Archive for March, 2009

For Wall Street, March is best month since 2002 (Reuters)

Tuesday, March 31st, 2009 | Finance News

NEW YORK (Reuters) –
Stocks climbed on Tuesday, driving the S&P 500 to its best month since October 2002, as investors snapped up top-performing bank and technology shares as the first quarter came to an end.

Upbeat news from Europe set the tone for financials, helping them recover much of Monday's losses and continue a recent robust rally after British bank Barclays (BARC.L) declined to take part in a government asset-protection plan.

Technology shares added to a strong three-week rally after brokerage Davenport recommended investors buy Microsoft Corp (MSFT.O), pointing to increased demand for personal computers in China and the United States, and potential restocking of inventories in Europe.

Even as the broad S&P 500 rose 8.5 percent in March for its best one-month percentage gain since October 2002, uncertainty about the struggling economy left the benchmark U.S. stock index down 11.7 percent for the first quarter.

"I don't think this strong rally we've had in March guarantees we will continue this for the rest of the year," said Brian Daley, sales trader at Conifer Securities in New York.

"I think there's still a lot of question marks and a lot to be seen in terms of how the fundamentals play out in the second half, and that's what I think investors are really going to focus on."

In fact, data showed business activity in the U.S. Midwest shrank in March at the most severe rate since 1980 while house prices sank a record 19 percent in January from a year earlier.

The Dow Jones industrial average (.DJI) gained 86.90 points, or 1.16 percent, to 7,608.92. The Standard & Poor's 500 Index (.SPX) added 10.34 points, or 1.31 percent, to 797.87. The Nasdaq Composite Index (.IXIC) climbed 26.79 points, or 1.78 percent, to 1,528.59.

S&P'S SIX-QUARTER SLIDE

As the final trading day of March ended, the S&P 500 marked its sixth consecutive quarterly decline, matching the longest streak of quarterly drops that stretched from the end of the fourth quarter of 1968 to the end of the second quarter of 1970. This time, the S&P's cumulative slide for the past six quarters was 47.7 percent, compared with a 30.6 percent drop 39 years ago.

After Monday's sharp sell-off in banking shares on concerns over the sectors health, JPMorgan Chase (JPM.N) rose 7 percent to $26.58 and Bank of America shares (BAC.N) jumped 13.1 percent to $6.82, while the S&P financial index (.GSPF) gained 6.7 percent.

Microsoft shares added 5.1 percent to $18.37 and contributed the most to the Nasdaq's advance.

Alcoa (AA.N) jumped 9.7 percent to $7.34 after Deutsche Bank upgraded the aluminum company's stock to "hold" from "sell" and raised its price target. Analysts gave little credence to a rumor that Australian rival BHP Billiton Ltd (BHP.AX) may be seeking to acquire Alcoa.

And on Nasdaq, shares of Autodesk (ADSK.O) shot up 10.4 percent to $16.81 after UBS upgraded the design software and services company's stock.

On the economic front, the picture remained bleak but investors appeared to pay less attention to the data, with damage limited to the homebuilding sector.

In addition to January's record drop in home prices, March U.S. consumer confidence came in barely above the record monthly low.

The Institute for Supply Management-Chicago index of business activity fell in March at a rate that was more severe than expected.

The Dow Jones homebuilders index(.DJUSHB) fell 3.2 percent.

Trading was active on the New York Stock Exchange, with about 1.64 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.20 billion shares traded, below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of 3 to 1, while on the Nasdaq, two stocks rose for every one that fell.

(Additional reporting by Leah Schnurr; Editing by Jan Paschal)

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France threatens G20 walkout (Reuters)

Tuesday, March 31st, 2009 | Finance News

LONDON (Reuters) –
France threatened on Tuesday to storm out of this week's G20 summit if it did not get the results it wanted, despite Britain's call for countries to unite and restore confidence to a broken world economy.

As leaders of the world's big powers converged on London for Thursday's crisis meeting to chart a way out of the worst global downturn since the Great Depression, the World Bank announced a $50 billion program to get international trade flowing again.

The International Monetary Fund also looks poised to get a huge cash boost to its ability to help countries being ravaged by the recession, and the leaders will likely announce common codes on financial regulation to prevent future crises.

"I want results," French president Nicolas Sarkozy told reporters. "We have to get results, there's no choice, the crisis is too serious to allow us to have a summit for nothing."

Shattering any impression of unity, his finance minister warned that Sarkozy would not sign the G20 communique if the summit failed to satisfy his objectives.

"(He) was very clear on that front. He said if the deliverables are not there, I won't sign the communique -- that means walking away," Christine Lagarde said in a TV interview.

A spokesman for summit host Gordon Brown said the British prime minister and French president had talked constructively on Monday and that Britain was looking forward to Sarkozy's participation.

Brown also desperately needs the summit to provide concrete results, just as much to revive his own political fortunes as to get the British economy out of recession.

But the run-up to the April 2 meeting have been marred by divisions between the United States and Britain on one side and the continental Europeans on the other over the right scale of fiscal stimulus and regulation.

Lagarde has said France may do more on the spending front if necessary, but that nations should wait to see the effect of current stimulus measures before taking any further action. Also, Europe has pushed for a strict overhaul of financial regulation while Britain and the United States appear to favor a lighter touch.

"Leaders meeting in London must supply the oxygen of confidence to today's global economy and give people in all of our countries renewed hope for the future," Brown said.

OBAMA TO EUROPE

The Organization for Economic Co-operation and Development (OECD) said on Tuesday the economies of its 30 members would shrink by 4.3 percent in 2009, costing 25 million jobs.

"The first major risk comes from a potential economic collapse of emerging markets," Australian Prime Minister Kevin Rudd said as he arrived in London. "The second major risk to global recovery is the process of deleveraging."

To prevent that, the G20 is expected to more than double the $250 billion available to the IMF to help struggling nations. Rudd said its funding should be tripled if necessary.

Speaking at a Thomson Reuters event, World Bank President Robert Zoellick announced measures to reverse a sharp drop in trade flows.

He said the $50 billion program would include funding from governments, starting with contributions from Britain and the Netherlands, regional development banks and private-sector banks such as Standard Chartered, Standard Bank and Rabobank.

A draft of the communique, obtained by Reuters this week, shows the G20 will pledge to avoid competitive devaluation of their currencies and other protectionist measures.

Lagarde told Reuters on Tuesday that currency imbalances will not be a feature of Thursday's meeting but the issue may require a separate summit.

China and Russia have started a debate about reserve currencies by raising the prospect of developing the IMF's Special Drawing Rights as the basis for a new global currency.

"We should think about creating a new currency system...The current system is not ideal,"" Russian President Dmitry Medvedev said. "We cannot develop in the next 10 years if we do not create a new infrastructure including new (currency) systems."

But for now the dollar's supremacy looks unchallenged.

The U.S. dollar is now and will remain the world's currency, a spokesman for the White House said as President Barack Obama's plane touched down at London's Stansted Airport for his first trip to Europe.

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Hot Topic climbs after analyst boosts price target (AP)

Tuesday, March 31st, 2009 | Finance News

CHICAGO – Shares of Hot Topic Inc. climbed Tuesday after an analyst boosted her price target for the teen clothing chain, saying the retailer's getting a sales boost from a solid combination of new products and in-store events.

Boenning & Scattergood analyst Holly Guthrie told investors in a research note that she was raising her price target on the City of Industry, Calif.-retailer to $13 from $10.50.

Unlike even many of its direct competitors, Hot Topic is faring better than most retailers in the recession, thanks to its devoted shopper base, affordable prices, assortment of popular fashion and licensed products tied to the "Twilight" books and movie, among other items.

In February, same-store sales — an important retail industry metric of sales in stores open at least a year — climbed nearly 11 percent. The company operates Hot Topic stores and Torrid, which sells plus-sized women's clothing.

Both brands' online sales climbed as well.

Guthrie told investors that sales of licensed products related to the "Watchmen" movie should help March sales. She predicts other sales boosts throughout the year related to the release of a "Twilight" sequel and the latest "Harry Potter" film.

Hot Topic shares climbed 51 cents, or 4.7 percent, to $11.45 in late-afternoon trading Tuesday.

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