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Banks earn $2.8B in 3Q; FDIC says dangers persist (AP)
WASHINGTON (AP) — The apparent end of the recession and stabilizing financial markets have not cured the banking industry, as souring and past-due loans have reached the highest levels in 26 years, the Federal Deposit Insurance Corp. said Tuesday. Banks earned $2.8 billion in the third quarter, but nearly 40 percent of that was from a one-time accounting trick. Loan balances plummeted and the fund that insures their deposits was $8.2 billion in the red. The number of banks on the FDIC’s “problem list” rose to 552 from 416 on June 30, the highest level in 16 years. Fifty banks failed during the quarter — the largest number since the second quarter of 1990. The FDIC’s fund that insures bank deposits fell by $18.6 billion, mostly because $21.7 billion was set aside for expected losses on future bank failures. The last similar deficit was in Dec. 1991, when a predecessor fund was more than $7 billion in the red. Separately, the Office of Thrift Supervision said Tuesday that thrifts eked out a $200 million profit in the third quarter. The agency called it “another break-even quarter,” after a small second-quarter profit was revised downward to a $94 million loss. Still, it was the first profitable quarter since the same period in 2007. The nominal profit was $1.3 billion, but $1.1 billion was a one-time gain at a single institution. The thrift’s holding company, which the OTS did not identify, shifted assets to reduce future tax expenses, agency officials said. The agency says the number of “problem thrifts” rose to 43 from 40 last quarter. Thrifts differ from banks in that they are required, by law, to have at least 65 percent of their lending in mortgages and other consumer loans. That makes them especially vulnerable to the housing downturn and unemployment. It also means they will play a key role in an eventual economic recovery. The FDIC voted this month to require banks to prepay three years of deposit insurance premiums by the end of next month to help replenish the dwindling deposit insurance fund, which is at its lowest point on record. That will raise about $45 billion. But bank failures this year through 2013 are expected to cost the fund $100 billion, so the prepayments won’t provide a long-term fix for the insurance fund. It does spare ailing banks the immediate cost of paying a second emergency fee this year. Depositors’ money — insured up to $250,000 per account — is not at risk, since the FDIC has the option of tapping a credit line with the Treasury Department. “While bank and thrift earnings have improved, the effects of the recession continue to be reflected in their financial performance,” FDIC Chairman Sheila Bair said. A 2.8 percent drop-off in loans outstanding — the largest percentage decline on record — showed that credit for consumers and businesses remained tight, she said. “There is no question that credit availability is an important issue for the economic recovery,” Bair said. “We need to see banks making more loans to their business customers.” That’s especially important for small businesses which get more than 60 percent of their credit from banks the FDIC insures, she said. Bank profits returned in the third quarter after a $4.3 billion loss in the previous quarter and $879 million in earnings last year. But analysts warned not to read much into the better earnings. “A few very large banks are making a pile of money, and the rest of the industry is hurting,” said Daniel Alpert, managing director of the New York investment bank Westwood Capital LLC. The largest Wall Street firms are benefiting from a host of government subsidies — such as capital injections, asset guarantees, low-cost borrowing — that cost taxpayers without improving the economy, Alpert said. “We’re creating riskless profits for the big banks,” he said. Still, banking analyst Bert Ely said the Federal Reserve’s low-interest rate policy is helping the whole industry. Net interest margin — the difference between what it costs banks to borrow and what they pay to depositors — reached a four-year high. It was a rare bright spot in the FDIC report. That bright spot comes at the expense of consumers, who are earning historically low interest rates on their deposits. “Americans are getting nothing in terms of interest on their savings so that the banks can make money,” Alpert said. High unemployment and slow spending are making it harder for banks to collect from consumers. Loans 90 or more days past due reached 4.9 percent — the highest in 26 years. Banks gave up on collecting $50.8 billion in loans during the quarter, an 80.5 percent increase from a year ago. It was the 11th straight quarterly increase and — at 2.7 percent — another 26-year high. OTS Acting Director John Bowman cast a cautious tone, saying thrift profits were hurt by money being set aside as they prepare for more loan losses. “We know that we have not seen the last thrift failure of this crisis,” Bowman said. Some smaller banks have protested the early insurance assessments that are being charged to replenish the deposit insurance fund. They complain that they had nothing to do with the excesses of big Wall Street banks, reckless mortgage lending and risky investments that precipitated the financial crisis, but are being forced to pay to help clean up the mess. There have been 124 bank failures so far this year, the most since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $28 billion. There were 25 bank failures last year and three in 2007. Bair said “there are no quick fixes” for the banking industry’s troubles — “only careful, hard work” to oversee banks as they continue writing off bad loans and attempt to ride out the downturn. “It really is all about the economy at this point,” she said. Read the r est here: Banks earn $2.8B in 3Q; FDIC says dangers persist (AP)
Fed: super-low rates could fuel speculative bubble (AP)
WASHINGTON (AP) — The Federal Reserve doesn’t expect the recovery will be strong enough to quickly drive down the jobless rate, and acknowledged its efforts to keep the rebound going could feed a new speculative bubble. AP – FILE – In this May 24, 2008 file photo, the headquarters of the Federal Reserve Bank is seen … Record-low interest rates “could lead to excessive risk-taking in financial markets,” according to documents released Tuesday of the Fed’s closed-door meeting earlier this month. It also could cause consumers, investors and businesses to worry about inflation taking off. Although Fed officials saw the current likelihood of that as “relatively low,” they pledged to “remain alert to these risks.” At the Nov. 3-4 meeting, Fed Chairman Ben Bernanke and his colleagues kept the target range for its bank lending rate at zero to 0.25 percent. Fed policymakers also pledged to hold rates at such super-low levels for an “extended period,” to ensure the recovery gains traction. Most analysts predict that means rates will stay where they are through the rest of this year and into part of 2010. On the economy, the Fed expects the unfolding recovery will be gradual, as modest growth keeps the nation’s unemployment rate elevated over the next several years. Most Fed policymakers said it could take “five or six years” for the economy and the labor market to be consistently healthy. High unemployment, slow income growth and hard-to-get credit will weigh on consumer spending “for some time to come,” the Fed said. Troubles in the commercial real-estate market also will restrain the recovery, according to minutes of the November meeting. Fed officials expected the pace of the recovery “would be rather slow, relative to historical experience.” Recoveries after steep economic downturns are usually robust, the Fed said. In updated economic projections, the Fed said the economy’s contraction for all of this year won’t be as deep as it thought in a forecast released in the summer. That’s because the second half of this year is shaping up better than anticipated. Under a range of new projections, the economy will shrink 0.5 percent or be flat this year. The old forecast called for a contraction of anywhere from 0.6 to 1.6 percent. Growth next year should turn out slightly better than the Fed previously projected– ranging from 2 to 4 percent — up from 0.8 to 4 percent. But that won’t be enough to quickly drive down the unemployment rate, which now stands at 10.2 percent. It’s only the second time in the post-World War II period the rate has topped 10 percent. The central bank predicted the jobless rate could hover between 8.6 and 10.2 percent next year, based on a range of forecasts from Fed policymakers. It’s a tad better than its previous forecast, where the Fed said the jobless rate could rise as high as 10.6 percent. The postwar high was 10.8 percent at the end of 1982 when the country had suffered through a severe recession. Looking ahead to 2011, the Fed said the unemployment rate could drop to anywhere from 7.2 to 8.7 percent. That would still be considered well above normal, which is between 5 and 6 percent. “Most members projected that over the next couple of years, the unemployment rate would remain quite elevated,” according to the Fed minutes. Inflation, meanwhile, should stay under control, the Fed said. Prices this year should increase between 1 and 1.7 percent, and rise a bit higher next year. The new projections were little changed from the old forecast. The new projections buttressed economists’ beliefs that Fed policymakers won’t be in any rush to boost rates. “So long as unemployment remains high and inflation expectations subdued, the Fed has little desire to lift rates,” said Sal Guatieri, economist at BMO Capital Markets. “Since the November meeting, Fed speakers have turned decidedly dovish” likely because unemployment spiked to 10.2 percent just days after that gathering. View original post here: Fed: super-low rates could fuel speculative bubble (AP)
Crude prices sink to $76 per barrel (AP)
Oil prices fell to around $76 a barrel Tuesday with new data showing a slow U.S. economic recovery and consumer confidence that remains lukewarm at best. AP – FILE – In this Sept. 19, 2007 file photo, an oil pump is seen at dusk in Sakhir, … {”s” : “ung,uso”,”k” : “c10,l10,p20,t10″,”o” : “”,”j” : “”} The dollar also gained against other major currencies, which can keep energy prices in check. Benchmark crude for December delivery fell $1.54 to settle at $76.02 a barrel on the New York Mercantile Exchange. The Commerce Department said the economy grew at a rate of 2.8 percent between July and September, short of estimates for 3.5 percent growth released just a month ago. Consumers are not spending much, commercial construction was weak, businesses trimmed inventories. The lack of consumer spending was partly explained in another report released Tuesday. Americans’ confidence in the economy improved slightly in November from October, but shoppers remain gloomy heading into the holiday shopping season, according to the monthly survey released by the Conference Board. The lack of industrial and consumer activity has played out in weekly oil inventory reports from the Energy Department, with supplies of crude in storage growing. The next weekly report arrives Wednesday, and expectations are that crude and gasoline supplies grew again last week. Retail prices edged lower again, falling less than a penny to $2.638 per gallon Tuesday. That’s a lot more than last year at this time, when gasoline prices plunged to about $1.91 as the economic crisis unfolded. Gasoline consumption for the week ended Friday declined 1.6 percent from the previous week and 1.4 percent from a year ago, according to the weekly MasterCard SpendingPulse report. Year-to-date consumption for 2009, however, is still up 0.6 percent. MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check. Still, gasoline prices are being supported by crude, which has traded between $76 and $82 for more than a month. That is largely being blamed on the dollar because oil is bought and sold in the U.S. currency. Investors holding euros or other currencies can buy more oil when the dollar falls. Crude prices rose Monday when the dollar fell. On Tuesday, the dollar gained against the euro, yen, and British pound. Oil prices fell as much as 2 percent. In other Nymex trading, heating oil fell less than a penny to settle at $1.9497 a gallon. Gasoline for December delivery fell almost 4.04 cents to settle at $1.939 a gallon. Natural gas for December delivery rose 1.3 cents to settle at $4.486 per 1,000 cubic feet. In London, Brent crude dropped $1 to settle at $76.46 on the ICE Futures exchange. Associated Press Writers Alex Kennedy in Singapore, Barry Hatton in Lisbon, Portugal, and Jeannine Aversa in Washington contributed to this report. Continued here: Crude prices sink to $76 per barrel (AP)
Ambac Chief Financial Officer Sean Leonard resigns (AP)
NEW YORK (AP) — Embattled bond insurer Ambac Financial Group Inc. announced Tuesday the resignation of its chief financial officer. The company, based in New York, said Sean Leonard left “to pursue other interests.” The resignation is effective immediately. The departure comes just weeks after Ambac said it may be forced to file for bankruptcy protection. In a filing with the Securities and Exchange Commission Nov. 9, the company said it believes it has enough liquidity to get through the second quarter of 2011, but warned it could run out of money sooner. Ambac for years had backed municipal bonds that rarely defaulted and paid steady dividends. In recent years, however, the company invested in complex new bonds that were comprised of risky mortgages amid the housing bubble. The new bonds were an opportunity for Ambac to generate outsize returns. But as the housing bubble burst and mortgage defaults spiked, the likelihood of issuer default and claims on bond insurance rose. In the filing with the SEC earlier this month, Ambac said it may not be able to generate enough cash to pay operating expenses and debt obligations over the long term. Given the tight credit markets, the company said it also may not be able to access alternate sources of capital. “No assurances can be given that Ambac will be successful in executing any or all of its strategies,” the company said in the filing. Ambac Financial is considering a restructuring of its debt through a prepackaged bankruptcy proceeding. But if it can’t bolster its capital position, the company said it may file for bankruptcy without a lender agreement in place. Leonard joined Ambac in 2005, according to the company. Those who worked under Leonard will report to CEO David Wallis until a replacement is found, Ambac said. An Ambac representative did not immediately return a call for further comment. Shares of Ambac fell 9 cents, or 10 percent, to 81 cents in afternoon trading. In the past year, shares have traded between 35 cents and $2.09. In November of last year, shares were as high as $3.40. More: Ambac Chief Financial Officer Sean Leonard resigns (AP)
Merck Announces Quarterly Dividends and New $3 Billion Share Repurchase Program (Business Wire)
WHITEHOUSE STATION, N.J.–(BUSINESS WIRE)–At their meeting today, the Board of Directors of Merck & Co., Inc. declared a quarterly dividend of $0.38 per share on the company’s common stock for the first quarter of 2010. Payment will be made on Jan. 8, 2010 to common stockholders of record at the close of business on Dec. 15, 2009. The Board of Directors today also declared a quarterly dividend of $3.75 per share on the company’s mandatory convertible preferred stock for the first quarter of 2010. Payment will be made on Feb. 15, 2010 to preferred stockholders of record at the close of business on Feb. 1, 2010. In a separate action, the Board of Directors approved purchases over time of up to $3 billion of Merck’s common stock for its treasury. Treasury stock purchases will be made on the open market or in block transactions or in privately negotiated transactions. About Merck Today’s Merck is working to help the world be well. Through our medicines, vaccines, biologic therapies, and consumer and animal products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to health care through far-reaching programs that donate and deliver our products to the people who need them. Merck. Be Well. For more information, visit www.merck.com . Forward Looking Statement This news release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, statements about the benefits of the merger between Merck and Schering-Plough, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Merck’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the possibility that the expected synergies from the merger of Merck and Schering-Plough will not be realized, or will not be realized within the expected time period, due to, among other things, the impact of pharmaceutical industry regulation and pending legislation that could affect the pharmaceutical industry; the risk that the businesses will not be integrated successfully; disruption from the merger making it more difficult to maintain business and operational relationships; Merck’s ability to accurately predict future market conditions; dependence on the effectiveness of Merck’s patents and other protections for innovative products; the risk of new and changing regulation and health policies in the U.S. and internationally and the exposure to litigation and/or regulatory actions. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in Merck’s 2008 Annual Report on Form 10-K, Schering-Plough’s Quarterly Report on Form 10-Q for the quarterly period ended Sept. 30, 2009, the proxy statement filed by Merck on June 25, 2009 and each company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site ( www.sec.gov ). View original post here: Merck Announces Quarterly Dividends and New $3 Billion Share Repurchase Program (Business Wire)
Top 2 booksellers report losses, their shares fall (AP)
NEW YORK (AP) — Barnes & Noble Inc. and Borders Group Inc., the nation’s two largest brick-and-mortar book sellers, both posted quarterly losses Thursday and forecast a difficult holiday season, saying competition from discount chains and online retailers is stiffening. AP – FILE – In this May 18, 2009 file photo, a customer reads magazines inside the Barnes and Noble … Barnes & Noble, the larger of the two, also cut its forecast for annual profit, and shares of both retailers fell. Even with online presence, traditional bookstores have had a rough time facing off against online sellers like Amazon.com as they also compete with low-price brick-and-mortar stores including Wal-Mart Stores and Target and cope with consumers cutting discretionary purchases amid tough economic times. But Barnes & Noble CEO Stephen Riggio said this fall’s price war among Amazon.com, Walmart.com and Target Corp.’s online division — in which those retailers cut prices on preorders for some new titles to $9 and less — was “overblown.” “Book-selling has been for a long time a ‘long tail’ business,” Riggio said during a conference call with investors. “Best sellers represent less than 5 percent of our sales and among these very top best sellers less than 1 percent of our sales.” Still, “every percentage counts,” said Michael Norris, a senior analyst with Simba Information. “I wouldn’t be that quick to dismiss the influence of the big discounters there,” he said. “You can go to Walmart.com and get the Sarah Palin book for a few bucks less than you can at either of them.” Barnes & Noble, which operates 775 stores, reported a fiscal second-quarter loss of 43 cents per share. Excluding costs related to buying back its 636-store college bookstore from its chairman in August, it earned 30 cents per share, matching analyst forecasts. Sales for the quarter ended Oct. 31 rose 4 percent to $1.16 billion — though the increase was due to revenue from the college bookstores. Excluding that, Barnes & Noble sales fell 2 percent to $1.09 billion. The company, based in New York, lowered its yearly forecast as the costs of producing its new electronic reader, the Nook rose and holiday sales seemed off to a weak start. Shares fell $1.58, or 6.7 percent, to $21.94 during midday trading. The stock has traded between $12.64 and $28.78 over the past year. Barnes & Noble is pinning its hopes for future profit on the Nook, a competitor with Amazon.com’s Kindle for which it began accepting pre-orders last month. Last week, it said orders had exceeded expectations and those placed beginning Nov. 20 would be filled Jan. 4 or later. The company plans to bulk up its e-content digital business, selling digital subscriptions to newspapers, blogs, magazines and other periodicals as well as digital books. Both companies forecast a weak holiday season. “This is an unpredictable holiday selling season as consumers remain unsettled and reactive to economic news,” said Borders CEO Ron Marshall. Borders Group Inc. lost $38.5 million, or 64 cents per share, less than a year ago, but its third straight quarterly loss. Revenue for the three months that ended Oct. 31 dropped 13 percent to $602.5 million. In an effort to improve its finances, Borders, based in Ann Arbor, Mich., has cut jobs, closed stores and chosen new leaders. It also has shifted its focus from less profitable categories like music and toward children’s books, toys, stationery and its cafe. But it has been slower than Barnes & Noble to shutter its lower-margin small-format stores and grow its e-commerce business. “Barnes & Noble still remains at least one step ahead of Borders,” Norris said. Borders shares fell 21 cents, or 10.5 percent, to $1.80. The stock has traded between 34 cents and $4.48 over the past year. AP Retail Writer Michelle Chapman contributed to this report from New York. The rest is here: Top 2 booksellers report losses, their shares fall (AP)
Economy’s rebound not as strong as first thought (AP)
WASHINGTON (AP) — The economy is growing modestly, with consumers too wary about spending to invigorate the recovery. AP – In this Sept. 3, 2009 photo workers build a new commercial building in Warrensville Heights, Ohio. The economy … That picture emerged Tuesday from reports on the nation’s economy and the confidence of consumers, who power 70 percent of it. The economy grew at a 2.8 percent rate last quarter — less than originally estimated. And forecasts for the current quarter are for similarly slight growth before a drop-off next year. The main reasons are that consumers remain reluctant to spend, commercial construction has slipped and imports are dampening U.S. growth. The Commerce Department’s new reading on gross domestic product was weaker than the 3.5 percent growth rate for the July-September period estimated just a month ago. The GDP, which measures the value of all goods and services produced in the United States, also was a tad weaker than the 2.9 percent growth rate that economists surveyed by Thomson Reuters had expected. At the same time, the Conference Board’s latest survey of consumer confidence found that as retailers enter the crucial holiday season, shoppers remain gloomy. Unemployment and tight credit have sapped consumers’ willingness and ability to spend freely. Also Tuesday, the Standard & Poor’s/Case-Shiller home price index of 20 major cities suggested that the housing market’s recovery is continuing, if only gradually. Home prices rose slightly in September. Compared with a year earlier, though, they remain down 9.4 percent. The lackluster reading on economic growth and consumer confidence caused stocks to retreat from their 13-month highs. The Dow Jones industrial and other stock averages were down slightly in midmorning trading. The good news is that the economy finally started to grow again after a record four straight losing quarters. The bad news is that the rebound, now and in the months ahead, probably will be lethargic. The worst recession since the 1930s is very likely over, but the economy’s return to good health will take time, Fed officials and economists say. Growth probably won’t be strong enough to quickly drive down the nation’s unemployment rate, currently at 10.2 percent. Some analysts think it could climb as high as 11 percent by the middle of next year before making a slow descent. It could take at least four years for the unemployment rate to drop back down to more normal levels. For the current quarter, some economists think economic growth will slow to around a 2.5 percent pace, though others say it could reach 3 percent if holiday sales turn out better than expected. Most say they think the economy will weaken again next year, with growth at a pace of around 1 percent as the impact of the $787 billion stimulus package fades and consumers keep tightening their belts under the strain of high unemployment and hard-to-get credit. Much of the economy’s return to growth last quarter reflected federal support for spending on homes and cars. But Tuesday’s report shows that some of that spending was a bit less robust than initially thought. Spending on homes and other residential projects soared at an annualized pace of 19.5 percent last quarter, a little slower than the 23.4 percent rate first estimated. Spending on big-ticket “durable” goods — including cars — jumped at a pace of 20.1 percent, down from 22.3 percent. Even with the downward revisions, it was notable that such spending grew, after falling in the previous quarter. In the third quarter, the popular Cash for Clunkers rebates and an $8,000 tax credit for first-time homebuyers juiced up sales of cars and homes. The clunkers program ended in August, but the tax credit has been extended and expanded beyond first-time buyers. What’s not clear is whether the recovery can continue after government supports are gone. If consumers clam up, the economy could tip back into recession. Tuesday’s report showed that overall consumer spending grew at a pace of 2.9 percent last quarter. That was down from a 3.4 percent growth rate first estimated, though it marked the best showing since early 2007. On the business side, companies cut back spending on commercial construction — a weak spot in the economy — at 15.1 percent annualized pace. That was deeper than the 9 percent annualized cut back first estimated. Businesses also trimmed stockpiles of goods by $133.4 billion last quarter, slightly more than initially estimated. And the nation’s trade deficit ended up shaving 0.83 percentage point off GDP last quarter, more than first thought. Unlike past rebounds that were driven by the spending of everyday Americans, this one appears to hinge on spending by businesses, foreigners and — until it runs out — the government. And in an encouraging note, businesses after-tax profits grew at a 13.4 percent pace last quarter, up from a 0.9 percent pace in the prior period, Tuesday’s report showed. The government makes three estimates of economic activity for any given quarter. Each is based on more complete data. Tuesday’s was the second reading of the third-quarter GDP data. Link: Economy’s rebound not as strong as first thought (AP)
Reports on consumer confidence, GDP tug at stocks (AP)
NEW YORK (AP) — Stocks retreated from 13-month highs after a lackluster reading on consumer confidence and a report showing slower economic growth sapped the market’s optimism. Major indexes were slightly lower Tuesday after the Conference Board said its Consumer Confidence Index increased to 49.5 in November from a revised reading of 48.7 in October. While better than expected, the report shows that consumers remain gloomy heading into the holiday season. A reading above 90 means the economy is on solid footing. Stocks had already been falling in morning trading after the government revised its calculation of third-quarter economic growth down to 2.8 percent from its original estimate of 3.5 percent, the latest sign that the recovery is likely to be slow and bumpy. The decline in stocks came after a big rally on Monday carried the Dow Jones industrials up 133 points to their highest level in just over a year. A weakening dollar and an upbeat report on housing lured investors back into stocks after a three-day losing streak. The dollar bounced back on Tuesday, hurting stock market sentiment. The dollar’s weakness has been a big driver behind higher stock prices this year. Investors have been taking advantage of record-low interest rates to invest in assets other than cash that can earn them better returns. As the end of the year approaches, however, investors have become hesitant to take on more risk and potentially upset the big gains they’ve amassed since stocks began rallying in March. That desire for safety helps push up the dollar and other safe-harbor investments like Treasurys at the expense of the stock market. The Dow fell 22.68, or 0.2 percent, to 10,428.27. The Standard & Poor’s 500 index lost 1.03, or 0.1 percent, to 1,105.21, while the Nasdaq composite index fell 8.63, or 0.4 percent, to 2,167.38. About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to a relatively low 240.8 million shares, compared with 284.4 million at the same time on Monday. Analysts expect trading to be choppy this week amid light trading volume heading into the Thanksgiving holiday. A report earlier Tuesday showing the fourth straight month of improving house prices in September did little to shore up investor confidence. The Standard & Poor’s/Case-Shiller home price index rose 0.3 percent in September from the previous month. Investors have been battling mixed signals on the economy in recent months. Areas like housing have shown modest improvements, but others like consumer confidence and employment are lagging. That has investors worried that their bets on an economic recovery over the past eight months may have been overdone. The Standard & Poor’s 500 index is up 63.5 percent since early March. A stronger dollar put pressure on the shares of commodities and materials producing companies. When the dollar rises, it makes commodities and commodities-related products more expensive for buyers overseas. The ICE Futures US dollar index, a widely used measure of the dollar against other currencies, rose x percent in morning trading. Oil prices fell $1.24 to $76.32 a barrel on the New York Mercantile Exchange. Gold prices rose slightly. Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.35 percent from 3.36 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.05 percent from 0.03 percent. In other trading, the Russell 2000 index of smaller companies fell 5.41, or 0.9 percent, to 589.40. Overseas, China’s Shanghai index fell 3.5 percent, its biggest decline in three months, while Japan’s Nikkei stock average fell 1 percent. In afternoon trading, Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index gained 0.1 percent, and France’s CAC-40 slipped 0.1 percent. View original post here: Reports on consumer confidence, GDP tug at stocks (AP)
Home prices rise for 4th month in a row (AP)
WASHINGTON (AP) — The summer’s trend of rising home prices is flattening as the traditional home shopping season ends, two reports Tuesday showed. AP – In this Oct. 15, 2009 photo, a sign for a newly-constructed home advertises a financing rate in Chagrin … {”s” : “bac,c,fnm,fre,jpm,wfc”,”k” : “c10,l10,p20,t10″,”o” : “”,”j” : “”} The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 0.3 percent to 144.96 in September, the fourth monthly increase in a row. The seasonally adjusted index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in April 2006. Another reading of home prices published by the Federal Housing Finance Agency held steady from August to September. Analysts expect prices to dip again this winter as foreclosures increase. “As long as the unemployment rate stays elevated, you’re going to see pressure on the pace of foreclosures, which are going to find their way back onto the market, depressing prices,” said Dan Greenhaus, chief economic strategist with Miller Tabak & Co. Home prices are a key ingredient to rebuilding the economy. Homeowners feel wealthier when their property appreciates in value and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the bank than their homes are worth. Currently, roughly one in four homeowners are in that situation, according to First American CoreLogic. While prices nationally are likely to keep rising through November, “we are very worried about the potential for a huge wave of supply next year, both from private sellers and banks,” wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. “Prices could easily reverse their recent gains.” Home prices rose in 11 major cities with the strongest gains in San Francisco and Minneapolis, according to the Case Shiller report. Prices fell by the most in Las Vegas and Cleveland. Compared with a year earlier, the 20-city index was down 9.4 percent, the smallest year over year decline since January 2008. “With housing remaining an albatross around the economy’s neck, nothing would perk things up more than some increases in home prices,” wrote Joel Naroff, chief economist at Naroff Economic Advisors. “That seems to be happening.” The price reports came a day after the National Association of Realtors said home resales surged by more than 10 percent in October as buyers took advantage of a special tax credit for first-time owners. Read this articl e: Home prices rise for 4th month in a row (AP)