The summer has come to an end, and so has the market slump that came with it. With little on tap to challenge the recent rally, stocks are on track to close September with the biggest monthly gains in over a year.
Though September is typically down month on Wall Street and the economic recovery remains sluggish, investors have taken cues from recent upbeat economic news to propel major indexes sharply higher during the month after a sell-off in August.
"We've been seeing modestly favorable economic numbers lately, which has allowed markets to keep moving up," said Stephen Carl, head equity trader at Williams Capital Group.
So far, the Dow has rallied 8.4%, which would be the best monthly gain since July 2009, when the blue-chip index added 8.6%. The latest lift also puts the Dow on track for its best September since 1939, when it rose 13.5%.
The S&P has rallied 9.5%, the largest increase since April 2009, and the Nasdaq has surged 12.6%, the biggest jump since October 2002.
Last week, stocks rose more than 2% after the major indexes broke above key technical levels early in the week. That encouraged investors to keep the momentum going, and stocks ended with a rally to fresh four-month highs.
Though the economy is still not out of the woods, analysts don't foresee a pullback in stocks in the week ahead.
"We've got a frilly light week ahead in economic data until the last couple of days, and as long those readings come in near expectations, the markets will be able to sustain the recent gains," said Michael Sheldon, chief market strategist at RDM Financial Group.
And even if poor economic news triggers some volatility and puts pressure on stocks, Sheldon said the recent momentum should be enough for investors to close September and the third quarter on a positive note.
On the docket
Monday: There are no market-moving economic or corporate events expected on Monday.
Tuesday: The Case-Shiller 20-city home price index is expected to have increased 3.4% in July after rising 4.2% in June.
After the start of trading, the Conference Board releases its Consumer Confidence index for September. Economists forecast the index to have edged down to 52.9 during the month from 53.5 in August.
Wednesday: The government's weekly oil inventory report is due after the start of trading.
Thursday: The third and final reading on gross domestic product growth in the second quarter is due before the bell. The economy is expected to have expanded at a 1.6% annualized rate, unchanged from the previous reading, and still sharply lower from the initial reading had been for a 2.4% growth rate in the period.
At the same time, the Department of Labor releases a weekly report on jobless claims. The number of Americans filing new claims for unemployment insurance is expected to have decreased to 457,000 last week from 465,000 in the previous week.
Continuing claims, a measure of Americans who have been receiving benefits for a week or more, are expected to have dropped to 4.45 million from 4.49 million claims the previous week.
The Chicago PMI, a regional reading on manufacturing activity, will be released after the bell. The measure is expected to have eased to 56.0 in September from 56.7 in August.
Friday: A government report on personal income and spending is due before the opening bell. Economists surveyed by Briefing.com expect income to have edged up 0.3% in August after rising 0.2% in July. Spending is forecast to tick up 0.3% after increasing 0.4%.
The University of Michigan's final reading on consumer sentiment in September is due shortly after the market open. It's expected to inch up to 67.1 from the last reading 66.6.
The Institute for Supply Management's (ISM) index of manufacturing is also due after the start of trading. Economists forecast the index to have slipped to 54.5 in September from 56.3 in August. Any number above 50 indicates growth in the sector.
Meanwhile, the government is expected to report that construction spending fell 0.5% in August, after dropping 1% in July.
Auto and truck sales for September are due throughout the day.
Saturday, September 25, 2010
US Credit Union Trade Groups Praise NCUA Rescue Plan
WASHINGTON (Dow Jones)--Two major trade associations for the credit union industry tentatively praised the rescue plan unveiled by federal regulators Friday for the nation's so-called wholesale credit unions.
The National Credit Union Administration announced the plan, which aims to stabilize a crucial part of the credit-union industry battered by losses on risky subprime mortgage-backed securities. As part of the effort, the regulator announced a plan to manage $50 billion of troubled assets inherited from failed institutions. NCUA plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets.
Federal regulators also seized three wholesale credit unions, bringing to five the number of wholesale institutions deemed by the government to be not financially viable.
Fred Becker, president of the National Association of Federal Credit Unions, called the seizure of the three corporate credit unions "very unfortunate."
But he praised the final version of new rules governing the corporate credit unions, also approved Friday, and the plan announced by NCUA to deal with troubled assets.
Both items were "not only as we expected, but as we had advocated on behalf of federal credit unions," Becker said.
On the troubled asset plan, NAFCU's members were particularly interested to have the bonds backed by the troubled assets backed by the government and for credit unions to be able to buy the bonds, he said.
"There are some potentially positive aspects for credit unions in the actions that NCUA has taken, the biggest being that credit unions will only have to cover the actual, eventual credit losses--and nothing else, including market losses," said Bill Cheney, president and chief executive of the Credit Union National Association.
Both officials said they needed time to digest the news fully.
NCUA estimates that total future assessments on the credit union industry to recoup losses from the troubled assets will range from $7 billion to $9.2 billion, which will be spread out over about 10 years.
That's a longer timeframe than credit unions originally expected, and it was approved by Treasury Secretary Timothy Geithner as part of the overall rescue plan.
"While nobody wants to pay the assessments, [the longer timeframe] will make the assessments much more palatable for the industry as a whole," said NAFCU's Becker in an interview.
"Credit unions can and will absorb the expense," said CUNA's Cheney. "They have the resources to do so, as they are generally well capitalized. Consumers will not feel any impact."
-By Victoria McGrane, Dow Jones Newswires; 202-862-9267; victoria.mcgrane@dowjones.com.
The National Credit Union Administration announced the plan, which aims to stabilize a crucial part of the credit-union industry battered by losses on risky subprime mortgage-backed securities. As part of the effort, the regulator announced a plan to manage $50 billion of troubled assets inherited from failed institutions. NCUA plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets.
Federal regulators also seized three wholesale credit unions, bringing to five the number of wholesale institutions deemed by the government to be not financially viable.
Fred Becker, president of the National Association of Federal Credit Unions, called the seizure of the three corporate credit unions "very unfortunate."
But he praised the final version of new rules governing the corporate credit unions, also approved Friday, and the plan announced by NCUA to deal with troubled assets.
Both items were "not only as we expected, but as we had advocated on behalf of federal credit unions," Becker said.
On the troubled asset plan, NAFCU's members were particularly interested to have the bonds backed by the troubled assets backed by the government and for credit unions to be able to buy the bonds, he said.
"There are some potentially positive aspects for credit unions in the actions that NCUA has taken, the biggest being that credit unions will only have to cover the actual, eventual credit losses--and nothing else, including market losses," said Bill Cheney, president and chief executive of the Credit Union National Association.
Both officials said they needed time to digest the news fully.
NCUA estimates that total future assessments on the credit union industry to recoup losses from the troubled assets will range from $7 billion to $9.2 billion, which will be spread out over about 10 years.
That's a longer timeframe than credit unions originally expected, and it was approved by Treasury Secretary Timothy Geithner as part of the overall rescue plan.
"While nobody wants to pay the assessments, [the longer timeframe] will make the assessments much more palatable for the industry as a whole," said NAFCU's Becker in an interview.
"Credit unions can and will absorb the expense," said CUNA's Cheney. "They have the resources to do so, as they are generally well capitalized. Consumers will not feel any impact."
-By Victoria McGrane, Dow Jones Newswires; 202-862-9267; victoria.mcgrane@dowjones.com.
Stock What Does Stock Mean?
A security that represents ownership in a corporation and has claims on part of the corporation's assets and earnings per share. There are two main types of stock: (1) common and (2) preferred. (1) Common stock usually entitles the owner to vote at shareholders' meetings and receive dividends when applicable. (2) Preferred stock generally does not include voting rights but has a priority claim on assets and earnings ahead of common shares. For example, owners of preferred stock receive dividends before common shareholders do and are in the front of the line if a company goes bankrupt and is liquidated. Also known as shares or equity.
Investopedia explains Stock
A stockholder (a shareholder) has a claim to part of the corporation's assets and earnings. In other words, a shareholder is an owner of the company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and an investor owns 100 shares, that investor owns and has a claim to 10% of the company's assets. Stocks are a major component of investor portfolios because historically they outperform most other investments over the long run.
Investopedia explains Stock
A stockholder (a shareholder) has a claim to part of the corporation's assets and earnings. In other words, a shareholder is an owner of the company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and an investor owns 100 shares, that investor owns and has a claim to 10% of the company's assets. Stocks are a major component of investor portfolios because historically they outperform most other investments over the long run.
NYSE stocks posting largest volume decreases
Related Quotes
On Friday September 24, 2010, 6:04 pm EDT
NEW YORK (AP) -- A look at the 10 biggest volume decliners on New York Stock Exchange at the close of trading: : :Advanced Micro Devices Inc. rose 11.8 percent to $6.12 with 145,661,200 shares traded.
Bank of America Corp. rose 1.5 percent to $13.40 with 718,022,200 shares traded.
Citigroup Inc. rose 1.2 percent to $3.95 with 1,868,108,000 shares traded.
EMC Corp. rose 5.2 percent to $20.57 with 132,195,500 shares traded.
Ford Motor Co. rose .6 percent to $12.49 with 247,811,100 shares traded.
General Electric Co. rose 2.3 percent to $16.29 with 283,646,400 shares traded.
Motorola Inc. rose 3.6 percent to $8.38 with 107,006,500 shares traded.
Pfizer Inc. rose 2.0 percent to $17.06 with 197,687,100 shares traded.
Qwest Communications International Inc. rose 1.1 percent to $6.18 with 162,031,900 shares traded.
Wells Fargo & Co. rose 1.6 percent to $26.01 with 198,269,300 shares traded
Ford Venture to Spend $500 Million to Construct Plant in Chongqing, China bloomberg
China venture Changan Ford Mazda Automobile Co. signed an agreement with the Chongqing municipal government to spend $500 million to build an engine plant in the western Chinese city of Chongqing.
The planned plant will more than double Ford’s existing engine capacity in China, according to an e-mailed statement from the company.
The engine factory will be Changan Ford Mazda Automobile’s second and will add capacity of 400,000 units, according to the statement. The plant will mainly supply the venture’s vehicle- assembly lines in Chongqing, it said.
Construction will begin next year and engine production will start in 2013, Ford said in the statement.
Changan Ford Mazda Automobile is a venture between Chongqing Changan Automobile Co., Ford and Mazda Motor Corp.
To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net
The planned plant will more than double Ford’s existing engine capacity in China, according to an e-mailed statement from the company.
The engine factory will be Changan Ford Mazda Automobile’s second and will add capacity of 400,000 units, according to the statement. The plant will mainly supply the venture’s vehicle- assembly lines in Chongqing, it said.
Construction will begin next year and engine production will start in 2013, Ford said in the statement.
Changan Ford Mazda Automobile is a venture between Chongqing Changan Automobile Co., Ford and Mazda Motor Corp.
To contact the editor responsible for this story: Stanley James at sjames8@bloomberg.net
Regulators shut banks in Florida, Washington state
WASHINGTON (AP) -- Regulators on Friday shut down small banks in Florida and Washington state, bringing to 127 the number of U.S. bank failures this year on a wave of loan defaults and economic distress.
The Federal Deposit Insurance Corp. took over Haven Trust Bank Florida of Ponte Vedra Beach, Fla., with $148.6 million in assets and $133.6 million in deposits, and North County Bank, based in Arlington, Wash., with $288.8 million in assets and $276.1 million in deposits.
First Southern Bank, based in Boca Raton, Fla., agreed to assume the assets and deposits of Haven Trust Bank Florida. In addition, the FDIC and First Southern Bank agreed to share losses on $127.3 million of Haven Trust Bank Florida's loans and other assets.
Whidbey Island Bank, based in Coupeville, Wash., is acquiring the assets and deposits of North County Bank. The FDIC and Whidbey Island Bank agreed to share losses on $221.9 million of North County Bank's assets.
The failure of North County Bank is expected to cost the deposit insurance fund $72.8 million.
The failure of Haven Trust Bank Florida is expected to cost the fund $31.9 million. It was the 24th bank in Florida to fail this year.
Florida is among the hardest hit states for bank collapses, as the meltdown in the real estate market brought an avalanche of soured mortgage loans. Also high on the list of failure-heavy states are California, Georgia and Illinois.
With 127 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 95 banks.
The pace has accelerated as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.
The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.
The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of June 30.
The number of banks on the FDIC's confidential "problem" list jumped to 829 in the second quarter from 775 three months earlier, even as the industry as a whole had its best quarter since 2007, making $21.6 billion in net income. Banks with more than $10 billion in assets -- only 1.3 percent of the industry -- accounted for $19.9 billion of the total earnings.
The FDIC expects the cost of resolving failed banks to total around $60 billion from 2010 through 2014.
The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.
Depositors' money -- insured up to $250,000 per account -- is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.
The Federal Deposit Insurance Corp. took over Haven Trust Bank Florida of Ponte Vedra Beach, Fla., with $148.6 million in assets and $133.6 million in deposits, and North County Bank, based in Arlington, Wash., with $288.8 million in assets and $276.1 million in deposits.
First Southern Bank, based in Boca Raton, Fla., agreed to assume the assets and deposits of Haven Trust Bank Florida. In addition, the FDIC and First Southern Bank agreed to share losses on $127.3 million of Haven Trust Bank Florida's loans and other assets.
Whidbey Island Bank, based in Coupeville, Wash., is acquiring the assets and deposits of North County Bank. The FDIC and Whidbey Island Bank agreed to share losses on $221.9 million of North County Bank's assets.
The failure of North County Bank is expected to cost the deposit insurance fund $72.8 million.
The failure of Haven Trust Bank Florida is expected to cost the fund $31.9 million. It was the 24th bank in Florida to fail this year.
Florida is among the hardest hit states for bank collapses, as the meltdown in the real estate market brought an avalanche of soured mortgage loans. Also high on the list of failure-heavy states are California, Georgia and Illinois.
With 127 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 95 banks.
The pace has accelerated as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.
The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.
The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of June 30.
The number of banks on the FDIC's confidential "problem" list jumped to 829 in the second quarter from 775 three months earlier, even as the industry as a whole had its best quarter since 2007, making $21.6 billion in net income. Banks with more than $10 billion in assets -- only 1.3 percent of the industry -- accounted for $19.9 billion of the total earnings.
The FDIC expects the cost of resolving failed banks to total around $60 billion from 2010 through 2014.
The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.
Depositors' money -- insured up to $250,000 per account -- is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.
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