Archive for March, 2010

Stocks waver after upbeat economic data (AP)

Tuesday, March 30th, 2010 | Finance News

NEW YORK – The stock market moved closer to closing out another strong quarter with a modest advance Tuesday.

The Dow Jones industrial average added 12 points for its fourth straight gain following a rise in technology stocks. Apple and Verizon jumped after The Wall Street Journal reported that Apple was making phones that could be used on Verizon's network.

With one day left in the January-March quarter, the Dow has gained 4.6 percent for the period. The index is on track for its best first-quarter performance since 1999.

Stocks have now had a nearly unbroken advance since early March of last year. The Dow made an even larger leap of 7.4 percent in the fourth quarter.

The mood in the market was upbeat Tuesday after a report that consumer confidence grew more than expected in March. A separate report showed home prices inched higher for the eighth consecutive month.

Analysts expect trading to be erratic Wednesday because of the end of the quarter. Money managers often engage in what's known as window dressing, or trades intended to boost returns on reports sent to shareholders. Many investors refrain from big moves. Tuesday's volume was light as many traders took the day off for Passover or ahead of Easter.

A steady climb in stocks over the past two months could give investors reasons to collect some profits. The Dow has risen 19 of the past 23 days and is now at its highest level since September 2008.

"A bout of profit-taking would be normal and expected after the rise we had," said Mitch Schlesinger, managing director of FBB Capital Partners in Bethesda, Md.

The day's economic reports provided new evidence that the economy is improving, albeit slowly.

The Conference Board, a private research group, said its consumer confidence index rose to 52.5 in March, from 46.4 last month. Economists polled by Thomson Reuters had forecast it would rise to 50. A reading above 90 means the economy is on solid footing. Analysts hope that increased confidence will lead consumers to spend more.

"We're starting to see consumers come back in an adequate manner," said Larry Rosenthal, president of Financial Planning Services in Manassas, Va. "Not strong, but adequate."

The Dow rose 11.56, or 0.1 percent, to 10,907.42. The Dow was up as much as 44 points in morning trading.

The Standard & Poor's 500 index rose 0.05, or less than 0.1 percent, to 1,173.27, while the Nasdaq composite index rose 6.33, or 0.3 percent, to 2,410.69.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidated volume came to 4.1 billion shares compared with 4.4 billion Monday.

The Standard & Poor's/Case-Shiller home price index, which measures home values in 20 major metropolitan markets, rose 0.3 percent in January compared with the previous month. It was the eighth consecutive monthly gain.

The index was down 0.7 percent compared with the year-ago period. That was slightly better than the drop forecast by economists.

Investors have been tolerant of uneven housing reports and are instead focused on jobs. Analysts say stocks won't be able to push higher without an improvement in the job market.

The Labor Department releases its monthly employment report Friday. Economists expect it to show employers added 190,000 jobs in March. That would be only the second increase since the recession began in late 2007. Some of the growth is expected to be tied to temporary government hiring for the 2010 census. The stock market will be closed for Good Friday when the report arrives.

Investors will get another snapshot of jobs on Wednesday from payroll company ADP. Economists forecast the ADP report will show private-sector employers added 40,000 jobs in March.

Apple Inc. rose $3.46, or 1.5 percent, to $235.85. The stock reached a record of $237.48 during trading. Verizon Communications Inc. rose 78 cents, or 2.6 percent, to $31.23.

Apple's iPhone has been available only to subscribers of AT&T Inc. in the U.S. AT&T fell 56 cents, or 2.1 percent, to $25.95.

Bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.86 percent from 3.87 percent late Monday.

The dollar rose against most other major currencies. Gold fell.

Crude oil rose 20 cents to $82.37 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 1.69, or 0.3 percent, to 683.94.

Britain's FTSE 100 fell 0.7 percent, Germany's DAX index dipped 0.2 percent, and France's CAC-40 fell 0.3 percent. Japan's Nikkei stock average rose 1 percent.

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California rebound boosts 20-city home price index (AP)

Tuesday, March 30th, 2010 | Finance News

LOS ANGELES – A surprisingly strong rebound in California's real estate market helped lift a key home price index for the eighth month in a row.

That's good news for people who plan to sell their homes this spring. Prices are now up almost 4 percent from the bottom in May 2009, but still almost 30 percent below the May 2006 peak.

Prices rose 0.3 percent from December to January on a seasonally adjusted basis, according to the Standard & Poor's/Case-Shiller 20-city home price index released Tuesday. Prices increased in 12 cities in the index.

The biggest monthly gain was in Los Angeles, where prices rose 1.8 percent from December. And real estate agents say there's a distinct sense the worst of the downturn is over.

Buyers are "seeing that prices are creeping up," said Tony Middleton, a real estate agent with ZIP Realty who concentrates on the San Fernando Valley. "They're losing bids on homes and they have to bid again."

Prices in San Diego, meanwhile, rose by almost 0.9 percent. Phoenix had the third-largest gain at 0.8 percent.

Compared with the same month last year, the 20-city index was off just 0.7 percent from last year at a reading of 146.32. That was the smallest decline in almost three years and in line with analysts' expectations, according to Thomson Reuters.

Rising home prices also could boost consumer optimism. For most Americans, their home is their largest asset, so as values climb from the depths of the housing bust, homeowners feel wealthier and more comfortable spending. And, for homeowners who owe more on their mortgages than their properties are worth, rising prices rebuild equity.

Consumer confidence rebounded in March after a February plunge, according to a survey released Tuesday. The Conference Board's Consumer Confidence Index rose to 52.5 in March, recovering about half of the nearly 11 points it lost in February.

Still, shoppers remain cautious and there are signs that last year's housing rebound won't last. Home sales sank during the winter, and government incentives that have propped up the market are ending.

Another reason for the positive news is simply that the Case-Shiller index measures a three-month average of home prices. So January's report included November's strong home sales.

However, bargain-hunting homebuyers continue to pack open houses in California, often facing off with investors for foreclosed homes.

"We're seeing multiple offers in most of the markets here in the San Francisco Bay area," said David Kerr, an agent with ZipRealty in Oakland, Calif. "People are getting off the fence."

In February, bank-owned properties made up 44 percent of all resales in the state, according to MDA DataQuick. In Southern California, they accounted for more than half of resales.

With such high demand, supply is dwindling, driving prices higher.

Meanwhile, the state's unemployment rate has flat-lined of late, and that's made buyers more comfortable about purchasing a home than they were just six months ago, said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.

California home sales will likely get a boost in coming months thanks to a new serving of government stimulus.

Last week, state lawmakers enacted a tax credit of up to $10,000 for homebuyers that kicks in May 1. The state allotted $100 million for first-time buyers and another $100 million to anyone who buys a newly built home. California had a round of tax credits last year that proved to be popular; that program ended in July.

The latest incentive picks up where a federal first-time homebuyer tax credit of up to $8,000 is scheduled to leave off when it expires at the end of April. Should the Obama administration extend the federal tax break, that could give homebuyers in California even more reasons to buy.

Still, there remain pockets of weakness. Sales of homes priced above $500,000 are sluggish. And despite rising prices, more than one-third of all homeowners with a mortgage still owe more on their loans than their homes are worth, according to First American CoreLogic.

Among the cities showing monthly price declines in January, the biggest drop was in Portland, Ore., where prices fell 1.8 percent from December. Chicago and Seattle saw declines of 1.7 percent, while prices in Atlanta fell 1.5 percent.

Many analysts expect the Case-Shiller 20-city index will again turn downward in the coming months as more foreclosures in other states hit the market.

"It is only a matter of time before the index records a double-dip in prices," wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.

The Case-Shiller index measures home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.

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Alan Zibel reported from New York.

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Consumers slowly show signs of springing back (AP)

Tuesday, March 30th, 2010 | Finance News

NEW YORK – Signs of life in consumer spending are sprouting this spring.

A partial rebound in consumer confidence, a positive report on January home prices and an expected strong March from retailers suggest Americans are cautiously perking up.

The Conference Board said Tuesday its Consumer Confidence Index rose to 52.5 in March, recovering about half of the nearly 11 points it lost in February. Analysts expected a reading of 50 for March, but the index is still far below the 90 reading that's considered healthy.

February's 46.4 marked the lowest level since April 2009 and also erased three consecutive months of improvement. In January, the reading was 56.5.

Economists watch the figures closely because consumer spending, including health care and other major expenses, accounts for about 70 percent of U.S. economic activity and is critical to a strong economic recovery.

"We're a lot better off, but we have a lot more improvement to go," said Michael P. Niemira, chief economist at the International Council of Shopping Centers. He said shoppers have "more willingness to spend" and are starting to trade back up in areas where they had cut back.

Separately, the Standard & Poor's/Case-Shiller 20-city home price index showed prices rose 0.3 percent from December to January, the eighth consecutive monthly gain. Among the 20 cities in the index, 12 rose. But there's some worry the momentum in the housing market won't be sustained. Home sales sank during the winter, and government incentives that have propped up the market are ending.

Meanwhile, merchants are expected to report a 3.5 percent gain for March when they release sales figures next week, according to Niemira's estimate, which was upgraded from his original 2.5 percent projection. The figure is based on sales at stores open at least a year, considered a key indicator of a retailer's health.

Retailers reported a 3.7 percent increase for February, marking the biggest increase since November 2007, a month before the recession began.

The index excludes Wal-Mart Stores Inc., the world's largest retailer, which stopped reporting sales figures on a monthly basis.

Still, as consumers cautiously return to some more expensive brands and stores, they're still buying differently than before the recession, keeping some frugal habits while shedding the more extreme cutbacks.

A year ago, Tracy Smiley joined many Americans in taking frugality to new extremes as she struggled with rising expenses and saw her father's retirement funds evaporate as the stock market dropped to 12-year lows.

She switched to store brands for almost everything, choosing an even cheaper knockoff of Hamburger Helper. She bypassed Macy's and Abercrombie & Fitch in favor of the sale bins at Target and Old Navy.

But the Lacey, Wash., resident, feeling better about her husband's raise, her car loan being paid off and the economy, has started to trade back up for certain items, such as to beef from pasta.

"I don't think I will go back to how I was before. But I still want to buy better foods," said the 28-year-old mother of two.

February's plunge in confidence jolted investors, but March's report appeared to confirm that last month's reading was an aberration. Many factors had dampened confidence, including severe weather that had shut businesses and thwarted job searches, and a stock market hurting because of international worry about Greece's national debt.

Still, March's reading, buoyed in part by a rally in the stock market, shows consumers no more optimistic than when the economic recovery started nine months ago. In June 2009, the reading hit 49.3.

Confidence has been recovering fitfully since hitting a historic low of 25.3 in February 2009. But many economists believe it will remain well below healthy levels for at least another year or two. That's because key pillars of the economic recovery still need to improve more.

While housing woes are still a concern, many economists say Americans won't spend with vigor until the job picture improves dramatically.

So far, that hasn't happened, but there are positive signs. Economists surveyed by Thomson Reuters expect the Labor Department to report Friday that in March unemployment was steady at 9.7 percent and employers added 190,000 jobs, after shedding 36,000 in February.

The Conference Board survey — based on a random survey of consumers sent to 5,000 households from March 1-23 — did show some easing of worry about the job market, but Americans are far from optimistic. Gary Thayer, chief economist at Wells Fargo Advisors, believes people need to see job creation that's "broad-based."

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AP Real Estate Writer Alan Zibel in Washington contributed to this report.

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