DailyFinance.comhttp://www.dailyfinance.comDailyFinance.comhttp://o.aolcdn.com/os/df/2013/img/2-dailyfinance_logo_m.pngDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Face-Off on Stocks: Springtime Picks and Pans [Video]http://www.dailyfinance.com/2011/03/09/face-off-on-stocks-springtime-picks-and-pans-video/http://www.dailyfinance.com/2011/03/09/face-off-on-stocks-springtime-picks-and-pans-video/http://www.dailyfinance.com/2011/03/09/face-off-on-stocks-springtime-picks-and-pans-video/#commentsFiled under: , , , ,

It may not feel like it after one of the worst winters in memory, but spring is just around the corner, meaning it's time to start thinking about spring cleaning -- and stocks that benefit from all that work needing to be done in and around the house.

Sherwin-Williams (SHW) is the biggest paint and coatings company in the U.S. and one of the largest in the world. The downturn in the housing and construction markets weighed on its shares during the worst of the recession, but they held up much better than the broader market and -- better yet -- have since come roaring back.

The stock is up 25% in the past 52 weeks, beating the S&P 500 ($INX) by 9 percentage points. However, the shares are down for the year-to-date and the relative valuation could be more compelling. Shares currently fetch a premium to their own five-year average on a trailing earnings basis, according to data from Thomson Reuters, and are at fair value by forward earnings. There's also the concern that rising oil and other raw materials costs could pressure margins in the quarters ahead.

Toro's Stock is Up 30% Over the Past Year

Toro (TTC) is well-known for its seemingly ubiquitous lawn mowers but the company is also a major player in commercial landscaping and irrigation systems for vast expanses of green. (Think ball parks and golf courses.) On the plus side, the stock is up more than 30% in the last year, sports a dividend yield of nearly 2% and enjoys a high-quality return on equity of nearly 35%.

On the downside, the relative valuation is looking a bit stretched, seeing as the stock trades at pretty significant premiums to its own five-year average on both a trailing and forward earnings basis, according to Thomson Reuters data. Furthermore, the company could be facing higher input costs as commodity prices continue to soar. Whether the company can grow into its valuation during the spring selling season remains to be seen.

Home Depot Intends to Raise Dividend Every Year

Home Depot (HD), a component of the Dow Jones Industrial Average ($INDU), appears to have put the worst of the downturns in housing and construction behind. After six quarters of recovery following years of sales declines and margin pressure, the nation's biggest home improvement retailer looks positioned for continued modest sales growth and operating margin expansion.

The stock's up about 18% in the last 52 weeks, besting the broader market by just two percentage points and the relative valuation looks mixed. Shares trade at a premium to their own five-year average by trailing earnings but offer a slight discount when looking at forward earnings. On the other hand, the cash flow story appears compelling. The dividend yields 2.7% and management is committed to keeping the payouts coming. Home Depot intends to raise its dividend every year with a long-term payout ratio targeted at 40%.

For the bull and bear cases on Sherwin-Williams, Toro and Home Depot, see Face-Off on Stocks above.


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]]>dividend investingDividendInvestingdividendsDJIAFace-OfffeaturedvideoHDHome DepotHomeDepothutheesingINDUinvestingInxnikhil hutheesingSherwin-WilliamsSHWstock picks for springStockPicksStockPicksForSpringstocksstocks todayToroTTCDan BurrowsWed, 09 Mar 2011 14:00:00 ESTDow Jumps 124 Points as Oil Dips and Bank Stocks Rallyhttp://www.dailyfinance.com/2011/03/08/dow-jumps-125-points-oil-dips-bank-stocks-rally/http://www.dailyfinance.com/2011/03/08/dow-jumps-125-points-oil-dips-bank-stocks-rally/http://www.dailyfinance.com/2011/03/08/dow-jumps-125-points-oil-dips-bank-stocks-rally/#commentsFiled under: , , , , , , , ,

Stocks rose sharply Tuesday with the Dow Jones Industrial Average enjoying a triple-digit gain after oil prices eased and bank shares rallied on the possibility of further dividend payouts and share buybacks.

The Dow ($INDU) added 124 points, or 1%, to close at 12,214. The blue-chip index was up as much as 161 points in intraday trading before pulling back. The broader S&P 500 ($INX) rose 12 points, or 0.9%, to finish at 1,322. The tech-heavy Nasdaq Composite ($COMPX) gained 20 points, or 0.7%, to close at 2,766.

Oil prices dropped Tuesday after setting a 29-month high in the prior session amid reports that OPEC could step up production to make up for supply disruptions in Libya. Talk that the U.S. could tap its Strategic Petroleum Reserve and rumors that Libyan ruler Moammar Gadhafi may be looking for a way to step down also helped oil prices cool off. Benchmark West Texas Intermediate crude futures fell 42 cents to settle at $105.02 a barrel on the Comex division of the New York Mercantile Exchange (CME).

Bank stocks led the market higher after Bank of America (BAC), the nation's biggest bank by assets and a Dow component, said it would return more money to shareholders through share buybacks and dividends. Chief Executive Brian Moynihan told investors that BofA can earn between $35 billion and $40 billion a year in pretax earnings when the business normalizes and that he would seek to return "every dollar" of capital to shareholders. The CEO made the remarks at the bank's first investor day conference since 2007.

The allure of dividends and buybacks helped BofA gain 4.8% on the day. Dow financial stocks JPMorgan Chase (JPM) and American Express (AXP) also had robust gains, and financials were the best-performing sector of the S&P 500 Tuesday, rising 2%. Energy was the worst-performer, closing down 0.9% on the drop in oil prices.

The rush back to riskier assets hurt bonds and gold prices Tuesday. The yield on the benchmark 10-year Treasury note, which moves in opposite direction of price, rose to 3.54% from a prior close of 3.5% Gold futures fell $7.30, or 0.5%, to settle at $1427.20 an ounce in NYMEX floor trading.

In other corporate news, Brown-Forman (BF.B) said third-quarter earnings rose 30% to beat Wall Street's estimates, helped by stronger sales of Jack Daniel's and el Jimador brands, as well as overseas strength. Additionally, the Louisville-based company, also known for making Southern Comfort, raised its full-year outlook.

Safeway (SWY), the nation's second-largest supermarket operator after Kroger (KR), issued a 2011 earnings outlook of $1.60 to $1.80 a share, which was in line with analysts' average estimate. The company also said it would pay down $600 million in U.S. debt.


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]]>American ExpressAmericanExpressAXPBACbank dividendsBank of Americabank stocksBankDividendsBankOfAmericaBankStocksCMECOMPXDJIAfinancial stocksFinancialStocksgoldgold pricesGoldPricesINDUinvestingInxJ.P. Morgan ChaseJ.p.MorganChaseJPMKRmarketoiloil pricesOilPricesSafewaystock marketStockMarketstocksStocksTodaySWYDan BurrowsTue, 08 Mar 2011 16:15:00 ESTStocks Fall as Oil Prices Rise and Tech Weighshttp://www.dailyfinance.com/2011/03/07/stocks-fall-as-oil-prices-rise-and-tech-weighs/http://www.dailyfinance.com/2011/03/07/stocks-fall-as-oil-prices-rise-and-tech-weighs/http://www.dailyfinance.com/2011/03/07/stocks-fall-as-oil-prices-rise-and-tech-weighs/#commentsFiled under: , , , , , , , , ,

Stocks fell sharply again Monday after increasing violence in Libya caused oil prices to trade near $107 a barrel at one point during the session and an analyst downgrade weighed on the technology sector.

The Dow Jones Industrial Average ($INDU) lost 80 points, or 0.7%, to close at 12,090. The blue-chip index was off as much as 128 points during the session before paring its loss. The tech-heavy Nasdaq Composite ($COMPX) fell 39 points, or 1.4%, to finish at 2,746. The broader S&P 500 ($INX) dropped 11 points, or 0.8%, to close at 1,310, hurt by tech stocks and the materials sector.

Chip-maker Intel (INTC) was among the Dow's worst performing components after analysts at Wells Fargo (WFC) cut its rating on the semiconductor sector to market weight from overweight. Tech stalwarts International Business Machines (IBM) and Cisco Systems (CSCO) also weighed on the blue chips.

Oils Approaches $107 a Barrel

Escalating violence in North Africa sent oil prices close to $107 a barrel at one point in Monday trading. Western allies are weighing military options against Libya, including a no-fly zone over the country, after forces loyal to Moammar Gadhafi unleashed air assaults against rebels fighting his regime.

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Benchmark crude oil futures rose $1.02, or 1%, to settle at $105.44 on the Comex division of the New York Mercantile Exchange (CME) -- a closing level not seen for 29 months. The contract traded as high as $106.95 earlier in the day. Supply disruptions in Libya and fear that unrest could spread to other oil producers in North Africa and the Middle East have sent oil prices up more than 20% in a month.

Sustained high oil prices threaten corporate profit margins and consumer spending. The International Air Transport Association recently cut its profit outlook for airlines this year to $8.6 billion, down 46% from last year. As for pain at the pump, a gallon of regular gas climbed to $3.503 on Sunday -- nearly 38 cents higher than a month ago and up 15 cents in a week, according to AAA, which posts gas prices daily.

Safety in Gold

Traders also fled stocks for the perceived safety of gold. Gold futures rose $5.90, or 0.4%, to settle at $1,434.50 an ounce on the Comex. The yellow metal hit an intraday high of $1,445.70 an ounce. Last week the precious metal set a new record close of $1,437.70 an ounce, not adjusted for inflation.

In other corporate news, shares of Dow component Boeing (BA) declined after competitor Airbus raised its demand forecast for the Asia-Pacific region. In a rare patch of green Monday, shares in Western Digital (WDC) rallied sharply after the world's largest maker of hard drives is buying Hitachi Global Storage Technologies, the third largest, for $4.3 billion in cash and stock.


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]]>BABoeingCMECOMPXCSCODJIAeconomygoldgold pricesGoldPricesIBMINDUIntcIntelinvestingINXLibyamarketoiloil pricesOilPricesstock marketStockMarketstocksStocksTodayWDCWFCDan BurrowsMon, 07 Mar 2011 16:15:00 ESTAll Eyes Remain on Oil Prices and Mideast Instability [Video]http://www.dailyfinance.com/2011/03/07/investors-focus-on-oil-prices-mideast-instability/http://www.dailyfinance.com/2011/03/07/investors-focus-on-oil-prices-mideast-instability/http://www.dailyfinance.com/2011/03/07/investors-focus-on-oil-prices-mideast-instability/#commentsFiled under: , , , ,

Last week's heavy stream of economic news was largely encouraging, and yet stocks barely eked out gains after oil prices spiked to levels not seen in more than two-and-a-half years. With a relatively light slate of economic data scheduled this week, oil prices and political instability could play an even larger role in the trading sessions ahead, says Kenny Polcari, managing director at ICAP Corporates.

"There's not a whole lot of heavy macro data, so what I think you're going to see is much more concentration on the geopolitical," the veteran New York Stock Exchange (NYX) trader says. "What's going on in the Mideast, what's going on with oil and food prices, I think that's what people are going to be looking at this week."

Thursday brings the regular weekly initial jobless claims numbers, and on Friday traders will get monthly retail sales and the Reuters/University of Michigan consumer sentiment index. But it's unlikely that those figures could be bigger catalysts than last week's spate of encouraging economic news, Polcari says.

Gasoline prices in Key West, Fla.

After all, the Institute for Supply Management indexes were strong, factory orders accelerated sharply, the unemployment rate dropped to a two-year low -- and yet the equity markets managed just the narrowest of gains. The Dow Jones Industrial Average ($INDU) rose 0.3% on the week, while the S&P 500 ($INX) and Nasdaq Composite ($COMPX) each inched up 0.1%.

That's because oil prices nearly overshadowed everything positive -- and could continue to do so for some time. Benchmark crude oil futures traded on the Comex division of the New York Mercantile Exchange (CME) rose nearly 7% last week to close above $104 a barrel. With the Federal Reserve's second round of quantitative easing set to end in June, Wall Street is concerned about the economy's ability to stand on its own, especially if energy prices don't cool off.

"The numbers from last week were very good, and so going into this week you get the sense that the recovery is really happening and people are feeling good," says Polcari. "But I think what you really have to start paying attention to is [the recovery] really going to be sustainable? Can it really be sustained with oil at $100-plus a barrel?"

And, lest we forget, the European debt crisis hasn't gone away, turmoil in Libya continues to churn and worries abound across the Middle East, Polcari says.

"On Friday, we've got this scheduled protest in Saudi Arabia called a Day of Rage," says Polcari. "There is very high unemployment in that country among young educated Saudi men and women, and so it's something they are very concerned about."


For more on Polcari's take from the floor of the NYSE, see the video above.


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]]>consumer sentimentConsumerSentimentDJIAeconomyenergyhutheesingICAPinvestingKenny PolcariKennyPolcariLibyamarketmarket outlookMarketOutlookMiddle EastMiddleEastNorth AfricaNorthAfricaoiloil pricesOilPricesretail salesRetailSalesstocksStocksTodayDan BurrowsMon, 07 Mar 2011 06:30:00 ESTUnemployment Rate Falls, but Stocks Slip on Oilhttp://www.dailyfinance.com/2011/03/04/unemployment-rate-falls-but-stocks-slip-on-oil/http://www.dailyfinance.com/2011/03/04/unemployment-rate-falls-but-stocks-slip-on-oil/http://www.dailyfinance.com/2011/03/04/unemployment-rate-falls-but-stocks-slip-on-oil/#commentsFiled under: , , , ,

Stocks fell sharply Friday after crude oil prices topped $104 a barrel, overshadowing an encouraging drop in the unemployment rate.

The Dow Jones Industrial Average ($INDU) fell 88 points, or 0.7%, to close at 12,170. The blue-chip index was off as much as 179 points during the session before paring its losses toward the close.

The broader S&P 500 ($INX) lost 10 points, or 0.7%, to finish at 1,321. The tech-heavy Nasdaq Composite ($COMPX) shed 14 points, or 0.5%, to close at 2,785.

For the week, the Dow eked out a gain of 0.3%. The S&P 500 and Nasdaq each added about 0.1% on the week.

A day after logging their best session in three months the equity markets keyed once again on a spike in oil prices. Benchmark crude oil futures traded on the Comex division of the New York Mercantile (CME) rose $2.51, or 2.5%, to settle at $104.42 a barrel, boosted by continuing tension in North Africa and the Middle East. The April crude oil contract shot up 6.7% on the week.

Surprise Drop in Unemployment Rate

Rising energy prices put a damper on February's jobs report, in which the unemployment rate logged a surprise drop to a two-year low of 8.9% from 9%. Economists, on average, expected the jobless rate to tick up to 9.1%. The economy added a net 192,000 jobs last month, while private employers added 222,000 jobs, the most since April.

But Friday's positive jobs data was largely reflected in Thursday's market action, when the Dow jumped nearly 200 points on better-than-expected initial jobless claims, says Kenny Polcari, managing director an interdealer broker ICAP Corporates.

"[The jobs data] were all very positive numbers, but we had a very dramatic move up yesterday," the veteran New York Stock Exchange (NYX) trader says. "Yesterday's macro numbers were perceived as good. Traders were talking it up all week. So today it was almost a sell-the-news situation."

The threat of sustained higher energy costs to the economic expansion are also weighing on traders' minds, Polcari says. As much as the trend in hiring might point to a self-sustaining recovery, Wall Street is mindful of what rising food and gas prices could do consumer spending and corporate profit margins.

"Oil's up a couple bucks-and-change today," Polcari says. "It doesn't give me a warm and fuzzy feeling that we're in a self-sustaining recovery."

For more on Polcari's take from the floor of the NYSE, see the video above.


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]]>CMECOMPXDJIAeconomyhutheesingICAPINDUinvestingInxKenny PolcariKennyPolcariLibyamarketsnikhil hutheesingNYXoiloil pricesOilPricesstocksStocksTodayunemploymentunemployment rateUnemploymentRateDan BurrowsFri, 04 Mar 2011 16:20:00 ESTFace-Off on Stocks: Exxon Mobil, Chevron, Barrick Gold [Video]http://www.dailyfinance.com/2011/03/01/face-off-on-stocks-exxon-mobil-chevron-barrick-gold-video/http://www.dailyfinance.com/2011/03/01/face-off-on-stocks-exxon-mobil-chevron-barrick-gold-video/http://www.dailyfinance.com/2011/03/01/face-off-on-stocks-exxon-mobil-chevron-barrick-gold-video/#commentsFiled under: , , , ,

Turmoil in the Middle East and North Africa has traders worried about disruptions to the global oil supply and geopolitical instability. That fear has oil prices flirting with $100 a barrel on the Comex division of the New York Mercantile Exchange (NYX), a level not seen in more than two-and-a-half years. Gold futures, meanwhile, are likewise back on an uptrend. The yellow metal, sought as a refuge against inflation and financial instability, are back near nominal all-time highs of around $1,430 an ounce in Comex trading.

Oil and gold stocks have caught a commensurate bid as violence has spread in Libya, Africa's third-largest oil producer, and could continue to gain as anxiety mounts that upheaval could spread to Algeria, Bahrain and Saudi Arabia. Whether the oil and gold trade is already played or oil and gold stocks still look attractive at current levels is a matter of debate.

Exxon Mobil (XOM), the integrated energy giant and component of the Dow Jones Industrial Average ($INDU), is as blue of a blue chip as they come. Shares are up more than 16% for the year-to-date vs. 4% for the S&P 500 ($INX) and have popped nearly 8% since the Libya crisis began.

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That run has the valuation looking a bit stretched. The stock currently trades at premiums to its own five-year average on both a trailing and forward earnings basis, according to data from Thomson Reuters. Of course if oil prices continue to rise, analysts' forward estimates will likely go higher, making the forward price/earnings (P/E) multiple look more compelling.

Chevron (CVX), the other integrated energy giant in the Dow, has also had a nice run. Shares are up more than 13% in 2011 and have jumped 11% since news from Libya caused oil prices to soar. Some analysts believe Chevron's superior upstream portfolio position and financial position warrant a modest premium for the stock.

Unfortunately, bears can say the stock may have already reached that modest premium on a relative valuation basis. Shares are currently trading at fair value to their own five-year average based on forward earnings and stand at a premium to trailing P/E. Of course bulls can point to a dividend that still yields a generous 2.8% as an indication the stock has hardly gone too high.

Barrick Gold Corp. (ABX), the world's largest gold miner, has seen its stock languish in 2011 as gold fever has been supplanted by a mania for silver and other metals, among other commodities. Shares were off as much as 13% by late January before gold prices rebounded. The stock has soared about 14% since then, putting it up about 2% for the year. With gold back at near-record levels, that run could continue apace.

More appealing is that shares still look like a bargain by relative valuation. The stock trades at a significant discount to its own five-year average on both a trailing and forward earnings basis, according to Thomson Reuters data. And then there's the dividend, which yields 0.9%. Dividends are one advantage of owning gold stocks rather than the metal itself. Gold, after all, offers no payouts.

For more on the bull and bear cases on Exxon Mobil, Chevron and Barrick Gold, see Face-off on Stocks above.


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]]>ABXBarrick Gold Corp.BarrickGoldCorp.CChevronCVXDJIAExxon MobilExxonMobilFace-Off on StocksFace-offOnStocksfeatuerdvideofeaturedvideogold pricesGoldPriceshutheesingINDUinvestingINXLibyaLibya stock picksLibyaStockPicksmiddle east stock picksMiddleEastStockPicksnikhil hutheesingNYXoil pricesOilPricesstock picksStockPicksstocksStocksTodayvideoXOMDan BurrowsTue, 01 Mar 2011 17:57:00 ESTStocks Plunge as Oil Nears $100 a Barrel and Gold Hits Record Highhttp://www.dailyfinance.com/2011/03/01/stocks-plunge-oil-near-100-a-barrel-gold-hits-record/http://www.dailyfinance.com/2011/03/01/stocks-plunge-oil-near-100-a-barrel-gold-hits-record/http://www.dailyfinance.com/2011/03/01/stocks-plunge-oil-near-100-a-barrel-gold-hits-record/#commentsFiled under: , , , , ,

Stocks fell sharply Tuesday with the Dow Jones Industrial Average suffering a triple-digit loss after oil prices once again flirted with $100 a barrel on fear that upheaval in North Africa and the Middle East could disrupt supplies.

The first trading day of the month is usually good to equities, but after a two-day respite, stocks went back back to suffering broad-based declines. The blue-chip Dow ($INDU) lost 168 points, or 1.4%, to close at 12,058. The broader S&P 500 ($INX) dropped 21 points, or 1.6%, to finish at 1,306. The tech-heavy Nasdaq Composite ($COMPX) fell 45 points, or 1.6%, to close at 2,737.

Federal Reserve Chairman Ben Bernanke in a semi-annual report to Congress warned that sustained high oil prices could dent the recovery -- but that was hardly news to traders who were already discounting such risks. The Dow, after all, lost 2.1% last week. If there was any pattern to Tuesday's action it was that oil prices resumed their upward trend after stabilizing over the prior two sessions -- and that, in turn, spooked equity investors.

Benchmark crude oil futures traded on the Comex division of the New York Mercantile Exchange (CME) rose $2.66, or 2.7%, to settle at $99.63 a barrel -- their highest closing level since September 2008.

Not All News Was Bad

In addition to fueling higher oil prices, turmoil in Libya has added to geopolitical uncertainty, which has led to a rebound in gold prices. Gold traded on the Comex rose $21.30, or 1.5%, to settle at $1,431 an ounce -- a new record when not adjusted for inflation.

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The sharp rise in oil prices overshadowed some encouraging corporate and economic news. General Motors (GM) racked up another impressive month of sales in February, as consumers snapped up new GM models despite soaring prices for gasoline. The Detroit-based automaker reported Tuesday that year-over year sales in February rose 46% for a total 207,028, exceeding analyst estimates, as well as GM's own expectations.

Rival Ford Motor (F) reported Tuesday that its February sales rose 14% compared to a year ago, in part due to strong sales of the revamped Ford Explorer sports-utility vehicle, which debuted in late 2010. In all, auto sales in February ran at the strongest annual pace since the federal "cash-for-clunkers" program.

In economic news, activity at U.S. manufacturers expanded last month at its fastest pace in seven years. The Institute for Supply Management said its manufacturing index rose to 61.4 from 60.8 the prior month. The gauge easily beat economists' average outlook, which stood at 60.5 for February. Alas, autos and manufacturers could stop the bleeding among stocks inflicted by oil.


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]]>auto salesAutoSalesBernankecar salesCarSalesCMECOMPXDJIADoweconomyFFordGeneral MotorsGeneralMotorsGMgoldgold all-time highgold pricesgold record highGoldAll-timeHighGoldPricesGoldRecordHighINDUinvestingInxISMmanufacturingmarketoiloil pricesOilPricesstocksStocksTodayvehicle salesVehicleSalesDan BurrowsTue, 01 Mar 2011 16:20:00 ESTThis Week's Market: 'Time to Be a Little Careful' [Video]http://www.dailyfinance.com/2011/02/28/libya-economic-reports-uncertain-stock-market/http://www.dailyfinance.com/2011/02/28/libya-economic-reports-uncertain-stock-market/http://www.dailyfinance.com/2011/02/28/libya-economic-reports-uncertain-stock-market/#commentsFiled under: , , , , ,

The market suffered its biggest swoon since August last week as Libya descended into chaos and oil prices hit highs not seen for more than two-and-a-half years. With the geopolitical landscape thrown into doubt for the foreseeable future, don't be surprised if stocks come under further selling pressure in the days ahead, says Teddy Weisberg, founder and president of Seaport Securities.

After dropping 2.1% in four sessions, the Dow Jones Industrial Average ($INDU) stands just 130 points above the psychologically key 12,000 level. A heavy week of economic news and data coupled with increasing anxiety over the Middle East could have investors primed to protect gains.

Caution sign"There are yellow caution flags flying everywhere right now," Weisberg says. "The investor needs to be careful here because the one thing the markets cannot deal with are unknowns."

Oil prices stabilized Friday after futures jumped nearly 14% in a week, but crude remains close to $100 a barrel on the Comex division of the New York Mercantile Exchange (CME). With every $10 jump in oil prices knocking about 0.2% off U.S. GDP, Wall Street is rightfully worried about future corporate earnings.

"Vulnerable to a Sell-Off"

Also coming traders' way in the sessions ahead is a dump of data. In addition to action in the energy markets, Wall Street will contend with reports on personal income and spending, the ISM manufacturing and nonmanufacturing indexes, pending home sales, light-vehicle sales, Federal Reserve Chairman Ben Bernanke's semi-annual report to congress and -- the biggest release of them all -- the monthly employment report on Friday.

"It's probably a time to be a little careful," says Weisberg. "We've had such a big move in the market, and the market is vulnerable to a sell-off. And those people who have been in the market have been looking for an excuse to take some money off the table."

For more on Weisberg's view from the floor of the New York Stock Exchange, see the video above.

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]]>BernankeCmeDJIAeconomyhutheesingINDUinvestingLibyamarketmarket outlookMarketOutlookNikhil Hutheesingoiloil pricesOilPricesSeaport SecuritiesSeaportSecuritiesstocksStocksTodayTeddy WeisbergTeddyWeisbergunemploymentunemployment rateUnemploymentRateDan BurrowsMon, 28 Feb 2011 06:30:00 ESTStocks Snap Losing Streak as Oil Prices Stabilize [Video]http://www.dailyfinance.com/2011/02/25/stocks-snap-losing-streak-as-oil-prices-stabilize-video/http://www.dailyfinance.com/2011/02/25/stocks-snap-losing-streak-as-oil-prices-stabilize-video/http://www.dailyfinance.com/2011/02/25/stocks-snap-losing-streak-as-oil-prices-stabilize-video/#commentsFiled under: , , , , ,

Stocks snapped a three-day losing streak Friday to close broadly higher, helped by stabilizing oil prices and some end-of-the-month bargain hunting.

Global equity markets sold of sharply this week as violence in Libya, Africa's third-largest oil producer and a member of OPEC, caused oil prices to hit levels not seen in more than two-and-a-half years.

The Dow Jones Industrial Average ($INDU) rose 62 points, or 0.5%, to close at 12,130. Prior to Friday's session the blue-chip index lost more than 300 points in three days. It finished the holiday-shortened week down 2.1%.

The broader S&P 500 ($INX) closed Friday up 14 points, or 1.1%, at 1,320. The tech-heavy Nasdaq Composite ($COMPX) added 43 points, or 1.6%, to finish at 2,781. For the week, the S&P 500 and Nasdaq lost 1.7% and 1.9%, respectively.

Stocks suffered their worst week of the year after crude oil futures spiked nearly 14% on concern that civil war in Libya could disrupt supply or even spill over into Algeria, Bahrain and Saudi Arabia. Benchmark crude oil traded on the Comex division of the New York Mercantile Exchange briefly crossed $100 a barrel this week but by Friday the rally lost steam, as the April contract rose 60 cents, or 0.6%, to settle at $97.88 a barrel.

Economic news was mixed, as a surprise downward revision to fourth-quarter GDP was offset by consumer sentiment hitting a three-year high.

Friday's action was likely dictated by technically oversold conditions heading into the last trading day of the month on Monday, says Alan Valdez, director of trading operations at DME Securities. Beyond that the market remains wary of what higher oil prices could mean for consumer spending and the pace of economic growth, the veteran New York Stock Exchange (NYX) trader says.

"You see program trading taking the market back up today on light volume, but remember: Every penny that oil goes up at the gasoline pump, it's $400 million out of consumer spending," says Valdez. "That's $400 million not going to Walmart (WMT) or 7-Eleven. It's a huge drag on the economy."

Speaking of Walmart, Valdez says the retailer's disappointing fourth-quarter report earlier this week and Friday's downward revision to GDP suggest that consumers aren't spending as much as Wall Street had hoped -- regardless of what the consumer sentiment survey showed.

"For traders, the real survey of consumer sentiment is Walmart," he says. "About 150 million people a week shop at Walmart. And their sales were a little light their, and guidance was a little light."

For more on Valdez's view from the floor of the NYSE, see the video above.


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]]>Alan ValdezAlanValdezCOMPXDJIADME SecuritiesDmeSecuritieshutheesingINDUInxLibyamarketNikhil HutheesingNYSENYXoiloil pricesOilPricesstock market todayStockMarketTodaystocksStocksTodayWal StreetWal-MartWalStreetWMTDan BurrowsFri, 25 Feb 2011 16:20:00 ESTWill Mideast Turmoil Hoist Gold to a New High?http://www.dailyfinance.com/2011/02/24/will-mideast-turmoil-hoist-gold-to-a-new-high/http://www.dailyfinance.com/2011/02/24/will-mideast-turmoil-hoist-gold-to-a-new-high/http://www.dailyfinance.com/2011/02/24/will-mideast-turmoil-hoist-gold-to-a-new-high/#commentsFiled under: , ,

Gold bugs love bad news, and civil war in Libya, Africa's third-largest oil producer, couldn't have come at a better time. The pickup in the global economy and specter of central bank rate hikes helped knock the yellow metal off its lofty pedestal early in the year. Gold futures traded on the Comex division of the New York Mercantile Exchange (CME) lost more than a hundred bucks an ounce in January, and the precious metal looked like it was going into a full-blown correction.

As we said back when gold prices were on the way down, what a difference a month makes -- and now the same holds true on the way back up. Uprisings in Tunisia, Egypt and Libya -- and the potential for unrest in Bahrain, Algeria and (gulp) Saudi Arabia -- have pushed the price of gold back within striking distance of nominal all-time highs.

With oil bouncing around near $100 a barrel in New York trading and the Dow Jones Industrial Average ($INDU) off more than 350 points in just three days, it appears that the flight to safety in gold is back on.

Comex gold has rallied about 6% in February so far, closing at more than $1,415 an ounce Thursday. That's the highest gold prices have been in seven weeks. Tack on another $15 to $16 an ounce -- or a bit more than a 1% gain -- and gold will be back at the all-time record levels set back in early December (not adjusted for inflation, that is). See the chart below.



Gold prices were essentially unchanged Thursday, putting a run on the record on hold, but it may be just a matter of time if market sentiment is any indicator. Recall that sentiment is a contrarian indicator: When market participants are bearish, the next move in prices tends to be bullish (the idea being that all the sellers have sold).

It turns out that sentiment among professional gold traders looking to time the market is pretty dour -- and they appear to be sitting on lots of cash, according to the Hulbert Gold Newsletter Sentiment Index. Traders recommend allocating just about 45% of a portfolio to gold at these levels, according the the index. That means more than 50% should be sitting in cash, waiting to pounce.

That suggests that a lot of buying power is still sitting on the sidelines of this most recent gold rush.


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]]>all time record gold priceAllTimeRecordGoldPriceCMEDJIAgoldgold pricesGoldPricesInduLibya and goldLibya uprisingmideast protestsoil pricesrecord gold pricesRecordGoldPricesstocksstocks todayStocksTodayDan BurrowsThu, 24 Feb 2011 15:00:00 ESTStocks Fall and Oil Gains for Second Day on Libyan Violencehttp://www.dailyfinance.com/2011/02/23/stocks-fall-oil-gains-libyan-violence/http://www.dailyfinance.com/2011/02/23/stocks-fall-oil-gains-libyan-violence/http://www.dailyfinance.com/2011/02/23/stocks-fall-oil-gains-libyan-violence/#commentsFiled under: , , , , , ,

Stocks fell for a second straight day Wednesday, and oil prices briefly crossed the $100-a-barrel mark after violence escalated in Libya and tech bellwether Hewlett-Packard (HPQ) delivered a disappointing sales outlook.

The Dow Jones Industrial Average ($INDU) lost 107 points, or 0.9%, to close at 12,106. The blue-chip index was off as much as 149 points in midday trading before paring its loss. The broader S&P 500 ($INX) fell 8 points, or 0.6%, to finish at 1,307. The tech-heavy Nasdaq Composite ($COMPX) declined 33 points, or 1.2%, to settle at 2,723.

Forces loyal to Libyan leader Moammar Gadhafi continued their assault on anti-government protesters, leading to widespread chaos and shooting in the streets of the Libyan capital, Tripoli, the Associated Press reported. Nearly 300 people have been killed in the uprising so far, according to the New York-based Human Rights Watch.

The increasing violence in Africa's third-largest oil producing nation sent oil prices soaring again. Benchmark crude traded on the New York Mercantile Exchange rose another $3.07, or 3.2%, to close at $98.49 a barrel, its highest close since October 2008. Contracts broke above $100 a barrel at one point during the session. Crude oil hasn't closed above the triple-digit level since September 2008.



Libya is the world's 15th-largest exporter of crude oil, contributing 2% of global daily output. Fears that anti-government unrest could spread to other oil-producing nations in the region have caused crude oil futures to spike nearly 14% in less than a week.

The flight to safer assets punished equities around the globe, as did some disappointing corporate news. Hewlett-Packard weighed most heavily on the Dow after the tech giant issued a weak revenue forecast late Tuesday. The blue-chip index's decline was tempered somewhat by energy giants Exxon Mobil (XOM) and Chevron (CVX), shares of which rose sharply, thanks to the spike in oil prices.

The flight to safety also boosted gold prices, which notched a seven-week high Wednesday. Gold futures traded on the Comex division of the NYMEX rose $9.40 or 0.6%%, to finish at $1,411 an ounce.

In other corporate news, Lowe's (LOW), the nation's second-biggest home improvement retailer after Home Depot (HD), said fourth-quarter profit rose 39% to beat Wall Street's forecast, but a disappointing outlook hurt shares.

In U.S. economic news, existing-home sales rose 2.7% in January, but the increase was due to a rising number of foreclosures and all-cash deals rather than growth in the number of first-time home buyers.


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]]>ChevroncommoditiesCOMPXCVXDJIAearningsegypt protestsExxon MobilExxonMobilgoldHDHewlett-PackardHome DepotHomeDepotHPQINDUinvestingInxLibyaLOWLowesmiddle eastMoammar Gadhafioiloil pricesoil rises on LIbya violenceOilPricesOilRisesOnLibyaViolencestocksstocks fall on Libya violenceStocksFallOnLibyaViolenceStocksTodayXOMDan BurrowsWed, 23 Feb 2011 16:30:00 ESTStocks Plunge and Oil Spikes on Libya Turmoilhttp://www.dailyfinance.com/2011/02/22/stocks-plunge-oil-spikes-on-libya-turmoil/http://www.dailyfinance.com/2011/02/22/stocks-plunge-oil-spikes-on-libya-turmoil/http://www.dailyfinance.com/2011/02/22/stocks-plunge-oil-spikes-on-libya-turmoil/#commentsFiled under: , , , , , ,

The Dow Jones Industrial Average ($INDU) suffered a steep triple-digit loss Tuesday as turmoil in Libya ignited a global sell-off in stocks. Oil prices rose sharply, as did safe-haven assets such as Treasurys and the dollar.

Libyan leader Moammar Gadhafi vowed to fight on to his "last drop of blood" Tuesday after two nights of bloodshed in the nation's capital as his forces tried to crush the uprising that has fragmented his regime, the Associated Press reported.

The increasingly unstable situation in Libya and elsewhere in the Middle East punished equities worldwide. The blue-chip Dow dropped 179 points, or 1.4%, to close at 12,212. The tech-heavy Nasdaq Composite ($COMPX) lost 78 points, or 2.7%, to finish at 2,756. The broader S&P 500 ($INX) fell declined 28 points, or 2.1%, to close at 1,315. At the same time, the CBOE Market Volatility Index ($VIX) , also known as the VIX or the investor fear gauge, jumped 30%.

Treasurys and the Dollar Rise

The increasing tension in Africa's third-largest oil producer and OPEC member sent oil prices soaring. Benchmark crude traded on the New York Mercantile Exchange vaulted $7.37, or 8.5%, to settle at $93.57 a barrel, its highest close since October 2008. Brent crude, a benchmark contract traded on the ICE Futures Exchange, crossed $108 a barrel before settling at $105.

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The Brent benchmark could move higher than $110 if the turmoil in the Middle East continues. Oil prices don't immediately transfer to gasoline pump prices, but they surely have an impact as crude moves through refineries into finished products. AAA data showed gasoline prices hit an average of $3.171 last week across the U.S.

The flight to safety lifted the bond market, as the yield on the benchmark 10-year Treasury note fell to 3.46% from a previous close of 3.59%. (Bond yields and prices move in opposite directions.) Gold futures traded on the Comex division of the NYMEX rose $10, or 0.7%, to finish at $1,398 an ounce. And the dollar strengthened against a basket of major currencies, as the U.S. Dollar Index rose 0.2%.

Disappointing news on the corporate front also abetted the sell-off in U.S. equities. Walmart (WMT), the world's largest retailer and a Dow component, posted a 27% rise in fourth-quarter profit, but sales in the U.S. continued a troubling slump.

One Bright Spot

Dow component Bank of America (BAC) saw its shares drop after the nation's biggest bank by assets said its credit card division would restate eight quarters of reports to regulators because of deteriorating credit and new regulations.

In U.S. economic news, consumer confidence surged in February to its highest level in three years as Americans grew increasing confident that the economy -- and their income prospects -- will improve in the months ahead. However, the S&P/Case-Shiller home price index showed that house prices in a majority of major U.S. cities fell to their lowest levels since the housing bubble burst.


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]]>BACBank of AmericaBankOfAmericaCompxDJIAeconomygoldgold pricesGoldPricesINDUinvestingINXLibyaoiloil pricesOilPricesstocksStocksTodayVIXWal-MartWMTDan BurrowsTue, 22 Feb 2011 16:20:00 ESTWall Street Is Bracing for a Rocky Weekhttp://www.dailyfinance.com/2011/02/22/wall-street-braces-for-rocky-week/http://www.dailyfinance.com/2011/02/22/wall-street-braces-for-rocky-week/http://www.dailyfinance.com/2011/02/22/wall-street-braces-for-rocky-week/#commentsFiled under: , , , , , , ,

Wall Street New York Stock ExchangeU.S. markets were closed for Presidents Day Monday, but given what unrest in Libya did to gold, oil and stocks overseas yesterday, this holiday-shortened trading week could get off to a bumpy start.

Bloody fighting and anti-government unrest in Libya sent shockwaves through various markets yesterday, setting the stage for more turbulence in the sessions ahead. Gold, which has languished for weeks as investors sought riskier assets, vaulted Monday on a renewed flight to safety. Gold futures that trade on the Comex division of the New York Mercantile Exchange (CME) rose $18, or 1.3%, to settle at $1,407 an ounce. The yellow metal hadn't closed above $1,400 since early January.

Oil prices likewise spiked as civil war threatened to overtake Libya, a major energy producer and holder of Africa's largest proven reserves. Benchmark oil futures traded on NYMEX leaped $5.22, or more than 6%, to close at $91.42 a barrel Monday. Brent crude, a benchmark contract traded on the ICE Futures Exchange, broke above $108 a barrel, its highest close since 2008.

Major Economic Reports Are Also Due

The specter of further Middle East instability and higher energy prices left European stocks awash in red as the major averages in the U.K., France and Germany lost anywhere from 1% to 1.4% Monday. The dollar also strengthened on Mideast tensions.

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The turmoil in Libya is of greater consequence than other protests now ripping through the region given its importance to global energy markets. Libya is the first member of OPEC to be rocked by mass protests, and the global oil industry has begun eying reserves that were last tapped after Hurricane Katrina in 2005.

Traders will also have contend with a spate of news on the housing front. The S&P/Case-Shiller Home Price Index for December comes out on Tuesday, while existing-homes sales data are due out Wednesday and new-home sales on Thursday. The week also brings two readings on consumer confidence, durable-goods orders and the second estimate on fourth-quarter U.S. GDP, which is due out Friday.

Possibly offsetting the expected market weakness would be another strong string of fourth-quarter earnings reports. Dow components Walmart (WMT), Home Depot (HD) and Hewlett-Packard (HPQ) are due up Tuesday. The Dow Jones Industrial Average ($INDU), broader S&P 500 ($INX) and Nasdaq Composite ($COMPX) are all up about 7% so far in 2011 in no small part to the ongoing V-shape recovery in corporate profits.

Of the 413 companies in the S&P 500 that have reported earnings to date, 71% have exceeded Wall Street's estimates, according to data from Thomson Reuters. Encouraging economic data and another round of better-than-expected earnings and outlooks may ultimately trump geopolitical concerns. But if the Mideast's oil-producing countries spiral into chaos, all bets are off.


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]]>DJIAearningseconomygoldgold pricesGoldPricesHDHewlett-PackardHome DepotHomeDepotHPQinvestingLibyamarket outlookoil pricesOilPricesstocksstocks todayStocksTodayWal-MartWMTDan BurrowsTue, 22 Feb 2011 06:30:00 ESTStocks Keep Rolling for Another Weekly Gainhttp://www.dailyfinance.com/2011/02/18/stocks-keep-rolling-for-another-weekly-gain/http://www.dailyfinance.com/2011/02/18/stocks-keep-rolling-for-another-weekly-gain/http://www.dailyfinance.com/2011/02/18/stocks-keep-rolling-for-another-weekly-gain/#commentsFiled under: , , , ,

Stocks closed broadly if modestly higher Friday on light volume as traders avoided making any big bets ahead of a long holiday weekend. The equity markets closed up for the third straight day and extended their winning ways to a third consecutive week.

The blue-chip Dow Jones Industrial Average ($INDU) rose 73 points, or 0.6%, to close at 12,391. The broader S&P 500 ($INX) gained 3 points, or 0.2%, to finish at 1,343. The tech-heavy Nasdaq Composite ($COMPX) added 2 points, or 0.1%, to close at 2,834.

A dearth of economic news Friday and just a smattering of earnings helped keep market action muted. Caterpillar (CAT) helped boost the Dow after the heavy-equipment maker said machinery sales through dealers accelerated during the three months ended January. Intuit (INTU), maker of TurboTax software, saw it shares jump after lifting its earnings outlook late Thursday. But shares in Campbell Soup Co. (CPB) declined after the food company disappointed investors with a decrease in fourth-quarter profit and a cut to its earnings outlook.

Marking Time Ahead of the G-20

Global markets mostly shrugged off another rate hike in China, the nation that has been driving the world's economic recovery and is looking to cool down its own torrid pace of growth. China's central bank said it will raise banks' reserve requirements for the second time this year in order to curb inflation. However, the hike was widely expected after China reported a rise in consumer prices earlier this week.

Markets also marked time ahead of the latest meeting of the G-20. Finance chiefs from the world's 20 industrialized and fastest-developing nations will wrestle over how to address global trade imbalances in Paris this weekend. The last G-20 meeting in November ended without making any progress on long-standing currency and trade disputes.

In all, Friday capped another remarkable week for the markets. The Dow gained 0.9% over the last five sessions, while the S&P closed up 1%, and the Nasdaq rose 0.7%. For the year-to-date, the Dow is up 7%, the S&P is up 6.7% and the Nasdaq has added 6.8%.

Even more impressive, tracing back to start of the rally in late August, the Dow is up 24%, the broader S&P has added 28% and the Nasdaq has gained 34% in less than six months (see chart).




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]]>Campbell SoupCampbell Soup CompanyCampbellSoupCATCaterpillarCOMPXCPBDJIAearningsG-20INDUINTUIntuitinvestingInxmarketstocksStocksTodayDan BurrowsFri, 18 Feb 2011 16:20:00 ESTFace-Off on Stocks: Hershey, American Greetings, Blue Nilehttp://www.dailyfinance.com/2011/02/17/face-off-on-stocks-hershey-american-greetings-blue-nile/http://www.dailyfinance.com/2011/02/17/face-off-on-stocks-hershey-american-greetings-blue-nile/http://www.dailyfinance.com/2011/02/17/face-off-on-stocks-hershey-american-greetings-blue-nile/#commentsFiled under: , , ,

Valentine's Day has come and gone, but an expected boost in sweetheart-holiday spending could still help a few stocks show your portfolio some love over the longer term.

Hershey (HSY), the leading U.S. candy company; American Greetings (AM), the largest publicly traded greeting card company; and fast-growing online jewelry retailer Blue Nile (NILE) all stand to benefit from a rebound in Valentine's Day sales. Indeed, IBISWorld expects sales linked to Cupid's holiday to jump nearly 6% year-over-year to $18.6 billion.

However, as always, whether shares in these companies are attractive at current levels is a matter of debate.

Hershey's stock is up 33% over the last year vs. a 24% gain for the S&P 500 ($INX), and yet the relative valuation remains favorable on a forward earnings basis. Return on equity is a robust 60%, and ample cash generation makes the 2.7% yield on the dividend reliable. Of more concern are surging supply costs. Sugar futures are at an all-time high, and energy is creeping up, too. That leads some investors to worry that the confectioner's margins have no place to go but down.

American Greetings' sales have been like a slowly melting iceberg for years. The company has gone from $2 billion in revenue a decade ago to about $1.5 billion today -- but it may have finally arrested that slide. The stock offers deep discounts to its own five-year average on both a forward and trailing earnings basis. It also sports a generous dividend yield of 2.6%. On the other hand, shares are volatile and heavily shorted by professional investors, making American Greetings look either cheap -- or cheap for a reason.

Blue Nile's stock was on a tear up until missing Wall Street's quarterly earnings estimates in early February. The online retailer disappointed traders with its outlook, too. But the stock isn't is volatile as recent price action would suggests, and it has an enviably high return on equity. Analysts forecast the company to generate a compound annual growth rate of nearly 20% over the next five years. The question for investors is whether that growth rate is torrid enough to justify paying more than 40 times forward earnings.

For more on the bull and bear cases on Hershey, American Greetings and Blue Nile, see Face-Off on Stocks above.

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]]>Blue NileDJIAFace-OfffeaturedvideoHersheyHSYhutheesinginvestingINXNikhil HutheesingNILEstock picksstocksstocks todayValentines Day stocksDan BurrowsThu, 17 Feb 2011 13:00:00 ESTCoke Takes the Fizz out of Berkshire Hathawayhttp://www.dailyfinance.com/2011/02/16/coke-berkshire-hathaway-warren-buffet-shares-decline-lag-market/http://www.dailyfinance.com/2011/02/16/coke-berkshire-hathaway-warren-buffet-shares-decline-lag-market/http://www.dailyfinance.com/2011/02/16/coke-berkshire-hathaway-warren-buffet-shares-decline-lag-market/#commentsFiled under: , , , , , , , , , , , ,

Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) liquidated positions in a number of high-profile companies during the fourth quarter, but the Oracle of Omaha's huge stake in Coca-Cola (KO) appears to have caused his portfolio to lose its fizz so far in 2011.

Berkshire Hathaway is up just 2.58% through Feb. 15, according to an analysis by Bespoke Investment Group, lagging the broader S&P 500 ($INX) by fully 3 percentage points. Berkshire dumped its stakes in Bank of America (BAC), Comcast (CMCSA), Nike (NKE) and Lowe's (LOW), according to a regulatory filing made Monday, but held firm in some of its biggest plays -- which helped cause the portfolio's underperformance so far this year, according to Bespoke.

Based on data filed by Berkshire Hathaway, Coca-Cola "has no doubt hurt Buffett's returns this year," Bespoke reports. Coke, a component of the Dow Jones Industrial Average ($INDU), is not only Berkshire Hathaway's biggest holding, accounting for 23.4% of the portfolio, but has been the firm's worst-performing investment, declining nearly 4% year-to-date, according to Bespoke (see table).



Interestingly, Coke's fellow Dow component General Electric (GE) has been Buffett's best investment in 2011, adding more than 17%. Buffett's commitment to financial stocks has also paid off, Bespoke notes. Wells Fargo (WFC), Berkshire's second-biggest position, is up nearly 9% through Feb. 15, while Dow component American Express (AXP) gained 7.6%.

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Buffett's biggest winners after GE were continuing bets on credit-rating firm Moody's (MCO), newspaper publisher Gannet (GCI) and Exxon Mobil (XOM) (yet another Dow stock), all of which rose more than 10%.

Bespoke Investment Group also put together a sector breakdown of Berkshire Hathaway's portfolio based on the most recent data and, lo and behold, financial stocks account for more than 45% of all holdings. Consumer staples come in second, making up more than 43% of the total pie. Note the large positions in consumer stocks (and Dow components) Procter & Gamble (PG), Kraft Foods (KFT) and Wal-Mart (WMT) in the table above.

Lastly, Berkshire Hathaway is most underweight in technology stocks. Bespoke notes that it has no exposure to the sector even though it's the biggest part of the S&P 500. "Buffett has said numerous times in the past that he doesn't invest in what he doesn't understand, and that is one reason he gives for not investing in the technology sector," says Bespoke. "In this case, he's putting his money where his mouth is."


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]]>American ExpressAXPBACBerkshire HathawayBRK.ABRK.BBuffett 2011Buffett returnsBuffett stock picksCMCSACoca ColaCokeComcastDJIAExxon MobilGCIGEINDUinvestingKFTKOKraft FoodsLOWMCONKEoracle of omahaPGportfolioProcter & Gamblestock picksstock picks for 2011stocksstocks todayWarren BuffettWFCWMTXOMDan BurrowsWed, 16 Feb 2011 16:30:00 ESTHow Inflation Could Be 66% Higher Than the Fed Reportshttp://www.dailyfinance.com/2011/02/16/inflation-66-percent-higher-than-fed-reports/http://www.dailyfinance.com/2011/02/16/inflation-66-percent-higher-than-fed-reports/http://www.dailyfinance.com/2011/02/16/inflation-66-percent-higher-than-fed-reports/#commentsFiled under: , , , ,

Global food prices are at an all-time high, U.S. gasoline prices are at the costliest level ever for this time of the year and yet inflation, in the words of Federal Reserve Chairman Ben Bernanke, remains "quite low."

By official reckoning, that's certainly the case. On Thursday we'll get the latest monthly inflation figures in the form of the consumer price index, which, to the Fed chief's chagrin, is running too close to disinflationary levels. Economists, on average, expect January prices to increase at just a 0.3% rate. So-called core inflation, which excludes volatile food and energy prices, is forecast to rise just 0.1%.

As Bernanke testified before Congress last week, economists exclude food and energy prices because that core inflation rate "can be a better predictor of where overall inflation is headed." By that measure, inflation was only 0.7% in 2010, compared with around 2.5% in 2007, the year before the recession began, the Fed chief explained.

Too bad those numbers don't jibe with with most folks' experience at the gas pump or checkout counter. As economist Ed Yardeni, president of Yardeni Research, told clients Tuesday: "I share the growing concern among the Fed's critics that the official measures of consumer price inflation may be understating actual inflation and that excluding food and energy from these measures is OK as long as you don't eat or drive."



Alternative measures for inflation show a far more alarming picture of price increases than the official data suggest. One of the more intriguing approaches is The Billion Prices Project at the Massachusetts Institute of Technology, which collects daily price changes on about 5 million items sold by approximately 300 online retailers in more than 70 countries.

For U.S. price data, MIT tracks 550,000 products from 53 retailers. By this measure, annual inflation is currently running at a rate of 2.5% -- or 66% greater than the official CPI figure. See the chart above.

Core inflation may have run at just 0.7% in 2010, as Bernanke says, which is the lowest reading on record gong back to 1960. Even if you add back in those pesky food and energy prices, the number rises to 1.2% -- still no big deal. But by the Billion Prices Project's reading, inflation in 2010 more than doubled to 2.5%. "The Billion Prices Project @ MIT is finding plenty of evidence that consumer prices are rising faster than the official price data," Yardeni notes.

Whatever the latest data show Thursday, there's a big difference between inflation as a guide for monetary policy and its real-world impact on conusmers' pocketbooks.

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]]>Ben BernankeBillion Prices ProjectCPIeconomyenergy pricesgas pricesinflationinterest ratesMITrate hikeDan BurrowsWed, 16 Feb 2011 06:35:00 ESTAfter Egypt, a Return to Basics Could Keep the Rally Rolling [Video]http://www.dailyfinance.com/2011/02/14/after-egypt-return-to-basics-keeps-rally-rolling-video/http://www.dailyfinance.com/2011/02/14/after-egypt-return-to-basics-keeps-rally-rolling-video/http://www.dailyfinance.com/2011/02/14/after-egypt-return-to-basics-keeps-rally-rolling-video/#commentsFiled under: , , , , , ,

The market heads into a busy week of economic reports and the tail end of fourth-quarter earnings season primed for yet more gains, says Jason Weisberg, managing director at Seaport Securities.

After all, if traders could sustain the rally through 18 days of increasing uncertainty in Egypt, a return to keying on fundamentals bodes well for the bulls.

"What's going on geopolitically is upstaging or suppressing the importance of a lot of those data points that are coming out," the veteran New York Stock Exchange (NYX) trader says. "The way we've seen the market behave over the last week through all this unrest, I'm shocked we've been able to put together such a rally. I think we'll continue to see such positive action unless one of the more unstable countries in that region destabilizes."

Trader on NY Stock ExchangeUltimately, all investors really care about are corporate profits (since shares are supposed to be a claim on future earnings), and the fourth-quarter reports continue to be strong. Of the 369 companies in the S&P 500 ($INX) that have released results so far, 72% have beaten Wall Street earnings estimates, according to data from Thomson Reuters. And 69% have exceeded analysts' average revenue forecasts. Another 50 S&P 500 companies will report earnings this week, so barring any major surprises, traders can put this earnings season in the bag.

Key economic news coming this week includes retail sales on Tuesday, industrial production on Wednesday and the consumer price index on Thursday. We'll also get the minutes from the most recent meeting of the Federal Reserve's rate-setting committee, including the central bank's updated outlooks for unemployment, inflation and economic growth.

It'll be a busy week to be sure, but it would take some highly anomalous data to to spark any kind of sell-off, Weisberg says.

"A lot of these numbers are so telegraphed at this point," he says, "that there aren't a lot of surprises when it comes to these government data points." For more on Weisberg's take from the floor of the NYSE, see the video above.


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]]>DJIAearningseconomyinflationinvestingJason Weisbergmarket outlookNYXSeaport Securitiesstock marketstocksunemploymentDan BurrowsMon, 14 Feb 2011 06:30:00 ESTMubarak Steps Down, and Stocks Go Up [Video]http://www.dailyfinance.com/2011/02/11/mubarak-steps-down-and-stocks-go-up-video/http://www.dailyfinance.com/2011/02/11/mubarak-steps-down-and-stocks-go-up-video/http://www.dailyfinance.com/2011/02/11/mubarak-steps-down-and-stocks-go-up-video/#commentsFiled under: , , , ,

Stocks closed higher Friday after Hosni Mubarak resigned as Egyptian president and handed control to the military, ending 18 days of mass protests and uncertainty in the strategically important Middle East nation.

The blue-chip Dow Jones Industrial Average ($INDU) closed up 44 points, or 0.4%, to finish at 12,273. The broader S&P 500 ($INX) added 7 points, or 0.6%, to finish at 1,329. The tech-heavy Nasdaq Composite ($COMPX) rose 19 points, or 0.7%, to close at 2,809.

The Dow extended its winning streak to nine sessions as it put up a gain of 1.5% for the week. The S&P 500 and Nasdaq each added 1.4% this week.

New York Stock Exchange"We've had incremental growth every day this week on strong earnings and general sentiment that the market should move up," says Joe Greco, managing director at Meridian Equity Partners. "It seems like any time there is something negative and the market pulls back a little there are fresh bids, and the market fills in."

More encouraging economic news also helped equities Friday. The consumer sentiment index rose to a slightly better-than-expected 75.1 in February -- its highest level in eight months. Economists surveyed by Bloomberg expected the preliminary February sentiment reading would rise to 75 from 74.2 in January. The index was 74.5 in December, 71.6 in November and 67.7 in October. At the start of the recession in December 2007, the index stood at 88.9.

"In a Nice Band"

Consumers' outlook on inflation remained the same in February. The one-year inflation outlook was unchanged at 3.4% in February; the five-year inflation outlook, unchanged at 2.9%. Economists, business executives and policymakers monitor the consumer sentiment index because, historically, consumers' attitudes have correlated with their decisions to spend their income.

Despite some technical indicators to the contrary, Greco sees little risk of a major sell-off transpiring anytime soon.

"We're now in a nice band of the 1,310 to 1,320 range on the S&P 500" says the veteran New York Stock Exchange (NYX) trader. "I think there's more potential to move up. Not necessarily sharply, but to just expand."

For more on Greco's take from the floor of the NYSE, see the video above.


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]]>consumer sentimentDJIAeconomyEgyptinvestingJoe GrecoJoseph GrecoMeridian Equity ParnersMubarakstocksstocks rise after Mubarak steps downstocks todayDan BurrowsFri, 11 Feb 2011 16:30:00 ESTWhy Rising Interest Rates Won't Break the Bull's Runhttp://www.dailyfinance.com/2011/02/11/why-rising-interest-rates-portend-more-gains-for-stocks/http://www.dailyfinance.com/2011/02/11/why-rising-interest-rates-portend-more-gains-for-stocks/http://www.dailyfinance.com/2011/02/11/why-rising-interest-rates-portend-more-gains-for-stocks/#commentsFiled under: , , , , , ,

Rising interest rates don't usually mean good things for economic growth or stock prices. The yield on the benchmark 10-year Treasury note closed at a nine-month high Wednesday and, sure enough, the following day, Freddie Mac revealed the average rate on 30-year fixed-rate mortgages hit its highest level since April 2010. The 10-year then ticked up again on Thursday, closing at 3.70%.

Homebuyers and CFOs alike know that higher rates mean lower borrowing and less spending. That acts as a drag on the economy, corporate profits and, by extension, share prices.

But the yield on the 10-year still has a way to go before interest rates start to hurt the stock market, reckons Jeffrey Kleintop, chief market strategist at LPL Financial. Indeed, for the time being, rising bond yields are actually good news for the stocks.

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"The yield on the 10-year Treasury note has risen by about 1.25 percentage points to 3.65% from 2.39% four months ago," Kleintop writes in his most recent report to clients. "With yields now climbing towards 4%, investors are beginning to wonder when rising interest rates may start to negatively affect stock prices."

At the current rate, the yield on the 10-year note, which serves as the benchmark for everything from credit cards to home mortgages, could reach nearly 5% by the summer, a level last seen in July 2007. But it just so happens that rising yields should mean rising stocks prices, Kleintop says -- at least in the near term.

That because, historically, whenever the yield on the 10-year Treasury was below 5%, stock prices and bond yields rose together, Kleintop notes. It's only when bond yields hit 5% that stocks start to suffer (see chart).



"The reason for the different relationship above and below 5%, and why rising yields are good news for stocks right now, has to do with economic growth and inflation," Kleintop writes. "When yields were rising from a low level, they reflected improving growth and low inflation which was a favorable environment for stocks."

By the same token, when yields were rising above 5%, economic growth was accompanied by higher inflation, which threatened future growth. That hurt the present value of future earnings, which in turn tamped down share prices.

"As economic data continues to reflect solid growth in the coming months, bonds yields and stock prices are likely to continue their climb," says Kleintop. "The tipping point of 5% is still a significant distance away."

For now, the bullish case on stocks can be found in a seemingly unlikely place: a bearish-looking bond market.

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]]>10-year TreasurybondscorrelationDJIAeconomyfannie maefreddie macinterest ratesinvestingJeffrey KleintopLPL Financialmortgage ratesstock marketstock market outlookstocksT NotesT-BillstreasuryDan BurrowsFri, 11 Feb 2011 06:30:00 EST