Archive for December, 2009

Consumer confidence up, house prices stall (Reuters)

Tuesday, December 29th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. consumer confidence rose to a three-month high in December, while prices in the hard-hit housing sector stalled in October, breaking a five-month string of gains.

The consumer confidence reading released on Tuesday reinforced views that the economy is gradually recovering, and the October housing data from the widely watched Standard & Poor's/Case-Shiller indexes was seen as indicating the market is stabilizing.

The Conference Board, an industry group, said its index of consumer attitudes rose to a reading of 52.9 in December from a revised 50.6 in November as job market pessimism eased and consumers' expectations reached a two-year high.

"There were some small signs of weakness, but all in all, it's a better number. It continues the trend of the U.S. economy improving," said Camilla Sutton, senior currency strategist, Scotia Capital in Toronto

Despite some signs of optimism, consumers in December rated their present situation the worst since February 1983, according to the Conference Board. The U.S. economy has been struggling to rebound from the worst recession in decades.

On Wall Street, the Dow Jones and broad Standard & Poor's 500 index closed marginally lower.

Government bonds, which usually perform better in weak economic times, were higher on the day, boosted by reassuring results from an auction of Treasury debt that went better than some had feared.


The consumer confidence index beat analysts' forecast of 52.5, which was based on a Reuters poll that ranged from 46.0 to 57.0. Last month's reading was also revised higher from an originally reported 49.5.

The expectations index rose to 75.6 -- the highest since December 2007 -- from 70.3 in November.

Consumers' labor market assessment also showed some signs of improvement, with the "jobs hard to get" index decreasing to 48.6 from 49.2.

Consumers rated their present situation the worst since February 1983, with that index falling to 18.8 from 21.2.

The "jobs plentiful" index also fell, dropping to 2.9 -- also its lowest since February 1983 -- from 3.1.

In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a 0.2 percent rise, according to a Reuters survey. September's index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent.

Only seven of the 20 cities in the composite index had month-over-month gains in prices in October, S&P said.

A sustained upturn in home prices is seen vital in the fledgling rebound in the hardest hit housing market since the Great Depression. There has been growing concern that record-high levels of foreclosures will mount even further and depress prices anew.

"The report signals that we have a growing stabilization in house prices. Obviously it's at a very slow pace and that is because the market is still saddled with a significant amount of inventory," said Anna Piretti, senior U.S. economist at BNP Paribas.

"We're likely to see some negative cross currents come into home prices in November, but that doesn't really change the trend -- the trend should be toward stabilization."

S&P said the annual rate of price declines improved, with the 20-city index dropping 7.3 percent from a downwardly revised 9.3 percent in September. A 7.2 percent downturn was forecast in the Reuters survey.

All 20 metropolitan areas and both the 20-city and 10-city indexes showed smaller rates of decline in October compared with September.

(Additional reporting by Lynn Adler, Emily Flitter and Steven C. Johnson; Editing by Dan Grebler)


Market slips in low volume trade; data mixed (Reuters)

Tuesday, December 29th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. stocks edged lower in a low-volume session on Tuesday, breaking a six-day string of gains as investors found little reason to push stocks higher as the year's end approached.

Data showing a rise in consumer confidence was offset by a housing report pointing to more bumps in the road.

The day's decline followed six days of gains. But the benchmark Standard & Poor's 500 index is still up 25 percent for the year.

Trading volume was the lowest for the year, according to Birinyi Associates, with many participants out before the New Year's holiday on Friday. At the close, only 638 million shares had changed hands, compared with last year's estimated daily average of 1.49 billion on the New York Stock Exchange.

On the data front, the Conference Board's index of consumer confidence rose more than expected in December to a reading of 52.9, a three-month high.

In contrast, the S&P/Case-Shiller composite index of home prices in 20 metropolitan areas, meanwhile, was unchanged in October, falling short of expectations.

"I don't think anyone is expecting a major climb here out of this recession," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Wealth Management in New York.

The housing news drove the Dow Jones U.S. Home Construction Index (.DJUSHB) down 0.3 percent.

The Dow Jones industrial average (.DJI) dipped 1.67 points, or 0.02 percent, to end at 10,545.41. The Standard & Poor's 500 Index (.SPX) slipped 1.58 points, or 0.14 percent, to finish at 1,126.20. The Nasdaq Composite Index (.IXIC) declined 2.68 points, or 0.12 percent, to close at 2,288.40.

On the plus side, shares of consumer products giant Procter & Gamble Co (PG.N), which makes Tide detergent and Crest toothpaste, rose 0.5 percent to $61.58 on the New York Stock Exchange.

Weighing on the Nasdaq was iPod and iPhone maker Apple Inc (AAPL.O), which slid 1.2 percent to $209.10 after hitting recent highs. The stock was pressured as Nokia Corp (NOK1V.HE) said it has filed a complaint against Apple with the International Trade Commission in a patent dispute.

In corporate news, United Community Banks Inc (UCBI.O) fell 5 percent to $3.24 after the company temporarily suspended its stock dividend in a move to improve liquidity.

On Friday, U.S. financial markets will be closed for the New Year's Day holiday. (Reporting by Caroline Valetkevitch; Editing by Jan Paschal)


GM ups discounts to sell Pontiac, Saturn inventory (Reuters)

Tuesday, December 29th, 2009 | Finance News

DETROIT (Reuters) –
General Motors Co (GM.UL), which is winding down its Pontiac and Saturn brands, has offered dealers $7,000 per car to clear remaining inventory through Monday, the company said on Tuesday.

GM had already been offering discounts of $6,500 or zero-percent financing for as long as six years to consumers who buy remaining Saturn and Pontiac models.

The sweetened incentive offer, which was announced to dealers earlier this month, means an effective discount of up to 49 percent on the cheapest Pontiac, the G3 hatchback.

The incentive offer, which could give GM's new car sales a boost at the end of the month, was first reported by the Wall Street Journal.

GM's U.S. sales have dropped 32 percent since the start of the year through November.

The automaker, which emerged from bankruptcy in July after taking more than $50 billion in government aid, is focusing on four brands in the U.S. market: Chevrolet, Cadillac, Buick and GMC.

GM is closing Saturn and Pontiac. A deal to sell Hummer is pending, and GM plans to close its Swedish brand Saab beginning as soon as next month if a deal to sell it cannot be reached.

GM will provide the cash payment to dealers who buy vehicles already on their lots to put into the service fleets that many dealers maintain.

Vehicles purchased in that way by dealers can then be sold to consumers as used, GM spokesman Tom Henderson said.

(Reporting by Kevin Krolicki; Editing by Derek Caney)