight day amid disappointing results at Apple (AAPL) Inc. and an unexpected decline in new home sales.

A gauge of homebuilders in S&P indexes slid 1.7 percent. Apple sank 4.7 percent as iPhone sales missed forecasts. Netflix Inc. (NFLX), the largest video-subscription service, tumbled 23 percent after raising doubts on user growth. Caterpillar Inc., the world’s largest maker of construction and mining equipment, and Boeing (BA) Co., a planemaker, gained at least 2 percent.

The S&P 500 slid 0.3 percent to 1,335.03 at 11:28 a.m. New York time. The benchmark gauge has lost 3 percent in four days. The Dow Jones Industrial Average rose 44.69 points, or 0.4 percent, to 12,662.01. The Nasdaq Composite Index lost 0.5 percent to 2,850.13. Trading in S&P 500 companies was up 20 percent from the 30-day average at this time of day.

“There’s a huge amount of uncertainty out there,” said Rob McIver, co-portfolio manager at Jensen Investment Management in Lake Oswego, Oregon. His firm manages $5.5 billion. “It’s a somewhat anemic U.S. recovery. You have the eurozone blowing up again. And you see that starting to be reflected in corporate results. It’s certainly a difficult environment for investors.”

The S&P 500 erased earlier gains as data showed demand for new U.S. homes unexpectedly dropped in June from a two-year high, indicating the housing recovery will be uneven. Earnings at 71 percent of the 196 S&P 500 companies which reported second-quarter results have beaten analysts’ estimates, according to data compiled by Bloomberg.

By Rita Nazareth
Read More: Bloomberg

U.S. Stocks Decline on Concern Europe Crisis Is Worsening

U.S. stocks declined, following a two-week advance in the Standard & Poor’s 500 Index, amid concern Europe’s debt crisis is deepening and after a Chinese central-bank adviser said economic growth may slow further.

Morgan Stanley (MS) and Bank of America Corp. (BAC) dropped at least 1.5 percent, following a tumble in European lenders, as Spanish bond yields surged on expectations regional governments may ask for aid. Freeport-McMoRan (FCX) Copper & Gold Inc. slid 3.7 percent, pacing losses in commodity producers, amid concern about lower Chinese demand. McDonald’s Corp. (MCD), the world’s largest restaurant chain, fell 3.5 percent as profit trailed estimates.

The S&P 500 lost 1.8 percent to 1,338.22 at 9:46 a.m. New York time. The Dow Jones Industrial Average fell 234.24 points, or 1.8 percent, to 12,588.33. Trading in S&P 500 companies was up 36 percent from the 30-day average at this time of day.

“Nothing is really fixed in Europe,” said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York. His firm oversees $201 billion. “The Spanish situation is chronic. And it’s not just Spain. This isn’t over.”

Stocks joined a global slump before the arrival in Athens tomorrow of Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund. In Spain, Catalonia joined a list of regions that may tap aid from the central government. Spain’s 10-year yields surged above 7.5 percent for the first time.

Song Guoqing, an academic member of the People’s Bank of China monetary policy committee, predicted the nation’s expansion may cool to 7.4 percent this quarter. He also warned that a decline in producer prices in tandem with consumer inflation may hurt investment returns of industrial companies.

By Rita Nazareth
Read More: Bloomberg

Bernanke Predicts Slow Progress on Unemployment

Federal Reserve Chairman Ben S. Bernanke said progress in reducing unemployment is likely to be “frustratingly slow” and repeated the Fed is ready to take further action to boost the recovery.

“The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year,” Bernanke said today in testimony for delivery to the Senate Banking Committee in Washington. The Fed is “prepared to take further action as appropriate to promote a stronger economic recovery,” he said.

In response to questions, Bernanke said the central bank’s easing tools include further purchases of assets, including mortgage-backed securities, reducing the interest rate that the Fed pays on reserves that banks keep with the Fed and altering the communications on the outlook for interest rates.

Bernanke said growth is slowing as business investment cools in response to the European crisis and the prospect of fiscal tightening in the U.S. At the same time, households are restraining spending as unemployment remains elevated and credit is hard to get.

Bernanke and his colleagues on the Federal Open Market Committee are considering whether the economy will need additional stimulus to reduce a jobless rate stuck above 8 percent since February 2009. Minutes of their June meeting show that a few participants believed the Fed will need to do more, while several others said new easing would be warranted if growth slows, risks intensify or inflation seems likely to fall persistently below the Fed’s 2 percent target.

By Joshua Zumbrun and Craig Torres
Read More: Bloomberg