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Stock Indexes Decline Slightly as Interest Hike Becomes More Likely

August 4, 2015 By Dave Smith Leave a Comment

Stock Indexes Decline Slightly as Interest Hike Becomes More LikelyThe trading day finished poorly on Tuesday as the major stock indexes have all registered mild downfalls.

The Dow Jones Industrial Average fell 86 points (0.5%) to 17,513, as Standard & Poor’s 500 (0.4%) and the NASDAQ Composite Index (0.4%) also registered downfalls by 4 p.m. EDT.

The indexes registered most of the slip just after Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, spoke favorably of the possibility of federal interest rates being raised for the first time since before the economic recession. This is highly anticipated and was foreshadowed by the Federal Reserve many times since the beginning of the year, against a flurry of protests from investors who claim that this might hinder the country’s economic recovery.

There has been no set date for the hike in the federal interest rate, with most analysts predicting it to happen either in September or late in the year. The government’s employment report for July, which is set to be released on Friday, could be a vital factor in the announcement; with this year generally seeing jobs being added at pre-recession rates and the active workforce being at a nearly four decades high level.

The Dow plummet was also influenced by tech giant Apple, whose stock prices fell by 3.2 per cent amidst concerns that a Chinese economic slowdown would tamper with the company’s largest growth market. Apple’s shares finished at $114.64 in regular trading, almost $20 less than its April 28 record of $134.54, wiping out more than $113 billion in value. However, it still remains the S&P’s 500 most valuable company by market capitalization, being estimated at $657.6 billion.

However, China’s situation was slightly better on Tuesday as the Shanghai Composite Index closed 3.7 per cent higher. This is attributed to the harsher legislation against short selling introduced by the country’s government on Monday, preventing investor from trading around borrowed shares as usual.

Greece on the other hand is nowhere close to getting out of its economic woes, as the main stock index in Athens was down 4.5 per cent during early hours trade. Adding to the woes, the traditional benchmark Athex Composite opened on Tuesday for the first time in over month – and slumped by 16 per cent until the end of the day, which represents the biggest percentage dip it suffered in the last 24 years.

Image Source: The Guardian

Filed Under: Business & Company, Capital Markets

Nasdaq Offers Technology for Bitcoin Trading

July 19, 2015 By Doyle Buehler

nasdaq bitcoin tradingNASDAQ OMX Group Inc has given its consent to offer a startup the core technology in order to power a marketplace for bitcoin trading and the associated digital-currency assets, according to the reports.

NASDAQ’s X-stream trading system, which is used by over 30 exchanges as well as marketplaces globally, will be used by the New York-based startup Noble Markets.

According to the reports, NASDAQ will be providing marketing assistance.

Noble will adopt the same software that is being used by securities exchanges worldwide and a related system that runs the NASDAQ Stock Market. Spokesmanpokesman Ryan Wells said that NASDAQ is open towards providing its sevices for bitcoin trading, which it views

The development follows the January agreement by the New York Stock Exchange to carry out investment in Coinbase, another major trading platform for the digital currency.

Coinbase, a Bitcoin payments processor which is supported by the New York Stock Exchange (NYSE), started a regulated exchange in the US earlier this year for smooth trading of the virtual currency.

“It is a vote of confidence in bitcoin the technology. Now that you are seeing big organizations providing technology, there’s a feeling that bitcoin is here to stay,” said Nicholas Colas, chief market strategist at Convergex Group.

The virtual currency bitcoins were launched in 2009. It allows people to carry out transactions purely over the Internet. The virtual currency came under scrutiny by the regulators both in the US and Europe after it reported a series of high-profile scandals, including the bankruptcy of bitcoin exchange Mt. Gox, based in Tokyo.

In other news, the NASDAQ Composite Index has reached an all-time record on Friday following the recent surge in stocks that major tech companies are experiencing. As Google added more $60 billion in market capitalization on Friday after a 16 per cent surge in stocks, the Index went up by 64 points to 5.163, surpassing the previous June 23 record.

The continous surge in tech stocks has raised fears since the beginning of the year that this might represent a bubble similar to the one posted before the dotcom crash of 1999-2000, when the NASDAQ Composite Index abruptly fell to half its value as internet-based start-ups which had seen massive investment started to crumble. However, skeptics are dismissing the possibility due to the fact that the tech sector is nowadays spearheaded by solid companies with high revenue and profit numbers and proven sustainability.

Filed Under: Business & Company, Capital Markets

Housing Starts and Permits Soar to Pre-Recession Numbers

July 18, 2015 By Carrie Davis Leave a Comment

Housing Starts and Permits Soar to Pre-Recession NumbersA recently released U.S. Commerce Department report shows that housing starts in June rose by 26.6 percent compared to 2014. A 30% increase was also noted in permits offered for the construction of new homes.

This brings both housing starts and permits to their highest levels since before the 2008 financial crisis. Most of the increase was prompted by a large amount of multi-family homes which had their groundbreakings during the month, bringing the total housing starts at a seasonally adjusted annual rate of more than 1.1 million during June. Single-family housing starts instead showed a slight decline when compared to May.

Over 1.3 million building permits were issued during June, which represented the highest amount since July 2007. In comparison, the number of housing permits issued during June 2014 barely rose over the 1 million mark. Permits have also gone up by 7.4 percent on a month-by-month analysis since May; again, most of these were issued towards multiple-family building projects.

Despite the surge of new multi-family housing project, builders still have a lot of confidence regarding the prospects of new single-family houses. The Wells Fargo Housing Market Index indicates that builder confidence into the latter rose to 60 at the start of July, meaning that most builders rate market conditions as good rather than poor. This is the highest level attained in the past 10 years.

Analysts point out the fact that the readings come as predicted when taking into account the increase in sales overall in home markets, as well as the continuous rise in new jobs during 2015. The spike in multi-family housing came because of a continuous decrease in single-family housing sustainability during the recession, with many previous owners needing to become renters.

This makes the single home ownership rate plummet to its lowest in the last two decades, with only 63.7 percent of owner having complete ownership over their homes. First-time home buying is also hitting low points, making up a lesser share of the housing market.

Despite the fact that overall housing rates are reaching pre-recession numbers in some areas, analysts point that single-family housing still needs to rise by about 40 percent, while new housing available for sale currently stand at 4.5 month supply, lower than the recommended 6-month supply, questioning sustainability in the near future and offering slight hints at a possible housing shortage.

Image Source: ocregister

Filed Under: Business & Company, Capital Markets

Wal-Mart is competing with Amazon in e-commerce battle

May 20, 2015 By Stephanie James Leave a Comment

walmartWal-Mart said that it will use its large network of stores as distribution points for online growth and they are taking a different approach than Amazon.

If the world’s largest bricks and motor retailer is serious about competing with Amazon as it has suggested by testing free shipping club, then it may have to spend more than the previously announced investment target on big distribution centers and other costs for its plan.

The importance of growing online is highlighted by the sluggish quarterly results which were released on Tuesday.

After a slight drop in quarterly sales, online revenue grew 17 percent globally in the first quarter ended April 30. But the investment in e-commerce shaved 2 cents off the retailers earning per share that is equal to the cost impact in the quarter of its move to raise wages for entry level workers across the US.

Most of the analysts see advantage in investing in e-commerce, because of high growth rates.

As Wal-Mart prepares to test a free shipping program aimed at undercutting Amazon price, the prospect of competing with rival that spends heavily on investment has raised some concerns.

Brian Yarbrough, retail analyst at Edward Jones said, “They continue to try to grow e-commerce which is good because it is growing. But it comes at a cost.”

Wal-Mart plans to open four large dedicated fulfillment centers this will be added to 11 facilities in operation already and dozen conventional distribution center refitted to help in the online push.

The company would invest $1.2 billion to $1.5 billion on e-commerce this year.

The biggest plus in its plan is a network of 4,500 stores.

It is using 80 for distribution, accounting for fifth of its online deliveries on a unit basis.

Last year the company has booked $12 billion in online revenues.

It would cost $20 million to $40 million dollars each to convert conventional distribution centers to handle e-commerce. Building a large scale fulfillment facility from scratch can cost $150 million.

Converting conventional distribution centers to handle e-commerce probably costs $20 million to $40 million dollars each, while building a large-scale fulfillment facility from scratch can cost $150 million, estimates.

To catch up Amazon it could run into billions of dollars.

Steven Osburn, director at Kurt Salmon specializing in supply chain said, “However, finding ways to use their existing infrastructure better is a much cheaper way to go about it.”

Even then Wal-Mart would need at least 5 to 10 more dedicated fulfillment centers.

Osburn said: “You are still probably talking a billion dollars plus in investment if this catches on.”

Shipping costs are another concern. Amazon could be losing $ 2 billion a year on shipments to members of its Prime Program, which offers free shipping on most items for a $99 annual fee.

Wal-Mart is offering free shipping with three days in its pilot program for a fee of $50, half the cost of Prime.

Mulpuru believes that it would be hard for Wal-Mart to put a big dent in Amazon’s market share, but it can make gains by capitalizing on its strong points such as its strong relationships with packages goods makers and in groceries.

David Cheesewright, head of Wal-Mart’s international division pointed out to the company’s strong position in online groceries in Britain as know-how that could be leveraged elsewhere.

Cheesewright said, “I think particularly in the area of grocery, where product knowledge, understanding of the fresh supply chain, operational excellence, is going to be a key part of being successful in that space.”

Filed Under: Business & Company, Capital Markets Tagged With: David Cheesewright, e-commerce battle, quarter 1 reports, walamart competing with amazon

JPMorgan profit surges in first quarter, fixed-income trading rebounds

April 14, 2015 By Dave Smith Leave a Comment

jpmorgan

JPMorgan Chase & Co on Tuesday released its quarterly report, which showed a better-than-expected quarterly profit after the Swiss central bank’s decision of cap removal on the franc shocked the markets and spurred trading in bonds and currencies.

Jamie Dimon, chief executive official of the bank, had in early March told investors that a volatility spike triggered higher revenues compared to the previous year. The newly-posted results are in accordance with the CEO’s announcement, with the revenues of trading surging for the first time since the financial crisis.

The bond trading revenue has witnessed severe pressure in the Wall Street in the recent times, and it’s still not clear if surges in the customer volume in the first quarter will continue to persist.

Marianne Lake, Chief Financial Officer of the bank, said that the volumes appeared to be a bit lower so far for the second quarter. She further added that ‘it is too soon to say that’.

The revenue of JPMorgan, the biggest American bank by assets, from trading fixed income, currencies and commodities (FICC) by five percent to USD 4.07 billion during the first quarter.

Filed Under: Business & Company, Capital Markets Tagged With: Jamie Dimon, JPMorgan Chase & Co, JPMorgan quarterly report, JPMorgan revenue, Marianne Lake

US stocks edges up, led by energy shares

April 14, 2015 By Carrie Davis Leave a Comment

us_traders_2012_6_18

The S&P 500 and Dow Jones industrial average moved higher on Tuesday, backed by the energy stocks and reports of March-quarter earnings that topped the modest expectations of the economists but did minimal to lower the concerns about the strong US dollar.

Shares of Chevron, Exxon Mobil and other energy firms followed crude higher after a forecast that May’s US shale oil output would record its first monthly fall in over four years. The S&P 500 energy index surged 1.95 percent.

Johnson & Johnson slashed its full-year forecast on the grounds of the impact of a strong greenback, even though the adjusted earnings topped the expectations. The shares of the Dow component gained 0.29 percent.

Tim Ghriskey, chief investment officer at New York-based Solaris Group, said, “Expectations are low, primarily because of economic weakness during the first quarter related to weather, the strong dollar, the West Coast dock strike and oil prices.”

At 1:02 pm, the S&P 500 edged up 3.42 points, or 0.16 percent, to 2,095.85 and the Dow Jones industrial average surged 78.46 points, or 0.44 percent, to 18,055.5. The Nasdaq Composite declined 15.63 points, or 0.31 percent, to 4,972.62.

The shares of Chevron jumped 1.97 percent, while Exxon’s shares increased 2.22 percent.

The shares of Alcatel increased 12.18 percent to USD 4.88, while the US shares of Nokia dropped 4.21 percent to USD 7.95.

On the NYSE, the advancing issues outnumbered the declining ones by 1,842 to 1,099, for a 1.68-to-1 ratio. 1,404 issues dropped and 1,211 advanced, for a 1.16-to-1 ratio favoring decliners on the Nasdaq.

The S&P 500 was recording three new 52-week highs and no new lows. On the other hand, the Nasdaq Composite was posting 57 new highs and 22 new lows.

Filed Under: Business & Company, Capital Markets Tagged With: Chevron shares, Dow Jones industrial average, Exxon Mobil shares, Nasdaq, S&P 500, Tim Ghriskey, US dollar, US stocks, Wall Street stocks

US stocks close lower as first-quarter earnings concern deepen

April 13, 2015 By Stephen Kenwright Leave a Comment

Wall-Street-Exposed

The stocks at the Wall Street declined on Monday amid rising fears of poor US first-quarter earnings due to the strong dollar and lower prices of crude oil.

Nine out of the 10 S&P 500 sectors dropped, led by a 1.1 percent drop in S&P industrials. General Electric shares declined 3.1 percent to USD 27.63 after rallying on Friday, when the company said that it has the potential to return over USD 90 billion to the investors by 2018. 3M Co shares fell 0.7 percent at USD 165.84.

The greenback was last up 0.1 percent compared to a basket of major currencies after hitting a 99.99 peak. This was the highest level recorded in four weeks period. A stronger dollar tends to hurt the profits for the American multinationals. The crude oil in the United States edged higher but significant losses since last year have weighed on the results of the energy companies.

John Carey, portfolio manager at Boston-based Pioneer Investment Management, said, “We’re all waiting on earnings, which are going to be coming fast and furious as we move through the week. I think there is some trepidation about what the earnings announcements are going to look like and so investors are cautious.”

According to Carey, most people are hoping for weak earnings due to the strong greenback, reduced crude oil prices and sluggish consumer spending in the country due to the harsh winters.

The S&P 500 fell 0.46 percent, or 9.63 points, to 2,092.43, the Dow Jones industrial average dropped 0.45 percent, or 80.61 points, to 17,977.04. The Nasdaq Composite tumbled 0.15 percent, or 7.73 points, to 4,988.25.

The Nasdaq traded briefly above 5,000, coming within 110 points of its life-time intraday high.

The Nasdaq Composite posted 104 new highs and 24 new lows, while the S&P 500 recorded 24 new 52-week highs and no new lows.

Nearly 5.4 billion shares changed hands at the American stock exchanges, below the daily average of 6 billion for the last five sessions, as per BATS Global Markets.

Filed Under: Business & Company, Capital Markets Tagged With: crude oil price, Dow Jones industrial average, General Electric shares, Nasdaq Composite, S&P, S&P 500, US dollar, US stocks, Wall Street stocks

GE plans selling most finance unit, USD 90 billion return to investors

April 11, 2015 By Stephanie James Leave a Comment

General-Electric_1

US industrial giant General Electric Co on Friday announced that it is going to shed most of its finance unit and return approximately USD 90 billion to the shareholders as it has gradually transformed into a “simpler” industrial business than an unwieldy hybrid of manufacturing and banking sectors.

Making the announcement on Friday, the company gave a brief outlook of its restructuring plan that included buying back nearly USD 50 billion of its shares, divesting additional GE Capital operations and selling nearly USD 30 billion in real estate assets in the next two years.

Tom Donino, equity trading co-head at First New York Securities, said, “The stock has been under-owned by institutional investors, and that’s going to change now.”

The company’s repurchase program will be partly funded by USD 35 billion via money returned from GE Capital. The program is considered as the second largest in the history after USD 90 billion plan made by tech giant Apple Inc.

GE possessed 10.06 billion outstanding shares as of January 31. The company said that it has expected to lower that by as much as 20 percent to reach between 8 billion and 8.5 billion by 2018.

Overall, GE said that it has planned to shed USD 275 billion in GE Capital assets.

According to the firm, it has planned keeping USD 90 billion in finance assets directly associated with selling its products like medical equipment, jet engines, electrical grid gear and power generation.

The company has USD 1.70 to USD 1.80 per share in forecast earnings for the current year, including 60 cents from GE Capital. In a conference call with the analysts, the company’s executives said that they expect profit to be substantially higher in 2018.

The contracting GE Capital will slash down the earnings by 25 cents per share, the executive said adding that the stock buybacks can offset that impact.

Keith Sherin, the finance unit’s chief, said that the American industrial giant already had a remarkable number of inquiries about the units of GE Capital before the announcement made on Friday.

Over a decade, the shares of General Electric Co fell 23 percent; the S&P edged up 75 percent.

Filed Under: Business & Company, Capital Markets Tagged With: GE Capital, GE shares, General Electric Co, Keith Sherin, Tom Donino

JP Morgan CEO warns of shortage of government-backed Treasury bonds

April 9, 2015 By Stephanie James Leave a Comment

Jamie_Dimon,_CEO_of_JPMorgan_Chase

JP Morgan Chase chief executive Jamie Dimon has cautioned against the shortage in supply of the government-backed Treasury bonds.

According to Dimon, the problem is set to grow in distinctly worse manner in the next economic crisis.

In a letter to the company’s shareholders this week, Dimon said, “In a crisis, everyone rushes into Treasuries to protect themselves. This will be even more true in the next crisis. But it seems to us that there is a greatly reduced supply of Treasuries to go around.”

The 59-year-old CEO underscored the day of last October when the Treasury bonds, which was normally stable, moved .04 percentage points, 40 basis points, in one fell swoop.

Dimon termed the move “unprecedented”, saying it is promoted by fears that the Federal Reserve Bank would slow its stimulating program for lending by buying large assets of the banks.

The issue which is underlying Dimon’s warning is his ever-ready concerns about the adverse impact of regulation on the banking sector. By underscoring the dramatic move in Treasuries last October, the CEO sought to highlight the impact of tougher capital requirements on demand for safe assets, such as Treasuries, in case of a downturn.

Dimon said, “In effect, there may be a shortage of all forms of good collateral.”

The banks will lead the charge to exhaust the Treasuries and other liquid assets in the condition of another downturn because of the stricter rules that defines about the quantity of liquid assets required by the banks to hold relative to potential outflows of cash.

 

 

Filed Under: Business & Company, Capital Markets Tagged With: Federal Reserve Bank, Jamie Dimon, JP Morgan Chase, Treasuries, Treasury bonds, Treasury shortage, US economy

Fed eyes weak economic data ahead of likely rate hike in June

April 8, 2015 By Stephanie James Leave a Comment

The-US-Federal-Reserve-II-A1

At a time when the world is watching the highly-anticipated interest rates hike in the United States, two top officials of the Federal Reserve Bank has said that they could still increase the key rates in June despite recently recorded weak economic data and the rising skepticism among the investors.

Fed Governor Jerome Powell and New York Fed President William Dudley revealed about the scenarios under which the US central bank could chose an earlier date than many expected now for raising the key rates.

Dudley, Federal Reserve’s policy committee’s permanent voting member, said, “I could imagine circumstances where a June rate hike could still be in play. If the economy’s strong, the unemployment rate is dropping, wages are rising, and the outlook is good, you could conceivably get to that point…The bar is probably a little bit higher for a June hike given recent data.”

Dudley is also a close ally of Federal Reserve Chairperson Janet Yellen.

Echoing similar sentiments, Powell said that he would wish to commence tightening policy even at the current low inflation levels. He also said that the Fed should proceed steadily from then in order to ensure continued economic recovery from the 2007-2009 recession.

“You cannot wait until you see the goal posts coming because monetary policy works with these long lags,” Powell said.

Powell further said that the US central bank could choose to move in June if the country’s economic data over the next two months give a clear indication that the economic recovery is on track.

“By the time of the June meeting we will have had a lot more incoming data on just about everything in the economy. June is a different world than today. I don’t think we need to be in a hurry, but you have to start well before you actually hit the goal,” the Fed official said.

The indication by the influential Fed officials amid the weak economic data has once again put the spotlight on the performance of the US economy over the next two months.

Disappointing US manufacturing activity, jobs growth and sales in retail sector over the winters had pushed the market expectations for an increase in interest rate to later in the year.

The month of June has long been seen as the earliest time when the Fed could tighten its monitory policy, after a long period of more than six years when it kept its rates near zero.

 

 

Filed Under: Business & Company, Capital Markets Tagged With: Federal Reserve Bank, Jerome Powell, US economic data, US interest rate hike, US jobs data, William Dudley

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