S&P Downgrades US Debt

Late Friday, S&P, one of the three major credit rating agencies, downgraded the US debt rating. The other two agencies have continued to assign the highest rating to US debt. S&P cited the deficit reduction in the debt ceiling agreement as too little. Since this is uncharted territory, it’s not clear what will happen when markets open on Monday. Interest rates may rise, but most analysts expect the impact to be small. A volatile session will be likely.

US Stocks Tread Water

U.S. stock indexes have largely been treading water, as Wall Street preps for an onslaught of earnings that will have more than 100 S&P 500 companies reporting in the week ahead. Number wise for benchmark indexes we are right back to where we were two months ago.

The duo’s earnings and others that reported last week proved mixed, with Bank of America disappointing investors by reporting a sharper-than-anticipated drop in profit and naming a new chief financial officer.

On Friday, the major indexes tallied weekly declines, with the Dow Jones Industrial Average finishing its first down week in four.

Off 0.3% from the week-earlier close, the Dow ended at 12,341.83, up 56.68 points, or 0.5%, for the day.

The Standard & Poor’s 500 Index gained 5.16 points, or 0.4%, to finish at 1,319.68, off 0.6% for the week.

The Nasdaq Composite Index rose 4.43 points, or 0.2%, to 2,764.65, down 0.6% from the prior Friday’s close,with the technology-weighted index managing a daily rise even as internet-search giant Google Inc.  offered disappointing results.

Estimated share-weighted earnings for the S&P 500 for the first-quarter 2011 stood at $207.9 billion as of Friday, above the prior week’s $207.7 billion, according to Thomson Reuters analyst Christine Short.

The estimated revenue growth rate for the S&P 500 for the first quarter is 8%, according to Short and Freeman.

The 110 S&P 500 companies slated to release results in the coming week include the first major drug company to report first-quarter earnings, with Eli Lilly and Co. slated to release its results ahead of Monday’s open.

While earnings so far have proved a mixed bag, economic reports have largely bolstered the view of an economy picking up steam, albeit not at a rapid pace.

Investor issues, in the last week or so you’ve seen some strategists revising down GDP (gross domestic product) estimates for the year, and the IMF (International Monetary Fund) did the same thing for the entire world and the U.S., so the market is grappling with that.

And, with the Federal Reserve’s policy of quantitative easing liking coming to an end at the end of June, so long as core inflation is viewed as under control, investors are trying to gauge the impact.

“When the Fed takes a little capital away from the party, investors are wondering just how the economy is going to do on its own as some of the stimulus is taken away,” said Freeman.

Fuel costs have risen in recent weeks as violence in the Middle East and North Africa prompted worries of supply disruptions.

Stocks spike after economic reports

Stocks rose sharply Wednesday after a batch of economic reports offered some hope that the U.S. economy was improving. Investors seized on encouraging readings on the labor market and Americans’ incomes while shrugging off a steep fall in new home sales and manufacturing orders.

The rebound suggests that investors are no longer counting on a rebound in the housing market to move the economy forward.

The upturn marked an abrupt reversal from earlier this week, when an exchange of artillery fire between North and South Korea led nervous investors to sell stocks and dash into gold, Treasurys and other assets often used as hiding spots.

The Dow Jones industrial average rose 134.75, or 1.2 percent, to 11,171.12 in early afternoon trading.

The Standard & Poor’s 500 index gained 15.45, or 1.3 percent, to 1,196.18. The Nasdaq composite index rose 46.89, or 1.9 percent, to 2,541.80.

Safety assets moved lower as investors became more willing to take on risk. The dollar and gold both fell, while Treasury prices edged lower, pushing their yields higher. The yield on the 10-year note inched up to 2.85 percent from 2.77 percent Tuesday.

U.S. stock and bond markets will be closed Thursday for the Thanksgiving holiday. They will reopen for half-day sessions on Friday.

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Numbers Boost Wall Street

Stocks continued a September rally Friday following a sharp jump in orders for manufactured goods last month and better news about the European economy.

The Dow Jones industrial average charged toward 200 points in positive territory for the day and is heading for a fourth week of gains. That would be the longest winning streak since stocks rose to their highest levels of the year in late April. A surprise jump in business confidence in Germany also tempered worries about Europe’s economy, driving stocks higher in Europe and the U.S. Stocks had fallen Thursday following a report that business activity slowed in the 16 countries that used the euro.

Gold prices climbed again, briefly touching $1,300 an ounce, as many investors remained cautious. The dollar fell.

Industrial stocks including General Electric Co., Caterpillar Inc. and United Technologies Corp. gained after the Commerce Department reported that orders for durable goods excluding transportation rose last month at their fastest pace in five months. The increase was double what economists polled by Thomson Reuters had expected.

Stocks have been volatile in recent sessions as investors react to the latest pieces of economic data. Much of the news throughout September has been better than expected, which has pushed major indexes sharply higher during the month after a big sell-off in August.

Capital goods orders from U.S. companies for products like computers and machinery rose sharply in August, reversing a steep drop in July orders. In other corporate news, Nike Inc. jumped after reporting strong results and the largest gain in upcoming orders in a decade.

The Dow Jones industrial average rose 191.82, or 1.8 percent, to 10,853.71 in mid-afternoon trading. The Dow has risen 8.4 percent in September, but is only up 4.1 percent for the year.

The Standard & Poor’s 500 index rose 23.10, or 2.1 percent, to 1,147.93, putting it in position to end a three-day losing streak. The index, used as a benchmark by professional investors, also climbed back above a key technical trading level Friday.

The Nasdaq composite index rose 47.23, or 2 percent, to 2,374.30. It has been the best performer during this month’s rally among the major indexes, jumping 12.3 percent.

The modest rise in sales followed a similar report Thursday that showed sales of previously occupied homes rose in August from depressed levels in July. Sales plummeted in the months after a home buyer tax credit expired at the end of April, but analysts are relatively hopefully sales over the summer might indicate the bottom of the market.

2010 S&P poised for record low

U.S. stocks tumbled Tuesday, with the S&P 500 Index poised for its lowest finish this year, as U.S. consumer confidence fell more than anticipated in June, adding to worries about a global slowdown. This is all part of the global economy we’re worried about, there just isn’t enough growth around to generate steady job growth and after falling nearly 300 points, the Dow Jones was down 248.04 points, or 2.4%, to 9,890.48, with all 30 of its components in the red.

The Dow last fell below 10,000 on June 10, and closed below the psychologically important level the prior day. Current US stock prices and market watch. 

Industrial companies and natural-resource firms were among the hardest hit after the Conference Board revised downward its leading economic index for China. China stock picks that should be on your watchlist. 

The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting the reading to dip slightly to 62.8.

June’s reading marked the biggest drop since February, when the index fell 10 points. The index had risen for three straight months since then.

Both components of the index — one that measures how consumers feel now about the economy, the other that assesses their outlook over the next six months — dropped. The Present Situation Index decreased to 25.5 in June from 29.8 in May. The Expectations Index declined to 71.2 from 84.6.

A key issue is jobs. The Labor Department is expected to report on Friday that employers eliminated 110,000 jobs in June, and the jobless rate is expected to tick up slightly to 9.8 percent, from 9.7 percent in May, according to economists surveyed by Thomson Reuters. That follows a bleak report in May, which showed employers added 431,000 jobs but the vast majority were temporary census positions.

Retailers had a surprisingly solid start to the year as consumers felt better as their stock portfolios rose, but since April, business has slowed. Hastings believes the sluggishness continued into June. He believes sweltering heat in this past month wilted sales of summer’s trendy fashions as consumers stuck to buying the basics like shorts and tank tops to keep cool.

Value Stock Picks

Value stocks can pay off if you pick carefully.  For the average investor hunting for low-priced value stocks can require exhaustive research and countless hours of investigative work. And buyer beware: You could wind up in some dimly lit trading room staring down at a stock that’s deader than last call at a southern baptist ministry convention. Just to define our terms, a low-priced stock is one that sells for $10 or less. We’re not talking about penny stocks, which sell for $1 or less and can be deadlier than the kool-aid at Jonestown.

One attraction of low-priced stocks, of course, is that they are inexpensive. You can pick up 100 shares of a $5 stock for just $500. If you wanted to buy 100 shares of Google, you’d need about $50,000.

But the main allure of low-priced stocks is that they usually aren’t followed by the average Wall Street mope, which means you can sometimes pick up overlooked bargains. Many big institutional investors, for example, won’t touch a stock that sells for less than $10, on the assumption that it’s on its way to zero. And stocks that sell below $5 aren’t marginable, which means you can’t borrow to buy them — and that rule eliminates some investors as well.

Your first job is to get some protection. A stock that sells for $3 can go to zero faster than a drummer can get to a pawnshop. One way to get some muscle: Look for stocks of companies with low or no debt and plenty of cash. High debt is one of the biggest killers of small companies: If rates go up or business goes down, the bank will own your company, and your stock will become toilet paper.

Value investors follow a different path. They believe that the broader stock market always overreacts to news about a company. The Stocknod neural network uses a proprietary software scan that seeks out value stock picks of formerly hot stocks that have stumbled and whose share prices are at bargain levels. Value stock picks with eye popping fundamentals and low price to book ratios.

Value investing has proven to be a successful investment strategy for faithful investors: Buying low PE ratio stocks, low price-to-cash-flow ratio stocks, or low price-to-book ratio stocks that insure positive gains regardless of what the rest of the market is doing. Stocknod’s value stock picks scan consistently uncovers the value stocks poised to outperform. Value stock’s have a conservative risk profile with low portfolio turnover and steady sure fire gains.

If you are looking for value stocks that pay dividends then try the StockNnod neural network scanned stock picks ned st that pinpoints value stocks poised to outperform.

US Stock Market on Shaky Ground

With no quick fix in sight to the sovereign debt issues plaguing Greece and other parts of Europe, the U.S. stock market’s roller coaster ride is unlikely to end in the weeks ahead. Watching Europe is important. They import a lot, and they export a lot, so they have a lot of influence over what’s going on around the world.

On Friday, the major U.S. stock indexes fell sharply for a second consecutive session, yet still managed to halt a weekly losing streak before it hit a third week, as investors tracked the euro’s decline on worries about Europe’s debt crisis, with Wall Street detouring around reports illustrating slow but steady improvement in the U.S. economy.

Making a triple-digit move for an 11th session out of the last 14, the Dow Jones Industrial Average fell 162.79 points, or 1.5%, to finish at 10,620.16, leaving it up 2.3% for the week after a two-week slide.

It’s the global growth story and concerns this is going to dampen the global recovery and increase credit risk. There’s a big question mark around how much damage is this going to do to an economy that is just starting to chug along.

And, while the current earnings season is mostly over, the coming days will bring results from a collection of big names, including results slated for Tuesday from three Dow components — Wal-Mart Stores Inc., Home Depot Inc. and Hewlett-Packard Co.

Twenty-three S&P 500 companies are expected to report earnings in the days ahead, including home-improvement retailer Lowe’s Companies Inc. on Monday, and tax preparation software firm Intuit Inc. on Thursday.

The S&P 500 Index on Friday declined 21.76 points, or 1.9%, to 1,135.68, up 2.2% from the week-ago close.

Results are also on tap from the technology sector, including Agilent Technologies Inc. [A] on Monday and Analog Devices Inc. [ADI] the next day. Computer Sciences Corp. [CSC] reports on Thursday, as does tax preparation software firm Intuit Inc. [INTU] .

Thursday also brings results from video game publisher Gamestop Corp. [GME] , shares of which were hit at the end of the last week after data pointed to a sharp April drop in sales of video games. .

The coming week also features results from retailers, including Abercrombie & Fitch [ANF] on Tuesday and office-supplies retailer Staples Inc. [SPLS] on Thursday.

Muted outlooks from retailers that reported in the past week left some questioning recent signs of strength in consumer spending, even as J.C. Penney Co. [JCP] reported robust gains in sales and profits, a theme echoed by the likes of Macy’s Inc. [M] and Kohl’s Corp. [KSS] .

Blended share-weighted earnings for the S&P 500 for the first quarter stood at $183.3 as of Friday, above the prior week’s $182.4 billion, according to research compiled by Thomson Reuters.

The Nasdaq Composite Index [COMP] on Friday shed 47.51 points, or 2%, to 2,346.85, leaving it 3.6% higher from last Friday’s finish.

Treasury’s Biggest Weekly Loss

Treasury prices posted gains on Friday, but remained headed for a weekly loss as yields on 10-year notes touched the highest levels since June amid heightened concerns about the government’s ability to finance its deficits and as investors turn to seeking out higher yields in other asset classes.

Still, U.S. debt yields, which move inversely to prices, were deemed attractive by some.

Yields on 10-year notes (UST10Y 3.86, -0.02, -0.46%)  fell 2 basis points, or 0.02%, to 3.86%. Last June, they peaked at 3.94%, which was the highest since October 2008, when the credit crisis really took off and sent yields to all-time lows.

Yields on 2-year notes (UST2YR 1.06, -0.02, -1.77%)  declined 2 basis points to 1.06%, after closing at the highest rate this year.

The week’s losses came as the successive Treasury auctions received poor demand from investors, coming at higher-than anticipated yields and with smaller proportions of the auctions being bought by a group of investors that includes foreign central banks. See previous column on auctions.

Providing some support for bonds, analysts pointed to a lack of note or bond auctions next week and the potential for month-end buying.

Benchmark bond indexes, at the end of every month, add to the index any debt that was sold during the period, which usually extended the duration of the index. Duration is a measure of price sensitivity to a change in interest rates, and is partly determined by maturity. Fund managers who try to match their holdings to benchmark indexes therefore buy recently-issued debt at month end.

That followed a government report which said the U.S. economy grew at a revised 5.6% pace in the fourth quarter, slower than reported earlier.

Benchmark 10-year securities are still on pace for the biggest weekly jump in yields since December.

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Ring of Fire

U.S. stock investors don’t know where to take cover with the constant market swings. Reeling from four straight weekly losses, are entering the coming week’s market torn between confidence in the global economic recovery and fear that foreign governments’ actions will bring the rebound to a sudden halt.

Investors have looked at the two sides and bet on safety, ultimately selling stocks to buy U.S. dollars, Gold and Treasury’s.

There is also the dark cloud looming that China will start to slow growth in its economy, and indirectly, other economies that have benefited from its appetite for energy and basic materials.

And at the same time, investors have grown concerned that high government debt levels in Greece, Spain and Portugal will lead to the type of spiraling financial crisis that froze credit markets two years ago.

The struggle between these opposing viewpoints has contributed to some heart-stopping swings in the last week.

The Dow made triple-digit moves in three of the last five trading sessions, tacking on 230 points by Tuesday’s close. The blue-chip average then gave back the entire advance, and then some, ending 0.6% lower for the week.

Along the way, the measure staged a late, sharp reversal Friday that brought the Dow from a 167-point loss to a 10-point gain by the finish, and a return above the key 10,000 level.

The S&P 500ended the week 0.7% lower at 1,066, with its weekly loss similarly moderated by solid gains early in the week.

Commodities tumbled last week, with their value as an alternative asset to paper currencies eroded by the dollar’s gains. Oil futures ended the week more than 1% lower, while gold futures lost nearly 2%.

Still, the index’s track record is looking tattered over a slightly longer period: It hadn’t posted four straight weekly declines since March 2009.

Investors face plenty of economic and corporate data in next few weeks that could sway sentiment either way.

As the week starts, investors may respond to press statements from the weekend’s G7 meeting of finance ministers in Canada.

Any deterioration in the financial situation in southern European nations also could overshadow U.S. events.

Stocks ZigZag to Start New Year

Stocks zigzagged early Monday as investors awaited on earnings from Alcoa latest stock price,for more signs that the global economy is healing.

Alcoa’s stock news will give investors one of the first looks at how companies fared in the final quarter of 2009.

Investors also looked to a report that Chinese exports jumped by nearly 18 percent in December. The bigger-than-expected increase follows 13 straight months of declines. The increase in exports has added confidence to investors who believe a global economic rebound is well under way.

Outside of unemployment rates and sub-par fundamentals, most indications are that the global enonomy is healing and 2010 should be a pivot year for the international markets.

Alcoa kicks off the flood of reports that will provide insight into how fast the economy is recovering. Economists polled by Thomson Reuters predict Alcoa earned 6 cents per share in the fourth quarter.

In midmorning trading, the Dow Jones industrial average fell 2.72, or less than 0.1 percent, to 10,615.47. The Standard & Poor’s 500 index rose 1.05, or 0.1 percent, to 1,146.03, while the Nasdaq composite index fell 2.41, or 0.1 percent, to 2,314.76.

The upbeat report from China has also bolstered commodity prices. A rise in production would push demand for resources higher.

Gold and oil are both sharply higher. Oil & Gas rose 43 cents to $83.18 a barrel, while gold is up $16.80 to $1,155.70 an ounce.

The dollar has also declined, adding to the strength of commodities.

Wall Street’s rise during the first week of the year is a promising sign for things to come. The S&P 500 has posted full-year gains 31 of the last 36 times the index rose during the first week of the year, according to the Stock Trader’s Almanac.

Meanwhile, bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.80 percent from 3.84 percent late Friday. The dollar fell against other major currencies.

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