NEW YORK (Reuters) –
For investors, June's job data could determine in this short July 4th holiday week if the stock market's recent rally is reignited or sputters out like a wet firecracker.
The monthly nonfarm payrolls report will come out on Thursday, instead of the usual Friday. U.S. markets will be closed on Friday, July 3, for the long Fourth of July, or Independence Day, holiday weekend.
Investors will pick apart the job figures and reams of other economic data released during the four-day week to see if recent signs of stabilization point to a sustainable economic recovery. Consumer confidence, the Institute for Supply Management's June index on U.S. manufacturing activity, and domestic car sales are among the major indicators on tap.
Although the U.S. economy has been mired in a recession since December 2007, investors' optimism has increased since early March amid growing signs that the extent of the economic slump is moderating.
That optimism has provided a crucial underpinning to stocks since the Standard & Poor's 500 Index (.SPX) hit a 12-year closing low on March 9. This spring, the S&P 500 climbed as much as 40 percent from that low; at Friday's close, it was still up 35.8 percent.
While unpleasant surprises may trigger a long-awaited correction, analysts said evidence of further economic stabilization would make the bulls grow bolder and help stocks break out of their recent consolidation range.
"It is going to depend a lot on where the surprise is," Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois, said, referring to the nonfarm payrolls data.
"In the last report, people looked at the fact that the decline in payrolls was not nearly as large as expected, but the unemployment rate jumped tremendously. At the end of the day, that jump trumped things."
JOBLESS RATE NEAR 10 PERCENT
U.S. nonfarm payrolls are forecast to lose 355,000 jobs in June versus May's slide of 345,000, according to economists polled by Reuters.
The U.S. unemployment rate is projected to rise to 9.6 percent in June from 9.4 percent in May.
"We think that a spike in the rate of unemployment could actually be a positive, as it may signal that discouraged workers are coming in from the sidelines and starting to look for work again," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
"There may be something else that plays out next week, a sort of portfolio window dressing effect. There's still a ton of cash sitting on the sidelines right now."
For the past week, the three major U.S. stock indexes were mixed. The blue-chip Dow Jones industrial average (.DJI) slipped 1.2 percent, while the S&P 500 dipped 0.3 percent, and the Nasdaq (.IXIC) gained 0.6 percent.
Holiday-shortened weeks tend to be volatile.
At the closing bell on Tuesday, Wall Street will write "finis" on trading for both the month of June and the second quarter. So there could be even more choppiness amid so-called "window dressing" in the coming week. That ritual calls for money managers to dump some losers and snap up recent standouts to spruce up portfolios -- and their quarterly returns.
MADOFF AND MOUNDS OF NUMBERS
Besides the focus on the economy, the holiday-shortened week will feature what promises to be a big spectacle -- the sentencing on Monday of confessed swindler Bernard Madoff for running a $65 billion Ponzi scheme.
In addition to the U.S. Labor Department's June jobs data, other reports to watch this week will include Tuesday's S&P/Case-Shiller reading on April home prices, the Chicago Purchasing Managers Index of June business activity in the U.S. Midwest, and the Conference Board's June consumer confidence report.
The ADP national employment survey for June is due on Wednesday, along with the Institute for Supply Management's June reading on manufacturing, May pending home sales, May construction spending and June domestic car and truck sales.
On Thursday, there will also be weekly initial jobless claims, which in recent weeks have tended to reinforce some hope of stabilization, and data on May factory orders.
"It seems that the market is at least comfortable with the fact that the economy is on the horizon of the recovery. It's certainly not getting any worse," said Cleveland Rueckert, a market analyst at Birinyi Associates Inc in Stamford, Connecticut.
"Our research shows that the market typically bottoms at the end of the recession, so confirmation of that will fuel continued gains. We're bullish long term."
With the start of the second-quarter earnings season looming, investors will keep an eye out for companies' outlooks or preannouncement. Aluminum producer Alcoa Inc (AA.N) is due to kick off the earnings season when it reports on July 7.
The Federal Reserve speakers' roster includes a speech by Federal Reserve Bank of St. Louis President James Bullard on the Fed's exit strategies on Tuesday, the very same day that Federal Reserve Bank of Kansas City President Thomas Hoenig speaks on bankruptcy and financial crisis.
(Reporting by Ellis Mnyandu; Additional reporting by Rachel Chang and Rodrigo Campos; Editing by Jan Paschal)
NEW YORK (Reuters) –
Microsoft (MSFT.O) has hired Morgan Stanley (MS.N) to sell Razorfish, its digital agency, and French marketing company Publicis Groupe SA (
Microsoft acquired the agency, formerly called Avenue A Razorfish, as part of its $6 billion takeover of aQuantive in 2007.
The report cited an analyst valuing Razorfish at $600 million to $700 million, based on sales of about $400 million last year and profit margins for similar businesses of 12 to 13 percent.
Publicis and Morgan Stanley were not immediately available for comment.
Microsoft declined comment.
Razorfish is one of the largest interactive advertising and marketing agencies, boasting a client list that includes McDonald's Corp (MCD.N), Starwood Hotels & Resorts (HOT.N), and Carnival Cruise Lines.
Microsoft and VivaKi, the digital arm of Publicis, last week unveiled a broad cooperation deal to develop new content, improve marketing performance and better target digital advertising audiences.
NEW YORK – Repaying a student loan could soon be a little less painful.
Starting this week, anyone with a federal student loan can apply for a program, run by the Department of Education, that caps monthly payments based on income, and forgives remaining balances after 25 years. Those choosing to work in public service could have their loans forgiven after just 10 years.
Eligibility for income-based repayment (IBR) is determined by a person's income and loan size. A calculator at
"It's a way to borrow for college without going to the poor house," said Lauren Asher, president of the Institute for College Access & Success, a California-based nonprofit that runs the Project on Student Debt.
The program stems from the Education Department's College Cost Reduction and Access Act, signed in 2007, which authorized the creation of a new income-based repayment plan for both Federal Family Education Loan (FFEL) and Direct Loan borrowers on all Stafford and graduate PLUS loans.
Monthly payments would amount to less than 10 percent of income for most of the estimated 1 million people expected to enroll, experts say. Payments would never exceed 15 percent of any income above about $16,000 a year (or 150 percent of the poverty level).
Those who earn less than $16,000 would not have to make any monthly payments.
The new payment option is intended to provide relief for those who earn modest salaries and struggle under the weight of student loans for years on end. By stretching repayment over a longer period, monthly payments are kept at a reasonable portion of income, though most people would not see any savings on the total cost of the loan.
IBR "can lower costs and provides light at the end of the tunnel" for such borrowers, said Asher of the Institute for College Access & Success. That gives borrowers greater financial flexibility to save for retirement, buy a home or even pay for their own children's education, she said.
The program isn't for everyone, however.
In some cases, accruing interest could push the cost of the loan higher. And since loans are likely to be paid off within 25 years, the loan forgiveness aspect of the program won't apply to most people. To save on interest costs, those who could afford to would be better served paying off loans faster, said Mark Kantrowitz, publisher of
If a salary jump eventually disqualifies a borrower for the capped monthly payments, they would still be responsible for the cost of the loan and the interest that accrued up to that point. Monthly payments still couldn't exceed what they would be under a standard 10-year repayment plan. Of course, borrowers could opt to pay off debts faster if they chose.
There are already some options for those who can't afford big monthly payments, such as long-term payment plans spanning up to 30 years. But eligibility requirements are stricter, and monthly payments can still be high.
The government also offers a program similar to IBR called the income-contingent repayment plan. That plan is not as lenient as the new one, however, with payments capped at 20 percent of income beyond 100 percent of the poverty level. And it's also only available for direct federal loans.
The new program will be available for direct federal loans, as well as federal loans administered through private lenders. Most of those enrolled in the income-contingent plan are expected to switch over to the new program.
Parent PLUS loans, the federal loans parents can take out to pay for their children's education, are not eligible for either payment plan.