US Manufacturing Index fall less than forecast, Stock market rise, commodities decline
Global Market
Manufacturing in the U.S. contracted less than forecast, easing concern that consumer spending and business investment will cause a deeper economic slump.
Supply Management's manufacturing index increased to 48.6 from 48.3. Government reported that construction spending drop less than analyst forecast.
Treasuries dropped after the reports, with yields on 10-year notes rising to 3.56 percent from 3.42 percent. The Standard & Poor's 500 stock index closed up 3.6 percent at 1,370.2. Fed will elaborate on the economic outlook before the Joint Economic Committee of Congress.
The 0.3 percent decrease in construction spending was smaller than analyst forecast. Homebuilding is likely to slow economic growth as sales continue to fall and builders delay new projects. Stricter lending standards spawned by mortgage defaults are restraining commercial projects.
Boeing Co., General Electric Co. and United Technologies Corp.'s said they aren't seeing a slowdown in commercial aerospace demand even as fuel prices rise, credit markets tighten and U.S. and European economies weaken. Boeing will deliver 28,600 aircraft valued at $2.8 trillion between 2007 and 2026. More than half of GE's annual sales came from outside the U.S. in 2007. Higher energy costs are hurting companies' profits and ability to spend on employment and on equipment.
Sherwin-Williams Co. reduced its earnings forecasts as falling domestic sales and surging raw-material costs. Oil prices are cutting profit margins as they uses petroleum-derived chemicals as raw materials. Corporate profits dropped 3.3 percent.
Consumer spending has been stagnant and businesses have cut orders for long-lasting goods. Plummeting confidence in the economy and lower profits indicate spending is unlikely to rebound in coming months.
J.C. Penney Co. said sales through the Easter holidays were below expectations and the rest of the year will be difficult. The retailer lowered profit forecast and sales would decline.
Stock Market
The U.S. stock market rise after Lehman Brothers Holdings Inc. and UBS AG raising $19 billion to replenish capital and spurring speculation that banks can weather credit losses.
Lehman rose and UBS sparked a rally in Europe on expectations that they will recover from mortgage-related losses. General Electric Co. and United Technologies Corp. led industrial shares higher after manufacturing index contracted less than forecast.
The Standard & Poor's 500 Index added 47.48 points to 1,370.18. The Dow Jones climbed 391.47 to 12,654.36. The Nasdaq Composite Index gained 83.65 to 2,362.75.
The S&P 500 has risen 7.6 percent on speculation the Federal Reserve's aggressive reduction of interest rates will stem credit- market losses and spur banks to lend to businesses and consumers. The benchmark for equities lost 9.9 percent on concern that the U.S. economy is in a recession.
Lehman climbed $6.70 to $44.34 after raising $4 billion from a stock sale. They rise the size of its offering shares to 4 million from 3 million on cause demand significantly outpaced supply. Merrill Lynch & Co. gained $5.28 to $46.02.
UBS gained $4.21 to $33.01. They will seek $15 billion by offering shares to existing holders, on top of 13 billion francs already raised. UBS shares were raised to buy by analysts. Fannie Mae jumped $5.18 to $31.50. Freddie Mac advanced $3.90 to $29.22. They also are seeing to raise capital. Citigroup Inc. climbed $2.42 to $23.84. Bank of America Corp. added $2.95 to $40.86. JPMorgan Chase & Co. rose $4.05 to $47.
Morgan Stanley climbed $3.15 to $48.85. They said its liquidity reserves have averaged $125 billion as the company strengthened its balance sheet. Liquidity reserves include cash deposits and quality securities as collateral.
GE climbed $1.42 to $38.43. United Technologies added $2.42 to $71.24.
The ISM's index increased to 48.6, signaling demand from overseas is sustaining manufacturing while consumer spending and business investment are stagnating.
Motorola Inc. gained 17 cents to $9.47. Videocon Group may offer to buy Motorola's mobile-phone business. Thornburg Mortgage Inc. gained 20 percent to $1.45 after raising $1.35 billion to stave off bankruptcy. The company received $1.15 billion from the sale of common stock, warrants and notes. They will get $200 million more after the transaction are completed.
Clear Channel Communications Inc. fell 72 cents to $28.50. Six banks being sued for refusing to fund a proposed buyout of the company. They asked court to delay trial date because they want to negotiate.
Goldcorp Inc. and Barrick Gold Corp. led miners lower as gold fell below $900 an ounce. Goldcorp lost $1.29 to $37.46. Barrick Gold decreased $1.53 to $41.92.
The benchmark index for U.S. stock-option prices fell. The Chicago Board Options Exchange Volatility Index retreated 11 percent to 22.68.
The dollar rose against the euro and the yen and Treasury yields climbed as traders pared bets on interest-rate cuts by the Fed. The odds of a half-point cut by the Fed slid to 22 percent.
Lehman Brothers Holdings Inc. rose after raising $4 billion from a stock sale and quelling speculation it's short of capital. Lehman gained 18 percent after they increased the size of preferred shares from 3 million to 4 million and said it had demand for 14 million. The stock climbed $6.70 to $44.34. Investors are betting Lehman will escape the fate of Bear Stearns Cos. The shares pay a coupon of 7.25 percent and are convertible to stock when Lehman shares reach $49.87.
They are trying to reassure investors after speculation that Lehman would face a problem similar to Bear Stearns. Merrill Lynch & Co., Citigroup Inc. and Morgan Stanley have also raised cash from investors after writedowns and losses tied to mortgage markets.
Investors paid $1,000 for each Lehman preferred stock, which can convert to 20.0509 common shares once the stock reaches $49.87.
The investment bank is sharing information on short-sellers of its stock with the SEC. The SEC is investigating whether some investors have been spreading rumors about Lehman while benefiting from a drop in the share price.
Merrill Lynch raised $6.6 billion in January by selling preferred shares to the Kuwaiti Investment Authority and Japan's Mizuho Financial Group Inc. Merrill's convertible securities will pay a 9 percent annual dividend until they automatically turn into Merrill shares in 2 1/2 years. The conversion premium is 17 percent on Merrill's convertibles.
Countrywide Financial Corp. sold preferred stock to Bank of America Corp. to bolster its finances. That wasn't enough to save the company, they agreed to sell itself to Bank of America in January.
UBS AG said it's seeking a cash infusion of $15 billion to rebuild capital after loss linked to subprime mortgages. Deutsche Bank AG will write down $3.9 billion in loans and asset-backed securities as a result of subprime problems.
Bear Stearns agreed to sell itself to JPMorgan Chase & Co. with support from the Federal Reserve. Bear Stearns resisted calls to raise capital before its demise, arguing its balance sheet was strong enough.
Currencies
The dollar advance against the euro on speculation large financial institutions will weather credit market losses.
The U.S. currency rose against the euro as UBS AG and Lehman Brothers Holdings Inc. raise a total of $19 billion. The yen fell versus all of the major currencies as a U.S. stock rally encouraged traders to buy higher-yielding assets funded by cheap loans in Japan.
Against the euro, the dollar traded at $1.5609. The dollar traded at 101.85 yen. The euro traded at 158.99 yen.
The Dollar Index rose 1.1 percent to 72.563, as traders reduced bets that the Federal Reserve will lower the target lending rate by a half-percentage point this month.
Japan's currency fell against the South African rand, South Korean won and Brazilian real as the Standard & Poor's 500 Index surged 3.6 percent. The Swiss franc dropped against most of the major currencies.
The U.S. currency rose to 1.0131 against the Swiss franc as UBS said it will write down $19 billion on debt securities. The firm will seek $15 billion in a rights offering to replenish capital. The dollar extended its gain against the euro as Lehman raised $4 billion from a stock sale. It increased the size of its offering to 4 million convertible preferred shares from 3 million.
The dollar will likely rise to $1.55 per euro and remain little changed near 100 yen by the end of June.
Commodities
Gold
Gold plunged below $900 an ounce as investors shifted money to equities on signs banks are rebounding from U.S. subprime- mortgage losses. U.S. stocks rose and the dollar rallied against the euro after UBS AG and Lehman Brothers Holdings Inc. were raising $19 billion to replenish capital.
Gold futures for June delivery tumbled $33.70 to $887.80 an ounce. Silver futures for May delivery fell 42 cents to $16.89 an ounce. The euro traded $1.5564 today.
U.S. mortgage defaults have caused $230 billion in credit losses and writedowns at financial companies worldwide. The dollar rallied after UBS announced plans to seek $15 billion in a rights offering. They reported an $11.9 billion first-quarter loss today.
Wide price fluctuations in precious metals have reduced investor demand. The historical volatility of gold futures was 42 percent in the past 10 days, compared with 15 percent a month earlier.
Manufacturing in the U.S. contracted less than forecast, easing concern that consumer spending and business investment will cause a deeper economic slump.
Supply Management's manufacturing index increased to 48.6 from 48.3. Government reported that construction spending drop less than analyst forecast.
Treasuries dropped after the reports, with yields on 10-year notes rising to 3.56 percent from 3.42 percent. The Standard & Poor's 500 stock index closed up 3.6 percent at 1,370.2. Fed will elaborate on the economic outlook before the Joint Economic Committee of Congress.
The 0.3 percent decrease in construction spending was smaller than analyst forecast. Homebuilding is likely to slow economic growth as sales continue to fall and builders delay new projects. Stricter lending standards spawned by mortgage defaults are restraining commercial projects.
Boeing Co., General Electric Co. and United Technologies Corp.'s said they aren't seeing a slowdown in commercial aerospace demand even as fuel prices rise, credit markets tighten and U.S. and European economies weaken. Boeing will deliver 28,600 aircraft valued at $2.8 trillion between 2007 and 2026. More than half of GE's annual sales came from outside the U.S. in 2007. Higher energy costs are hurting companies' profits and ability to spend on employment and on equipment.
Sherwin-Williams Co. reduced its earnings forecasts as falling domestic sales and surging raw-material costs. Oil prices are cutting profit margins as they uses petroleum-derived chemicals as raw materials. Corporate profits dropped 3.3 percent.
Consumer spending has been stagnant and businesses have cut orders for long-lasting goods. Plummeting confidence in the economy and lower profits indicate spending is unlikely to rebound in coming months.
J.C. Penney Co. said sales through the Easter holidays were below expectations and the rest of the year will be difficult. The retailer lowered profit forecast and sales would decline.
Stock Market
The U.S. stock market rise after Lehman Brothers Holdings Inc. and UBS AG raising $19 billion to replenish capital and spurring speculation that banks can weather credit losses.
Lehman rose and UBS sparked a rally in Europe on expectations that they will recover from mortgage-related losses. General Electric Co. and United Technologies Corp. led industrial shares higher after manufacturing index contracted less than forecast.
The Standard & Poor's 500 Index added 47.48 points to 1,370.18. The Dow Jones climbed 391.47 to 12,654.36. The Nasdaq Composite Index gained 83.65 to 2,362.75.
The S&P 500 has risen 7.6 percent on speculation the Federal Reserve's aggressive reduction of interest rates will stem credit- market losses and spur banks to lend to businesses and consumers. The benchmark for equities lost 9.9 percent on concern that the U.S. economy is in a recession.
Lehman climbed $6.70 to $44.34 after raising $4 billion from a stock sale. They rise the size of its offering shares to 4 million from 3 million on cause demand significantly outpaced supply. Merrill Lynch & Co. gained $5.28 to $46.02.
UBS gained $4.21 to $33.01. They will seek $15 billion by offering shares to existing holders, on top of 13 billion francs already raised. UBS shares were raised to buy by analysts. Fannie Mae jumped $5.18 to $31.50. Freddie Mac advanced $3.90 to $29.22. They also are seeing to raise capital. Citigroup Inc. climbed $2.42 to $23.84. Bank of America Corp. added $2.95 to $40.86. JPMorgan Chase & Co. rose $4.05 to $47.
Morgan Stanley climbed $3.15 to $48.85. They said its liquidity reserves have averaged $125 billion as the company strengthened its balance sheet. Liquidity reserves include cash deposits and quality securities as collateral.
GE climbed $1.42 to $38.43. United Technologies added $2.42 to $71.24.
The ISM's index increased to 48.6, signaling demand from overseas is sustaining manufacturing while consumer spending and business investment are stagnating.
Motorola Inc. gained 17 cents to $9.47. Videocon Group may offer to buy Motorola's mobile-phone business. Thornburg Mortgage Inc. gained 20 percent to $1.45 after raising $1.35 billion to stave off bankruptcy. The company received $1.15 billion from the sale of common stock, warrants and notes. They will get $200 million more after the transaction are completed.
Clear Channel Communications Inc. fell 72 cents to $28.50. Six banks being sued for refusing to fund a proposed buyout of the company. They asked court to delay trial date because they want to negotiate.
Goldcorp Inc. and Barrick Gold Corp. led miners lower as gold fell below $900 an ounce. Goldcorp lost $1.29 to $37.46. Barrick Gold decreased $1.53 to $41.92.
The benchmark index for U.S. stock-option prices fell. The Chicago Board Options Exchange Volatility Index retreated 11 percent to 22.68.
The dollar rose against the euro and the yen and Treasury yields climbed as traders pared bets on interest-rate cuts by the Fed. The odds of a half-point cut by the Fed slid to 22 percent.
Lehman Brothers Holdings Inc. rose after raising $4 billion from a stock sale and quelling speculation it's short of capital. Lehman gained 18 percent after they increased the size of preferred shares from 3 million to 4 million and said it had demand for 14 million. The stock climbed $6.70 to $44.34. Investors are betting Lehman will escape the fate of Bear Stearns Cos. The shares pay a coupon of 7.25 percent and are convertible to stock when Lehman shares reach $49.87.
They are trying to reassure investors after speculation that Lehman would face a problem similar to Bear Stearns. Merrill Lynch & Co., Citigroup Inc. and Morgan Stanley have also raised cash from investors after writedowns and losses tied to mortgage markets.
Investors paid $1,000 for each Lehman preferred stock, which can convert to 20.0509 common shares once the stock reaches $49.87.
The investment bank is sharing information on short-sellers of its stock with the SEC. The SEC is investigating whether some investors have been spreading rumors about Lehman while benefiting from a drop in the share price.
Merrill Lynch raised $6.6 billion in January by selling preferred shares to the Kuwaiti Investment Authority and Japan's Mizuho Financial Group Inc. Merrill's convertible securities will pay a 9 percent annual dividend until they automatically turn into Merrill shares in 2 1/2 years. The conversion premium is 17 percent on Merrill's convertibles.
Countrywide Financial Corp. sold preferred stock to Bank of America Corp. to bolster its finances. That wasn't enough to save the company, they agreed to sell itself to Bank of America in January.
UBS AG said it's seeking a cash infusion of $15 billion to rebuild capital after loss linked to subprime mortgages. Deutsche Bank AG will write down $3.9 billion in loans and asset-backed securities as a result of subprime problems.
Bear Stearns agreed to sell itself to JPMorgan Chase & Co. with support from the Federal Reserve. Bear Stearns resisted calls to raise capital before its demise, arguing its balance sheet was strong enough.
Currencies
The dollar advance against the euro on speculation large financial institutions will weather credit market losses.
The U.S. currency rose against the euro as UBS AG and Lehman Brothers Holdings Inc. raise a total of $19 billion. The yen fell versus all of the major currencies as a U.S. stock rally encouraged traders to buy higher-yielding assets funded by cheap loans in Japan.
Against the euro, the dollar traded at $1.5609. The dollar traded at 101.85 yen. The euro traded at 158.99 yen.
The Dollar Index rose 1.1 percent to 72.563, as traders reduced bets that the Federal Reserve will lower the target lending rate by a half-percentage point this month.
Japan's currency fell against the South African rand, South Korean won and Brazilian real as the Standard & Poor's 500 Index surged 3.6 percent. The Swiss franc dropped against most of the major currencies.
The U.S. currency rose to 1.0131 against the Swiss franc as UBS said it will write down $19 billion on debt securities. The firm will seek $15 billion in a rights offering to replenish capital. The dollar extended its gain against the euro as Lehman raised $4 billion from a stock sale. It increased the size of its offering to 4 million convertible preferred shares from 3 million.
The dollar will likely rise to $1.55 per euro and remain little changed near 100 yen by the end of June.
Commodities
Gold
Gold plunged below $900 an ounce as investors shifted money to equities on signs banks are rebounding from U.S. subprime- mortgage losses. U.S. stocks rose and the dollar rallied against the euro after UBS AG and Lehman Brothers Holdings Inc. were raising $19 billion to replenish capital.
Gold futures for June delivery tumbled $33.70 to $887.80 an ounce. Silver futures for May delivery fell 42 cents to $16.89 an ounce. The euro traded $1.5564 today.
U.S. mortgage defaults have caused $230 billion in credit losses and writedowns at financial companies worldwide. The dollar rallied after UBS announced plans to seek $15 billion in a rights offering. They reported an $11.9 billion first-quarter loss today.
Wide price fluctuations in precious metals have reduced investor demand. The historical volatility of gold futures was 42 percent in the past 10 days, compared with 15 percent a month earlier.
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