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Rise in home sales lifts market |
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Tuesday, 27 May 2008 |
 (AP) Wall Street advanced Tuesday after the government reported the first gain in new home sales in six months, news that raised hopes for a recovery in the housing sector and that offset disappointing consumer confidence data.
The Commerce Department said sales of new homes rose 3.3 percent in April to a seasonally adjusted rate of 526,000 units. In March, sales had fallen 11 percent to their weakest pace since 1991.
This pleasant surprise helped assuage investors after the Conference Board said its Consumer Confidence Index dropped for the fifth straight month. The index is now at its lowest level since October 1992.
Investors are uneasy about the effect of soaring energy and food prices on consumers, who account for more than two-thirds of U.S. economic activity. With gas prices up sharply from a year ago, many on Wall Street are worried that nervous consumers will stop reaching into their wallets for discretionary purchases.
But the gain in home sales raised hopes that the housing industry, whose problems have pummeled the economy, might be turning around -- and that consumers might not be as dejected as many on Wall Street have feared.
In midmorning trading, the Dow Jones industrial average rose 48.04, or 0.38 percent, to 12,527.67.
Broader stock indicators were also higher. The Standard & Poor's 500 index rose 5.51, or 0.40 percent, to 1,381.44; the Nasdaq composite index rose 22.42, or 0.92 percent, to 2,467.09.
The move higher follows steep losses for the market last week. The Dow lost 3.91 percent -- its worst week since February -- while the other indexes showed similar declines. Investors sold off stocks amid concerns about rising energy prices and after a sizable run-up since the market's lows in mid-March.
Bond prices fell Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.91 percent from 3.85 percent late Friday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $2.43 to $129.75 per barrel on the New York Mercantile Exchange on a growing sense that soaring gas and oil prices have cut demand for fuel during the normally busy summer driving season.
The surprise in new home sales also helped offset data released earlier in the session that showed housing prices during the first quarter had their steepest decline in 20 years. The Standard & Poor's/Case-Shiller home price index indicated that prices fell 14.1 percent during the quarter.
However, the drop was expected by most investors -- and the government's report on new home sales was considered more important because it is the most recent gauge on the industry.
In corporate news, Vodafone Group PLC posted a full-year profit and said its chief executive plans to resign. The world's biggest mobile phone company by sales said Arun Sarin will be replaced by his deputy, Vittorio Colao. Shares of Vodafone fell 39 cents to $32.16.
Blackstone Group LP and Apollo Management LP are holding discussions about acquiring specialty chemicals maker Chemtura Corp., according to a report by The Wall Street Journal, which cited a person familiar with the situation. Blackstone shares rose 21 cents at $18.75, while Chemtura shares rose 85 cents, or 11 percent, to $8.65.
Flotek Industries Inc. fell $2.99, or 15.6 percent, to $16.18 after the provider of oilfield services reduced its full-year profit forecast because of increased costs and delays in the delivery of parts.
The Russell 200 index of smaller companies rose 8.32, or 1.15 percent, to 732.42.
Advancing issues led decliners by 2 to 1 basis on the New York Stock Exchange, where volume came to 177.4 million shares.
Overseas, Japan's Nikkei stock average rose 1.48 percent. In morning trading, Britain's FTSE 100 fell 0.25 percent, Germany's DAX index fell 0.34 percent, and France's CAC-40 fell 0.63 percent.
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Oil prices steady near $133 a barrel |
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Tuesday, 27 May 2008 |
 (AP) Oil held steady near $133 a barrel Tuesday in Asia on worries about global petroleum supplies and the outlook for the U.S. dollar and economy.
Reports of an attack by militants on an oil pipeline in Nigeria, one of Africa's largest oil exporters, also supposed prices.
Midday in Singapore, light, sweet crude for July delivery was up 99 cents from Friday at $133.18 a barrel in electronic trade on the New York Mercantile Exchange.
Nymex floor trading was closed Monday for Memorial Day in the U.S., and electronic trading levels were little changed from the day before during Asian hours. Monday was also a bank holiday in Britain, and trading volumes were lower than usual.
In London, July Brent crude futures were up 63 cents at $133 a barrel on the ICE Futures exchange.
Memorial Day holiday official kicks off the American summer driving season, and analysts are expecting the seasonal demand for diesel and gasoline to provide additional support for prices.
The dollar has been slipping over the last week after a modest recovery, and investors will be watching economic data out of the United States to be released over the next few days for further clues about the health of the world's biggest economy.
Reports are expected this week on U.S. consumer confidence, new home sales, gross domestic product and other key economic data. If the reports show the economy's weak trend is continuing or deepening, that would push the dollar lower, which would in turn boost oil prices.
Oil and other hard commodities are seen as hedges against a weakening greenback and inflation. Also, a weak dollar, the currency of international oil trade, makes petroleum products less expensive to Asian and European buyers.
The dollar, one of the factors that has fed oil's rally from about $65 a year ago, was slightly lower against the yen and weaker against the euro in midday Asian currency trading in Tokyo.
Prices were also supported by Monday's news of the latest in a spate of oil-pipeline bombings in Nigeria. The country's main militant group, the Movement for the Emancipation of the Niger Delta, said the sabotage of a pipeline-switching station marked the anniversary in office of President Umaru Yar'Adua, who took power May 29, 2007, with a promise to calm the oil region.
The local joint venture of Royal Dutch Shell PLC confirmed there had been a pipeline attack and said "some production" had been shut down to allow crews to contain the crude spilling from the ruptured conduit.
Last week, a series of supply warnings shook markets, and Thursday, a report that the International Energy Agency — the energy watchdog for the most industrialized nations — is in the process of lowering its forecast for long-term global oil supply, sent crude futures rocketing to an all-time high of $135.09 a barrel.
Investors are also worried about a growing squeeze on global diesel supplies as demand in China surges has sparked a massive run up in heating oil prices.
Over the weekend, China's top economic planning agency again urged oil and power companies to make sure there are enough supplies for earthquake-hit areas and for the Beijing Olympic Games in August.
In other Nymex trading, heating oil futures rose 7.23 cents to $3.9379 a gallon while gasoline prices rose 1.63 cents to $3.4123 a gallon. Natural gas futures rose 17.4 cents to $12.031 per 1,000 cubic feet. |
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Food banks feeding more people |
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Tuesday, 27 May 2008 |
 (AP) Jackie Hoffman sifted through a laundry bin filled with aging bread, choosing a loaf of white. Like nearly a third of the first 50 customers to arrive at the Emergency Food Bank of Stockton that morning, Hoffman was new to the pantry. But since she lost her sales job at a local newspaper in December, she has not found work in Stockton, which has the highest foreclosure rate in the country and a hurting job market.
"I'm down on my luck," Hoffman said, squeezing and sniffing the bread. "And food is going through the roof. I need help."
Hoffman, 55, is one of the growing number of "nontraditional" food pantry clients across the country. They include more formerly independent senior citizens, more people who own houses and more people who used to call themselves "middle-class" — those who are not used to fretting over the price of milk.
"We're getting calls all the time from people who want to know how to get here," said Kristine Gibson, community outreach manager at the Stockton food pantry. "And when I ask where they live, they give an address of a nice neighborhood, one where you or I would want to live."
April saw the biggest jump in food prices in 18 years, according to the Labor Department. At the same time, workers' average weekly earnings, adjusted for inflation, dropped for the seventh straight month.
To meet growing demand, America's Second Harvest-The Nation's Food Bank Network, pressed lawmakers for the past year to increase the annual level of funding for The Emergency Food Assistance Program, commonly know as TEFAP, from $140 million to $250 million annually.
A survey it conducted of 180 food banks in late April and early May found that 99 percent have seen an increase in the number of clients served within the last year. The increase is estimated at 15 percent to 20 percent, though many food banks reported increases as high as 40 percent.
The money was included in the Farm Bill recently approved by Congress, but won't be available until the next fiscal year, which starts in October.
"The way it's going, we're going to have a food disaster pretty soon," said Phyllis Legg, interim executive director of the Merced Food Bank, which serves 43 food pantries throughout foreclosure-ravaged Merced County.
Food banks across the country are in similar straits: While demand is up, supplies and donations are down. The food banks, like their customers, also are suffering from high gas prices and struggling with the impact of rising food prices on their operations. Some have had to cut back on how much food they give, or how often.
"If gas keeps going up, it's going to be catastrophic in every possible way," said Ross Fraser, a spokesman for America's Second Harvest.
Food banks sometimes have to move food 150 miles to a food pantry, he said.
"You're going to get to the point where they are going to have to decide whether it's cheaper to just give a food pantry a check," he said. "The price of gasoline is going to drive the price of everything else."
Prices at the pump are at record highs, averaging just below $4 a gallon, and are expected to climb further.
Stories of want and need are mounting. In informal surveys, America's Second Harvest has found a growing number of food banks in crisis mode.
• In Albuquerque, N.M., the Roadrunner Food Bank reported that the pantries it serves are turning people away and running out of food.
• In Baton Rouge, La., the public school system has found students hoarding their free and reduced-price lunches so they can bring them home and have something to eat at night.
• In Lorain, Ohio, the Second Harvest Food Bank is finding that it is meeting only 25 percent to 30 percent of the need for food.
• In Merced, the food bank is planning to curtail a brown bag program, which supplies groceries to senior citizens, from once a week to once every two weeks, Legg said.
Even in San Francisco, a city that has been relatively unscathed by the foreclosure crisis and economic downturn, food pantries are seeing hundreds of new clients.
"We've gone from serving about 450 to 600 clients a day since Christmas," said Sara Miles, director of The Food Pantry.
"This is one of the worst times that our food banks have experienced in recent years in terms of the level of need and our ability to meet the need," said Vicki Escarra, president and chief executive officer of America's Second Harvest.
The Emergency Food Bank of Stockton, which operates out of a cavernous warehouse at the fringe of town, now finds customers lining up several hours before it opens at 10 a.m.
That's because, clients say, the best food — the fresh meat and eggs — goes first.
"If I get here too late, I'll be left with Marshmallow Fluff for 14 days," said Sondra Pearson, a mother of seven. "Not," she added, "that I'm going to turn that down." |
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Small business sentiment still shaky |
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Tuesday, 27 May 2008 |
 (Reuters) The majority of small business owners think the U.S. economy is getting worse, though sentiment showed some improvement in May from its recent lows, according to a survey released on Tuesday.
The survey reflects the U.S. economy's struggles with the worst housing slump since the Depression, soaring energy costs and a shrinking job market, although the numbers did show improvement in some areas.
Credit-card provider Discover's Small Business Watch index of confidence rose to 81.8 in May from 76.1 in April. April's was the lowest reading since the monthly survey's launch in August 2006.
According to the report, only 28 percent of business owners said that economic conditions were improving for their businesses, though this was an increase from 24 percent in April.
It showed 71 percent of small business owners thought the U.S. economy was getting worse, a decrease from 76 percent in April.
It also showed 39 percent said they had experienced cash flow issues over the last 90 days, down from 44 percent in April and 47 percent in March.
"Small business owners halted a steady decline in their economic confidence in May as the number of those with cash flow issues decreased to its lowest total in six months," the report said.
Overall, 50 percent of respondents rated the economy as "poor." That was down from 55 percent in April.
The survey showed 12 percent of small business owners planned to hire more workers "over the course of the next few months," and 9 percent would be laying off workers. Two percent said they were not sure and 77 percent expected no change.
Over the next six months, 42 percent expected to decrease spending on business development activities such as advertising, inventories, and capital expenditures and 28 percent projected an increase.
Three percent were unsure and 27 percent saw no change.
The Discover Small Business Watch is a monthly index measuring the relative economic confidence of U.S. small business owners who employ less than five employees.
This segment of the economy consists of 22 million businesses producing more than $1 trillion in annual receipts, according to the report. The watch is based on a national, random survey of 1,000 small business owners, commissioned by the Discover Business Card. |
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Wall St. down after housing report |
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Friday, 23 May 2008 |
 (AP) (AP) Stocks resumed their steep slide Friday as investors digested a better-than-expected home sales report that still showed continued weakness, and as traders squared their portfolios ahead of the three-day holiday weekend. The Dow Jones industrials fell more than 100 points.
The National Association of Realtors said existing home sales fell 1 percent last month. That's better than analysts' forecast of a 1.6 percent decline, but the news was still unwelcome to a market nervous about the continuing housing slump and the impact of the rising price of oil on consumers.
Meanwhile, rising oil prices also weighed on stocks. A barrel of oil is up $1.74 at $132.55 on the New York Mercantile Exchange. Oil prices are set for a third weekly gain after surging to a record $135.09 a barrel on Thursday. Investors are buying on the belief that supply can't keep up with growing global demand from countries like China and India.
"Crude oil is still weighing on the market and particularly because this is a traditional driving holiday," said Chris Orndorff, director of equity strategy at Payden & Rygel in Los Angeles.
Many traders took Friday off before the long holiday weekend, and lighter volume contributed to more volatile movements in stocks and the major indexes.
In late morning trading, the Dow fell 142.08, or 1.13 percent, to 12,483.54.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 19.21, or 1.38 percent, to 1,375.14, and the Nasdaq composite index fell 31.02, or 1.26 percent, to 2,433.56.
The economic fallout from higher energy prices remained Wall Street's focus this week. Stocks rose moderately Thursday after two sessions of steep declines, with the Dow recording its biggest two-day loss since late February.
Despite the declines of more than 2 percent in the major indexes this week, stocks are off their mid-March lows. The Dow is still up 7.5 percent from its close of 11,740.15 on March 10.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its yield, fell to 3.86 percent from 3.92 percent late Thursday.
The dollar was mostly higher against other major currencies, and gold was also higher.
In corporate news, Gap Inc. reported late Thursday that first-quarter profit surpassed Wall Street projections. The retailer said it boosted profit by 40 percent by better managing inventory and cutting costs. Gap fell 50 cents, or 2.7 percent, to $17.79.
There was also deal talk going into the holiday weekend. Halliburton Co., the world's second-largest oilfield services company, made a $3.4 billion bid to acquire British rival Expro International Group. Halliburton fell 65 cents to $47.63.
Yahoo Inc. late Thursday said in regulatory filing that it pushed its annual shareholders meeting to an undetermined date in late July. The move was seen giving the Internet portal more time to prepare a defense — or negotiate a sale to Microsoft Corp. Yahoo fell 22 cents to $27.31, while Microsoft fell 41 cents to $28.06.
American Axle and Manufacturing Holdings Inc. fell 68 cents, or 3.5 percent, to $18.57 after the company said late Thursday that workers approved a new contract including pay cuts and other concessions. The vote ends a strike that lasted nearly three months, hurting General Motors Corp.'s production of large sport utility vehicles and pickup trucks. Although the contract's ratification will benefit GM, auto stocks have been under pressure this week because of soaring fuel prices.
The Russell 2000 index, which tracks small-company stocks, fell 12.764, or 1.72 percent, to 720.37.
Declining issues outran advancers by about 4 to 1 on the New York Stock Exchange, where volume came to nearly 349 million shares.
In overseas trade, Tokyo's Nikkei closed rose 0.24 percent. In Europe, London's FTSE dropped 0.47 percent, Frankfurt's DAX fell 0.82 percent and Paris' CAC 40 shed 0.98 percent.
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