Monthly Archives: April 2010

Friday Stocks Wilt on GDP

Dow now at 11,093, down 74 points late this morning.

NEW YORK (AP) — Stocks fell sharply Friday after the government issued a weaker-than-expected reading on the economy.
A drop in consumer sentiment and concerns surrounding financial regulation contributed to the selling. The Dow Jones industrial average fell 100 points.
“The market may just be a little bit tired,” said Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn. “A lot of good news is priced into the market.”
Many analysts have said the stock market was poised for a pullback after it climbed steadily for nearly three months.
In the last trading session of April, the Dow is still set to post its third straight monthly gain. However it looks like it will snap an eight-week winning streak.
Friday’s pullback began after the government said the gross domestic product rose at a 3.2 percent annual pace in the January-March period. That was below the 3.4 percent rate economists polled by Thomson Reuters had forecast.
While the GDP was up for the third straight quarter, it was down from the fourth quarter’s 5.6 percent, a rate that was inflated by government stimulus spending and companies restocking their depleted inventories. For the economy to show healthy growth, it would have to grow at a faster pace than it did the first three months of the year. Growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.
The Labor Department will release its April employment report next week. Economists predict the unemployment rate held steady at 9.7 percent.
Analysts were relatively upbeat that the first-quarter growth rate, though slow, probably was good enough to help avoid a “double-dip” recession.
“GDP was slightly lower than expectations, but shows the economic recovery is probably sustainable,” said Peter Cardillo, chief market economist at Avalon Partners Inc. in New York.
Investors were disappointed by a separate report from Reuters and the University of Michigan that showed consumer sentiment rose to 72.2 in April from a preliminary April reading of 69.5. However, it was still lower than March’s 73.6. Economists had forecast a reading of 71.
The consumer sentiment report shows the “consumer isn’t fully recovered,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Investors want to see data that shows month-over-month improvement, Luschini added.
Financial stocks were pulled down by Goldman Sachs Group Inc., which is now facing a criminal investigation for its dealings in subprime mortgage securities. A Standard & Poor’s equity analyst downgraded Goldman Sachs’s stock to a “sell” rating Friday morning. Its shares dropped more than 7 percent.
In afternoon trading, the Dow Jones industrial average fell 100.51, or 0.9 percent, to 11,066.81. The Standard & Poor’s 500 index fell 13.64, or 1.1 percent, to 1,193.14, while the Nasdaq composite index fell 34.74, or 1.4 percent, to 2,477.18.
The Chicago Purchasing Managers Index rose this month, further evidence of a recovery in the manufacturing sector. The index, which reflects economic activity in the Midwest, jumped to 63.8 in April, from 58.8 last month. Economists expected the index to rise to 60.
Signs of an improving domestic economy pushed stocks higher the past two days, after fresh concerns about European debt problems sent shares plummeting on Tuesday. The Dow jumped 122 points Thursday, its biggest jump since March 5, after another batch of strong earnings and a Labor Department report that showed initial claims for jobless benefits fell last week.
Despite the gains the past two days, investors are still keeping an eye on the European debt problems. The biggest concerns are in Greece, where the country faces loan repayments in a couple of weeks. If it is unable to tap a joint European Union and International Monetary Fund bailout package before May 19, the country could default on its debt.
Analysts fear that debt problems will spread across the continent and stunt a global economic recovery.
Greece, Portugal and Spain all saw their debt ratings slashed by Standard & Poor’s earlier this week. Greece’s was cut to junk status. Lower ratings make it more expensive to borrow money, which would only add to debt burdens already facing some European nations.
European markets fell. Britain’s FTSE 100 dropped 1.2 percent, Germany’s DAX index fell 0.2 percent, and France’s CAC-40 fell 0.8 percent.
The euro rose against the dollar, but analysts remain cautious about its long-term future. Some have said that the debt problems could further drive down its value or lead to a split among the 16 countries that share the currency.
Meanwhile, Goldman Sachs is again contending with negative headlines. The big Wall Street bank — which is already facing civil fraud charges for misrepresenting details about subprime mortgage securities — is now also facing a criminal investigation.
“They’re really going after Goldman pretty hard,” said Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research. “That’s got people on edge.”
The Justice Department has opened a criminal investigation against the bank over mortgage securities deals it arranged. Many blame the credit crisis on the collapse of similar securities which were traded by many banks around the world.
Detrick said that after all asset bubbles, regulators and politicians look for companies or executives to blame and Goldman is currently at the top of that list.
Goldman shares tumbled $15.18, or 9.5 percent, to $145.06.
Earnings again largely topped expectations. Both oil company and Dow component Chevron Corp., homebuilder D.R. Horton Inc. and consumer products maker Newell Rubbermaid Inc. saw shares rise after reporting better-than-expected profit.
Chevron shares dipped despite the upbeat earnings as the broader energy sector has been hurt on the day by concerns about an oil spill off the Louisiana coast and its potential impact on future exploration and drilling. Chevron fell 12 cents to $82.18 after trading higher earlier in the day.
D.R. Horton shares jumped 63 cents, or 4.4 percent, to $14.87. Newell Rubbermaid jumped 51 cents, or 3 percent, to $17.46.
About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 593.7 million shares, compared with 612.8 million shares traded at the same time Thursday.
Bond prices rose as stocks dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.67 percent from 3.73 percent late Thursday.
Gold and oil prices both rose.
The Russell 2000 index of smaller companies fell 7.82, or 1.1 percent, to 729.92.

Just Got a Call From the NY Times

No, it wasn’t a job offer. They were interested in confirming information about Dorothy Provine’s death for their own story. The famed actress died Sunday morning at Belmont Terrace Health and Rehabilitation Center of lung disease.

She’d lived a quiet life completely out of the public eye on Bainbridge Island for 20 years. During that time, myself and others here at the Sun, namely former features editor JoAnne Marez, occasionally tried to do an interview with her.

The answer always was a respectful no. But I have to say, the disappointment for me is not the death of a famous actress, but that I nor anyone here never got the opportunity to tell the story of the second half of her life.

Now it’s too late. Perhaps I should have pushed a little harder.

Rachel Pritchett

Thursday Stocks Rise at Good Clip

Dow now at 11,185, up 140 points.

NEW YORK (AP) — More signs of an improving U.S. economy lifted stocks for a second straight day.
The Dow Jones industrials rose 140 points Thursday after the Labor Department said initial claims for unemployment benefits fell last week. First-time claims dipped to 448,000, slightly above analysts’ forecast of 445,000, according to Thomson Reuters.
Dealmaking and strong corporate earnings reports also provided fresh evidence that the U.S. economy is healing.
Hewlett-Packard Co. said late Wednesday it is buying smart phone maker Palm Inc. in an all-cash deal worth $1.4 billion. Acquisitions are a sign that the economy is recovering and companies are comfortable spending cash to build their businesses.
“Business are in a very strong position financially,” said Doug Lockwood, chief investment officer at Cornerstone Wealth Management in Auburn, Ind. Companies have built up big cash reserves that can not only go toward deals, but also eventually hiring back workers, Lockwood said.
Companies including Motorola, Time Warner Cable and Starwood Hotels & Resorts reported earnings that topped analysts’ expectations, as have many other companies that announced first-quarter results in recent weeks.
“It just seems like the market is moving and moving and nothing is going to get in its way,” said Steve Stahler, president of the Stahler Group Inc. in Baton Rouge, La.
Over the past two days, the Dow has recovered most of its 213-point loss it posted on Tuesday in response to growing concerns about European countries’ debt problems. Some analysts said Tuesday that investors were overreacting to the situation in Europe. But they also acknowledged the market was due for a pullback after moving steadily higher for months. When stocks go in one direction for a sustained period of time, market watchers worry that investors are buying or selling indiscriminately.
In afternoon trading, the Dow rose 140.41, or 1.3 percent, to 11,185.68. The Standard & Poor’s 500 index rose 16.17, or 1.4 percent, to 1,207.53, while the Nasdaq composite index rose 33.62, or 1.4 percent, to 2,505.35.
European stock markets rose Thursday after two days of steep declines. On Wednesday Spain became the third European country this week to see its debt rating slashed by Standard & Poor’s, following Greece and Portugal.
There are concerns that debt problems will spread across the continent and slow a global economic recovery. The most pressing problems are in Greece, which is still trying to tap a bailout package worth nearly $60 billion. European Union officials said again Thursday that Greece would have access to the money that will help it avoid defaulting on debt payments next month. The downgrades of Greek and Portuguese debt on Tuesday sent indexes worldwide tumbling.
Guy LeBas, chief fixed income strategist of Janney Montgomery Scott in Philadelphia, said the Greece crisis is “the tip of the iceberg for the European Union.”
The debt crisis has the potential to drag down a European economic recovery and lead to a collapse of the euro, a currency shared by 16 member nations, LeBas said.
Earnings were the primary driver of stocks on Thursday, even as long-term concern remains about Europe.
Starwood Hotels & Resorts Worldwide Inc.’s profit jumped sharply as more people checked in its hotels, including the Sheraton, W, and Westin. Drug maker Bristol-Myers Squibb Co., phone maker Motorola Inc. and Time Warner Cable Inc. also reported stronger earnings.
Dow component ExxonMobil Corp.’s profit rose during the quarter, but fell short of expectations.
Starwood Hotels & Resorts rose $3.18, or 6 percent, to $56.45, while Bristol-Myers Squibb rose $1.23, or 5.1 percent, to $25.57. Motorola jumped 22 cents, or 3.2 percent, to $7.14 and Time Warner rose $3.33, or 6.3 percent, to $56.46.
Hewlett-Packard shares fell 39 cents to $52.90, while Palm surged $1.16, or 25 percent, to $5.79.
About three shares rose for every one that fell on the New York Stock Exchange, where volume came to 612.7 million shares, compared with 710.5 million traded at the same point Wednesday.
Bond prices traded in a narrow range. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.77 percent, compared with late Wednesday.
Gold dipped, while oil rose.
The Russell 2000 index of smaller companies rose 8.70, or 1.2 percent, to 731.09.
Overseas, Britain’s FTSE 100 rose 0.6 percent, Germany’s DAX index gained 1 percent, and France’s CAC-40 rose 1.4 percent. Japan’s market was closed for a holiday.

Wednesday Stocks Close Higher: Fed Holds Rate Steady

Ending at 11,045, a rise of 53 points.

NEW YORK (AP) — Investors gave stocks a rebound after reassuring words from the Federal Reserve and another batch of upbeat earnings reports.
The Dow Jones industrials rose 53 points Wednesday, making back a quarter of the 213 they lost the previous day.
Investors were able to shake off Standard & Poor’s downgrade of Spain’s debt, the third European country in two days to have its rating lowered. Instead, they focused on the domestic economy.
In an economic assessment statement that accompanied the Fed’s decision to keep interest rates stable, the central bank said the labor market is “beginning to improve” and it noted that housing starts have edged up. The statement, which came at the end of a two-day policymaking meeting, did say that employers are still reluctant to hire, but that came as no surprise to investors.
The Fed said it expects to keep rates low for an “extended period” to help strengthen the economy.
“The Fed essentially kicked the can down the road,” said Burt White, chief investment officer at LPL Financial in Boston. Eventually the Fed will have to raise rates, but that might not happen now until early in 2011, White said.
But the Fed’s view of the economy is actually more conservative than data suggests, White said. That’s because it is concerned about European debt problems, White added, noting that a slowdown in Europe’s economy could slow U.S. exports and affect the domestic recovery.
Earnings provided a boost to stocks throughout the day. Cable company Comcast Corp., defense contractor Northrop Grumman Corp. and Dow Chemical Co. were the latest companies to top earnings expectations.
Tim Courtney, chief investment officer at Burns Advisory Group in Oklahoma City, said that improving sales at companies like Dow Chemical prove the economy is healing.
“It indicates consumers may be getting back on their feet,” Courtney said.
The Dow rose 53.28, or 0.5 percent, to 11,045.27. The Standard & Poor’s 500 index rose 7.65, or 0.7 percent, to 1,191.36, while the Nasdaq composite index rose 0.26, or 0.01 percent, to 2,471.73.
Wednesday’s trading was far quieter than on Tuesday, when the market plunged on news that S&P slashed its credit ratings on Greece and Portugal. Greece’s debt was cut to junk status, deepening the country’s credit crisis.
“When you get some of these negative headlines, you will get a short-term negative pullback,” said Brett D’Arcy, chief investment officer at CBIZ Wealth Management Group in San Diego.
European leaders calmed investors’ nerves early Wednesday. They said Greece would receive bailout money in time to cover $11.3 billion in debt payments due on May 19.
German leaders said their country’s portion of a nearly $60 billion bailout for Greece could be approved by the end of next week. Germany, the largest of the 16 countries that use the euro, has been demanding further spending cuts from Athens before it approves the bailout package.
Debt concerns across Europe have sent the euro sharply lower in the last few months. The euro traded in a narrow range against the dollar again on Wednesday, though it did touch its lowest level in a year earlier in the day.
Some analysts believe the debt problems could spread throughout the continent and hurt an economic recovery.
“Greece and Portugal will be Europe’s subprime problem,” said John Lekas, portfolio manager at Leader Capital in Portland, Ore.
After the close of trading, it was announced that Hewlett-Packard Co. was buying smart phone pioneer Palm Inc. for about $1 billion in cash. HP stock, which edged up 3 cents to $53.28 in regular trading, fell back to $52.93. Palm, which had closed down 2 cents at $4.63, shot up to $5.90, a 27 percent surge.
Dow Chemical rose $1.76, or 5.9 percent, to $31.83. Comcast rose 35 cents to $18.81, while Northrop Grumman rose $1.49, or 2.2 percent, to $68.67.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.44 billion shares.
Bond prices dipped after surging higher a day earlier. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.77 percent from 3.69 percent late Tuesday.
Gold and oil both rose.
The Russell 2000 index of smaller companies rose 1.12, or 0.2 percent, to 722.39.
Overseas, Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index dropped 1.2 percent, and France’s CAC-40 fell 1.1 percent. Japan’s Nikkei stock average tumbled 2.6 percent.

Actress Dorothy Provine Dead

Hello Bloggers,

I’ve just had a very difficult phone conversation with the husband of Dorothy Provine, the beautiful actress (“It’s a Mad, Mad, Mad, Mad World”) and Bainbridge resident who died Sunday.

Robert Day and his wife had a beautiful love story, but have been very, very off in their private world on the island.

Look for my story soon.

Anyone who knew Dorothy Provine, please call or e-mail me immediately.

Rachel Pritchett, (360) 475-3783

State: Moneytree Skirted New Limits

By Rachel Pritchett
Moneytree Inc.’s five Kitsap branches will stay open despite a cease-and-desist order that the state slapped on the company this week.
Groundbreaking consumer-protection laws that went into effect in January limit payday-loan companies like Moneytree from making more than eight loans to borrowers in a 12-month period, lessening the chance borrowers will get in over their heads.
Moneytree, the state alleges, has found a way around the new law by allowing borrowers to use and then “rescind” small loans, and not count them against the eight-loan limit.
Moneytree allows the borrower to get one or more small loans, which the borrower then can rescind several days later for the purpose of getting a bigger loan, according to the order from the state Department of Financial Institutions.
The “rescinded” loan is removed from a tracking system, allowing the borrower to have a clean slate.
The state alleged that the practice gives Moneytree an unfair advantage over its competitors.
In its first cease-and-desist order under the new statute, the state ordered Renton-based Moneytree to immediately stop the practice and stick to the eight-loan limit.
Dennis Bassford, a Moneytree founder and now its chief executive, said his company has always allowed borrowers to rescind some of their small loans, and that he believes the practice doesn’t violate the new law.
Moneytree and DFI are “just interpreting the statute differently,” he said.
Moneytree nonetheless has stopped the practice, Bassford said.
Moneytree can appeal the cease-and-desist order, either through the courts or through an administrative law judge.
Bassford declined to say what the company will do, but said he would like the opportunity to argue what’s permissible and about what’s not under the new statute.
All Kitsap stores — one each in Poulsbo, Silverdale and Port Orchard and two in Bremerton — appeared to be doing a brisk business on a midday Friday.
Payday loans are short-term loans designed to bridge the gap between paychecks and provide means for some low- and middle-income workers to get through the month. The loans come with fees that translate to close to 400 percent annual interest rates and sometimes twice that with unlicensed lenders.
Besides the eight-loan limit, the new law limits the total amount borrowers can get in loans to $700 or 30 percent of gross monthly income, whichever is less.
It also sets up a new database to track borrowers loans taken from different lenders.
And if borrowers can’t pay back loans on time, payday lenders now must offer installment plans. The law also prohibits payday lenders from harassing borrowers who can’t pay.

Tuesday Stocks Pull Back on Europe’s Deepening Debut Woes

Dow now at 11,047, down 157 points.

NEW YORK (AP) — U.S. stocks followed European markets sharply lower Tuesday after Standard & Poor’s downgraded the debt of Portugal and Greece. The rating agency’s move intensified investors’ fears that Europe’s debt problems are spreading.
Investors have been on edge for months about Greece’s fiscal crisis even as they’ve sent stocks higher. They have also been worried that Portugal could be the next weak European economy to require help. That has undermined confidence in Europe’s shared currency, the euro.
The dollar climbed by more than 1 percent against the euro, hitting its highest level in about a year.
Tuesday’s downgrades overshadowed the latest series of upbeat earnings reports from U.S. companies.
A setback in the European economic recovery “sends a U.S. recovery back and spreads to emerging markets,” said Eric Thorne, an investment adviser at Bryn Mawr Trust Wealth Management in Bryn Mawr, Pa.
The debt problems have the potential “to have devastating effects,” Thorne said. Though Thorne noted he doesn’t yet predict a worst-case scenario that would put a global recovery completely on hold.
Greece agreed last week to tap a rescue package from the 15 other countries that use the euro and the International Monetary Fund. However, there are now worries that Greece won’t have access to the money before it is forced to make a big debt repayment on May 19.
In midday trading, the Dow Jones industrial average fell 180.70, or 1.6 percent, to 11,024.33. The Standard & Poor’s 500 index fell 24.43, or 2 percent, to 1,187.62, while the Nasdaq composite index dropped 45.40, or 2 percent, to 2,477.55.
Portugal’s main stock index dropped 5.4 percent, while Greece’s plummeted 6 percent. Britain’s FTSE 100 fell 2.6 percent, Germany’s DAX index dropped 2.7 percent, and France’s CAC-40 tumbled 2.8 percent.