Posts Tagged stock
Stock investors ask: What’s the next big thing?
Posted by Tetyana Matychak in Fund Markets on March 11th, 2010
A year after the stock market began its comeback from 12-year lows, investors are looking for the next big thing.
Stocks have lost some of the momentum that propelled the Dow Jones industrial average up 61.4 percent from its close of 6,547 on March 9, 2009. That’s natural - bull markets tend to slow down as they head into their second year. But the lethargic pace of the economic recovery has also been a bit of a drag on stocks. And so investors are waiting for signs that the economy is ready to put up some solid, sustainable growth numbers.
The most likely trigger: job growth. Investors need to see a Labor Department report that says employers are creating more jobs than they’re cutting.
Until then, investors are going to stay cautious. Analysts say the market is likely to move sideways or drift higher, as it’s been doing over the past few weeks. Tuesday’s trading fit the pattern of modest moves. The Dow rose nearly 12 points. The average is up 1.3 percent so far this year.
But that doesn’t mean the market isn’t going to have its fitful moments. And it certainly has volatile industries that are expected to move the rest of the market. On Tuesday, the financial companies that led stocks higher in the past year again drove trading. Analysts said financial shares rallied as investors reacted to rumors that the government might prohibit the trades known as short sales in stocks of companies it owns. The government has large stakes in Citigroup Inc., American International Group Inc. and mortgage companies Fannie Mae and Freddie Mac after bailing them out during the 2008 financial crisis. Read the rest of this entry »
Greek drama plays out on Wall Street
Posted by Tetyana Matychak in Fund Markets on February 15th, 2010
U.S. stocks could struggle to make headway next week if a meeting of European finance ministers fails to reassure markets that they can contain Greece’s debt problems.
Greece’s financing problems have focused investors’ attention on the growing mountain of public debt as cash-strapped governments around the world spend their way out of recession. The fear is Greece’s problems could spread, hurting financial markets.
Finance ministers from the euro zone will meet on Monday, when U.S. markets are closed for the Presidents Day holiday, followed by finance ministers from the rest of the European Union on Tuesday.
“What the market wants to hear is that there is a viable remedy,” said Quincy Krosby, market strategist with Prudential Financial in Newark, New Jersey.
“The market will be anticipating how other problems will be handled. Can the solution be applied to the problems that may crop up in Spain, Portugal, Italy (and Ireland) because traders believe the aftershocks are not over.” Read the rest of this entry »
Fed holds rates at record low to aid recovery
Posted by Tetyana Matychak in Budget on February 2nd, 2010
The Federal Reserve pledged Wednesday to hold rates at record lows to nurture the economic recovery and lower unemployment. But its decision drew a dissent from one member, signaling the Fed’s challenge in deciding when to pull back stimulus money it pumped into the economy.
The Fed’s statement sketched a mixed picture of the economy. Pointing to weakness, it noted that bank lending is contracting. And it dropped a reference in its previous statement to an improving housing market.
But on the positive side, the Fed said business spending on equipment and software seems to be rising. And it said economic activity”continues to strengthen.”
The Fed said it still expects to end a $1.25 trillion program aimed at driving down mortgage rates as scheduled on March 31. Yet it reiterated that it remains open to changing that timetable if necessary.
Reports on home sales this week pointed to a still-fragile housing market. Read the rest of this entry »
The Great Recession Continues
Posted by Tetyana Matychak in Budget on January 27th, 2010
The December jobs report has doused the hope that we were at the beginning of a sustained economic recovery.
The unemployment rate managed to hold at 10% in December only because of an extraordinary shrinkage in the labor force: Some 661,000 gave up looking for a job.
Bureau of Labor Statistics’ (BLS) nonfarm payroll data indicate that December job losses totaled 85,000. But the bureau’s household survey, a better and more comprehensive measure of both the unemployed and underemployed, indicated a loss of 589,000 jobs. Since the Great Recession began in 2007, some 8.6 million jobs have been lost, according to the bureau; and small businesses, the normal source for new jobs, are still shedding workers. Fewer than 10% added employees, while more than 20% cut back—and the cuts averaged nearly twice as many per firm as the hires at the expanding companies.
Unemployment, in short, has graduated from being a difficulty, a worry. It is now a catastrophe, with some 15.3 million Americans out of work, according to the BLS. Read the rest of this entry »
How funds can hit such different notes
Posted by Tetyana Matychak in Fund Markets on January 20th, 2010
Individual investors are often told that index-linked funds are better for them than actively managed offerings. That may be true, but index funds carry their own risks that can catch the unsuspecting.
Look, for example, at two exchange-traded funds that track the same international-stock index — and yet their results last year are significantly different.
IShares MSCI Emerging Markets Index ETF (EEM 41.95, -0.49, -1.16%) and Vanguard
Emerging Markets ETF (VWO 41.70, -0.50, -1.18%) both track the MSCI Emerging Markets
Index. But the Vanguard ETF gained just over 76% last year, while the iShares offering was up nearly 72%. The Index itself was up 78.5%.
The difference highlights the varied results index funds can produce and offers a lesson to investors about the best way to choose an indexed investment.
How can investors tell which ETF best tracks its benchmark index and also come to realize that not all indexes are the same? The answer isn’t so straightforward. Read the rest of this entry »
China takes new steps to curb bank lending
Posted by Tetyana Matychak in Banks on January 15th, 2010
China took new steps Tuesday to control bank lending, ordering institutions to set aside more reserves in a move to avert a surge in credit that Beijing worries might fuel inflation or asset price bubbles.
China’s nascent rebound from the global crisis was fueled by a flood of lending by state-owned banks last year. Bankers cut lending under government orders toward the end of 2009 but regulators worry credit might rebound this year.
The move indicates Beijing is confident growth can be sustained and has shifted focus to preventing financial excesses and economic overheating. The government is forecasting growth of 8.3 percent for 2009, up from a low of 6.1 percent for the first quarter of the year.
The central bank raised the amount of reserves that banks must hold by 0.5 percent to 15 percent of their deposits. Also Tuesday, the bank raised interest rates paid on one-year bills for the first time since August to absorb money from the market and cool credit growth.
“This series of moves by the central bank provides a clear sign that policymakers are following through on their pledge to guide credit in order to pre-empt rising inflation and avoid asset price bubbles,”said Jing Ulrich, chairwoman of China equities for J.P. Morgan, in a report. Read the rest of this entry »
Best mutual funds and ETFs
Posted by Tetyana Matychak in Favourites, Investing on January 5th, 2010
Last year’s roller-coaster market showed why it pays to be patient with your investments. The Money 70, our recommended list of mutual funds and ETFs, will help you buy and hold your way to your long-term goals.
For the Money 70, our recommended list of mutual and exchange-traded funds, 2009 was a year of vindication. After the vast majority of the funds on our list suffered steep losses in 2008’s credit crisis, almost all rebounded strongly last year — with many posting double-digit gains. But short-term returns aren’t the point. It’s far more important for you to focus on long-term results.
This list was never intended to be a collection of hot funds. Instead, the point of the Money 70 is to give you a menu of high-quality funds and ETFs that you can use to construct a well-diversified portfolio, which in turn will help you achieve your long-term financial goals.
And over lengthy periods of time, Money 70 funds have proved worthwhile — provided you stuck with them in good times and bad. Take the case of Royce Pennsylvania Mutual. In a decade where gains were hard to come by in the U.S. stock market, this small-cap fund earned 9.5% a year vs. 3.9% for small stocks in general. Yet by moving money into and out of the fund at the worst possible times, Pennsylvania Mutual investors earned just 3.9% annually, according to Morningstar. Read the rest of this entry »
Stocks Climb on Evidence Global Economy Recovering
Posted by Tetyana Matychak in Fund Markets on December 23rd, 2009
Stocks rose around the world, driving Europe’s Dow Jones Stoxx 600 Index to a 14-month high, on evidence that the global economy is recovering from its recession. Oil and copper advanced.
The MSCI World Index of developed-nation shares climbed 0.3 percent at 9:41 a.m. in London. Futures on the Standard & Poor’s 500 Index added 0.3 percent and the MSCI Asia Pacific Index increased 0.5 percent. Oil gained 0.6 percent in New York, while the dollar traded near a three-month high against the euro.
U.S. consumer spending probably rose in November for the sixth time in seven months as households took advantage of holiday discounting, economists said before reports today. China’s growth may surge to as much as 12 percent next year, according to Citic Securities Co., the nation’s biggest listed brokerage. Consumer confidence in Italy unexpectedly rose in December to the highest in more than seven years after Europe’s fourth-biggest economy emerged from a recession.
“The path of least resistance will continue to be to the upside,” Robert Doll, who helps oversee about $3.2 trillion as chief investment officer for global equities at New York-based BlackRock Inc., said in a Bloomberg Television interview. The economic recovery “means earnings should be somewhat better and liquidity should still be plentiful. That’s a recipe for equities moving higher,” Doll said. Read the rest of this entry »
Stocks Rise, Default Swaps, Dollar Drop Following Dubai Bailout
Posted by Tetyana Matychak in Fund Markets on December 14th, 2009
Stocks rose as Abu Dhabi bailed out Dubai’s Nakheel PJSC and Exxon Mobil Corp. agreed to buy XTO Energy Inc. for $31 billion. The cost to protect U.S. corporate bonds from default fell to a 12-week low, while the dollar slipped and oil and Treasuries were little changed.
The Standard & Poor’s 500 Index climbed 0.5 percent to 1,111.73 at 10:55 a.m. in New York for a fourth straight advance, its longest streak in a month. Dubai’s equity index jumped 10 percent, the most in 14 months. The dollar weakened against 10 of 16 major currencies tracked by Bloomberg, while the euro strengthened against the dollar and pound as concern eased that Europe’s biggest banks will write down Dubai loans.
Abu Dhabi’s pledge reassured investors who had sent stock markets tumbling last month on concern defaults would slow the global economic recovery. Greek Prime Minister George Papandreou may announce measures to cut the European Union’s biggest budget deficit later today after the nation’s bonds plunged to their lowest levels in seven months last week.
Dubai’s bailout “puts to rest any lingering fears that might have existed about possible contagion,” Tim Condon, head of Asia credit research for ING Groep NV in Singapore, said in an interview. “It’s inevitable that we’re going to see a few more incidents of credit stress show up in both banks and corporates, but in terms of it becoming a macroeconomic issue I think Dubai World was as close as we were going to get.” Read the rest of this entry »
Kuwait Investment Fund Sells Citigroup Stake for $4.1 Billion
Posted by Tetyana Matychak in Trading Markets on December 10th, 2009
Kuwait Investment Authority, the nation’s sovereign-wealth fund, sold its stake in Citigroup Inc. for $4.1 billion after helping the U.S. bank boost capital amid the worst financial crisis since the Great Depression.
The fund converted preferred securities of Citigroup that it purchased for $3 billion last year into common shares and sold them, making a profit of $1.1 billion, KIA said in an e- mailed statement today.
The transaction “will be a confidence-booster,” said M.R. Raghu, head of research at Kuwait Financial Center, a Kuwait- based investment bank, in a telephone interview. “It looks to be good news, making a profit in these times.”
Sovereign wealth funds are selling investments in financial stocks as they seek to reduce risk and address domestic criticism over investment priorities. The funds, fueled in part by oil revenue, had become sources of capital around the world for companies including Citigroup and Morgan Stanley, helping them to withstand the credit market seizure that followed the collapse of U.S. subprime mortgages. Read the rest of this entry »
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