Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts

Wall Street advances as data outweighs budget cuts

NEW YORK (Reuters) - Stocks advanced modestly on Friday, leaving the S&P 500 with slight gains in a volatile week as strong economic data overshadowed growth concerns in China and Europe and let investors discount the impact of expected government spending cuts.


Stocks opened sharply lower for the session as Asian factories slowed and European output fell, but most of the losses evaporated after a report showed manufacturing activity expanded last month at its fastest clip in 20 months.


Consumer sentiment also rose in February as Americans turned more optimistic about the job market.


With $85 billion in government budget cuts set to begin, President Barack Obama blamed Republicans for failure to reach a compromise to avert the cuts, known as sequester. But the stock market appeared to have already priced in the failure by legislators to reach an agreement.


"We were able to dig out of that hole, but not make any great strides on it either," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We will probably be in a holding pattern pending some big development on a broader budget deal."


The Dow Jones industrial average <.dji> gained 35.17 points, or 0.25 percent, to 14,089.66 at the close. The Standard & Poor's 500 Index <.spx> added 3.52 points, or 0.23 percent, to 1,518.20. The Nasdaq Composite Index <.ixic> advanced 9.55 points, or 0.30 percent, to 3,169.74.


For the week, the Dow rose 0.6 percent, the S&P 500 edged up 0.2 percent and the Nasdaq gained 0.3 percent.


The slight gains for equities came during a volatile week that saw markets decline on Monday after uncertain Italian elections, only to rebound in the next two sessions as Federal Reserve Chairman Ben Bernanke defended the central bank's stimulus measures.


The low interest rates due to the Federal Reserve's accommodative monetary policy have helped equities continue to attract investors. The Dow is less than 1 percent away from its all-time intraday high of 14,198.10. Declines have been shallow and short-lived, with investors jumping in to buy on dips.


Intuitive Surgical jumped 8.5 percent to $553.40 after Cantor Fitzgerald analyst Jeremy Feffer upgraded the stock, saying the stock's slide of more than 11 percent on Thursday was a gross overreaction to a news report.


Groupon Inc surged 12.6 percent to $5.10 a day after the online coupon company fired its chief executive officer in the wake of weak quarterly results.


Gap Inc rose 2.9 percent to $33.87 after the clothing retailer reported fourth-quarter earnings that beat expectations and boosting its dividend by 20 percent, while Salesforce.com Inc posted sales that beat forecasts, driving its stock up 7.6 percent to $182.


Chesapeake Energy Corp fell 2.4 percent to $19.67 after the U.S. Securities and Exchange Commission escalated its investigation into the company and its Chief Executive Aubrey McClendon for a controversial perk that granted him a share in each of the natural gas producer's wells.


Volume was modest with about 6.72 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, slightly above the daily average of 6.5 billion.


Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 17 to 13, while on the Nasdaq, seven stocks rose for about every five stocks that fell.


(Editing by Jan Paschal)



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Wall Street gains on Bernanke comments, S&P above 1,500

NEW YORK (Reuters) - Stocks rose on Wednesday, with major indexes posting their best daily gains since early January, as Federal Reserve Chairman Ben Bernanke remained steadfast in supporting the Fed's stimulus policy and data pointed to economic improvement.


In a second day before a congressional committee, Bernanke defended the Fed's buying of bonds to keep interest rates low to boost growth. The market's jump of more than 1 percent also came on better-than-expected data on business spending plans and the housing market.


Bernanke's remarks helped the market rebound from its worst decline since November and put the S&P 500 index back above 1,500, a closely watched level that has been technical support until recently. The Dow Jones industrial average <.dji> closed at a level not seen since 2007 as it again pulled within striking distance of an all-time high.


Speaking before the House Financial Services Committee, Bernanke downplayed signs of internal divisions at the Fed, saying the policy of quantitative easing, or QE, has the support of a "significant majority" of top central bank officials.


Bernanke removed a headwind from markets arising from concerns the Fed's quantitative easing might end earlier than anticipated. Doubts about the Fed's intentions had broken a seven-week streak of gains by stocks.


"The Fed continues to encourage risk-taking in markets, which is a powerful tool that makes the danger not being long stocks, not in being too long," said Tom Mangan, a money manager at James Investment Research Inc in Xenia, Ohio.


The Dow Jones industrial average <.dji> was up 176.32 points, or 1.27 percent, at 14,076.45. The Standard & Poor's 500 Index <.spx> was up 19.07 points, or 1.27 percent, at 1,516.01. The Nasdaq Composite Index <.ixic> was up 32.61 points, or 1.04 percent, at 3,162.26.


Pending home sales jumped 4.5 percent in January, three times the rate of growth that had been expected. While orders for durable goods fell more than expected in January, non-defense capital goods orders excluding aircraft - a closely watched proxy for business spending plans - showed the biggest gain since December 2011.


About 74 percent of stocks traded on the New York Stock Exchange closed higher while 64 percent of Nasdaq-listed shares closed up.


The S&P turned very slightly higher on the week, recovering from the index's biggest daily drop since November on Monday. That drop came on concerns over Italy's election, as well as over sequestration - U.S. government budget cuts that will take effect starting on Friday if lawmakers fail to reach an agreement on spending and taxes.


The index had climbed 6.3 percent for the year before pulling back on concerns about Fed policy and inconclusive elections in Italy, which rekindled fears of a new euro zone debt crisis.


"While the rally remains intact and there are reasons to be long-term bullish here, there are also reasons to not be surprised if we get a correction," said Mangan, who helps oversee $3.7 billion.


In earnings news, Priceline.com gained 2.6 percent to $695.91 after reporting adjusted earnings that beat expectations. TJX Cos Inc jumped 2.5 percent to $44.75 after the retail chain operator posted higher fourth-quarter results.


The S&P retail index <.spxrt> climbed 1.6 percent.


Target Corp offered a cautious outlook for consumer spending in 2013 following a weak holiday quarter. The stock dipped 1.1 percent to $63.32.


First Solar Inc plunged 14 percent to $27.04 after failing to give a full-year earnings and sales outlook, though it also swung to a quarterly profit.


Groupon Inc plunged 21 percent to $4.70 after the bell after reporting its fourth-quarter results.


With 93 percent of the S&P 500 companies having reported results so far, 69.5 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6.2 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


About 6.23 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, slightly below the daily average so far this year of about 6.48 billion shares.


(Editing by Nick Zieminski and Kenneth Barry)



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Wall Street rebounds on Bernanke comments, data

NEW YORK (Reuters) - U.S. stocks rebounded from their worst decline since November on Tuesday after Federal Reserve Chairman Ben Bernanke defended the Fed's bond-buying stimulus and sales of new homes hit a 4 1/2-year high.


The S&P 500 had climbed 6 percent for the year and came within reach of all-time highs before the minutes from the Fed's January meeting were released last Wednesday. Since then, the benchmark S&P 500 has fallen 1 percent.


Bernanke, in testimony on Tuesday before the Senate Banking Committee, strongly defended the Fed's bond-buying stimulus program and quieted rumblings that the central bank may pull back from its stimulative policy measures, which were sparked by the release of the Fed minutes last week.


Bernanke's comments helped ease investors' concerns about a stalemate in Italy after a general election failed to give any party a parliamentary majority, posing the threat of prolonged instability and financial crisis in Europe, and sending the S&P 500 to its worst decline since November 7 in Monday's session.


Bernanke "certainly said everything the market needed to feel in order to get comfortable again," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.


"The fear is we were going to see a rollover, and the first shot over the bow was what we saw out of Italy yesterday with the elections," Kenny said. "When it came to U.S. markets, we saw some of that bleeding stop because our focus shifted from the Italian political circus to Ben Bernanke."


Gains in homebuilders and other consumer stocks, following strong economic data, lifted the S&P 500, and a 5.7 percent jump in Home Depot to $67.56 boosted the Dow industrials. The PHLX housing sector index <.hgx> rose 3.2 percent.


Economic reports that showed strength in housing and consumer confidence also supported stocks. U.S. home prices rose more than expected in December, according to the S&P/Case-Shiller index. Consumer confidence rebounded in February, jumping more than expected, and new-home sales rose to their highest in 4-1/2 years in January.


However, the central bank chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.


The Dow Jones industrial average <.dji> gained 115.96 points, or 0.84 percent, to 13,900.13 at the close. The Standard & Poor's 500 Index <.spx> rose 9.09 points, or 0.61 percent, to 1,496.94. The Nasdaq Composite Index <.ixic> advanced 13.40 points, or 0.43 percent, to close at 3,129.65.


Despite the bounce, the S&P 500 was unable to move back above 1,500, a closely watched level that was technical support until recently, but could now serve as a resistance point.


The CBOE Volatility Index <.vix> or the VIX, a barometer of investor anxiety, dropped 11.2 percent, a day after surging 34 percent, its biggest percentage jump since August 18, 2011.


The uncertainty caused by the Italian elections continued to weigh on stocks in Europe. The FTSEurofirst-300 index of top European shares <.fteu3> closed down 1.4 percent. The benchmark Italian index <.ftmib> tumbled 4.9 percent.


Home Depot gave the biggest boost to the Dow and provided one of the biggest lifts to the S&P 500 after the world's largest home improvement chain reported adjusted earnings and sales that beat expectations.


Macy's shares gained 2.8 percent to $39.59 after the department-store chain stated it expects full-year earnings to be above analysts' forecasts because of strong holiday sales.


Volume was active with about 7.08 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, above the daily average of 6.48 billion.


Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, three stocks rose for every two that fell.


(Reporting by Chuck Mikolajczak; Editing by Jan Paschal; Editing by Jan Paschal)



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Wall Street trips and falls on cloudy Italian election

NEW YORK (Reuters) - Stocks on Monday suffered their biggest drop since November after a strong showing in Italian elections by groups opposed to the country's economic reforms triggered worry that Europe's debt problems could once again destabilize the global economy.


The decline marks the biggest percentage drop for the benchmark Standard & Poor's 500 Index since November7, and drove the S&P down to its lowest close since January 18. The CBOE Volatility Index <.vix> or VIX, Wall Street's favorite barometer of fear, surged 34 percent, its biggest jump since August 18, 2011.


Selling accelerated late in the trading session after the S&P 500 fell below the 1,500 level, which has acted as a significant support point. Monday marked the S&P's first close under 1,500 since February 4.


Italy's center-left coalition holds a slim lead over former Prime Minister Silvio Berlusconi's center-right bloc in the election for the lower house of parliament, three TV projections indicated. But any government must also command a majority in the Senate, a race that is decided by region.


The resulting gridlock in parliament could lead to new elections and cast into doubt Italy's ability to pay down its debt.


"Europe hasn't gone away as an issue, it is going to hang around, and it is rearing its ugly head today," said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.


"If someone gets elected who is simply not going to play by the rules, what are they going to do? It puts them in a real quandary here because their financial support, their monetary support is all stipulated by the fact that these austerity programs are going to be in place."


Earlier polls pointing to a center-left victory boosted stocks in Milan and other European markets, and also helped lift the S&P 500 to a session high of 1,525.84 on optimism that Italy would continue down its austerity path.


After a strong start to the year, equities have retreated more recently. The S&P 500's slight fall last week was its first weekly drop after a seven-week string of gains.


In Monday's volatile session, banks and other financial stocks were among the worst performers on worries about the sector's exposure to Italy's massive debt. The KBW Bank Index <.bkx> fell 2.7 percent.


The CBOE Volatility Index <.vix> ended at 18.99, up 34.02 percent.


The Dow Jones industrial average <.dji> dropped 216.40 points, or 1.55 percent, to 13,784.17 at the close. The Standard & Poor's 500 Index <.spx> lost 27.75 points, or 1.83 percent, to 1,487.85. The Nasdaq Composite Index <.ixic> fell 45.57 points, or 1.44 percent, to 3,116.25.


Although the overall market lost ground on Monday, there were a few bright spots.


Barnes & Noble Inc shares shot up 11.5 percent to $15.06 after the bookseller's chairman offered to buy its declining retail business.


Amgen Inc shares climbed 3.1 percent to $89.55, after rival Affymax issued a voluntary recall of its only drug, an anemia treatment that competes with Amgen's top-selling red blood cell booster, Epogen. Affymax shares lost 85.4 percent to $2.42.


The FTSEurofirst-300 index of top European shares <.fteu3> edged up 0.04 percent and Italy's main FTSE MIB <.ftmib> ended up 0.7 percent after earlier gaining nearly 4 percent.


Political uncertainty on the home front, though, is also on Wall Street's mind.


U.S. equities will face a test with the looming debate over so-called sequestration - U.S. government budget cuts that will take effect starting on Friday if lawmakers fail to reach an agreement over spending and taxes. The White House issued warnings about the harm the cuts are likely to inflict on the economy if enacted.


"Sitting out there is the one-thousand-pound gorilla - the sequester issue - and certainly nothing is happening there," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.


Lowe's Companies Inc lost 4.8 percent to $35.86 after the home improvement retailer posted fourth-quarter earnings.


With 83 percent of the S&P 500 companies having reported results so far, 69 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


Volume was active with about 7.27 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, above the daily average of 6.46 billion.


Declining stocks outnumbered advancing ones on both the NYSE and the Nasdaq by a ratio of about 4 to 1.


(Editing by Kenneth Barry, Nick Zieminski and Jan Paschal)



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Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.


Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.


Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.


"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.


Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.


But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.


National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.


"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.


OPTIONS BULLS TARGET GAINS


The spending cuts, if they go ahead, could hit the defense industry particularly hard.


Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.


Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.


"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.


The stock ended up 0.6 percent at $88.12 on Friday.


If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.


General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.


EYES ON GDP DATA, APPLE


The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.


U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.


Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.


Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.


On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.


(Additional reporting by Doris Frankel; Editing by Kenneth Barry)



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Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.


Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.


Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.


"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.


Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.


But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.


National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.


"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.


OPTIONS BULLS TARGET GAINS


The spending cuts, if they go ahead, could hit the defense industry particularly hard.


Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.


Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.


"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.


The stock ended up 0.6 percent at $88.12 on Friday.


If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.


General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.


EYES ON GDP DATA, APPLE


The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.


U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.


Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.


Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.


On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.


(Additional reporting by Doris Frankel; Editing by Kenneth Barry)



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Wall Street rebounds on HP results, Fed officials' views

NEW YORK (Reuters) - U.S. stocks rose on Friday as Dow component Hewlett-Packard surged on strong results and comments from Fed officials allayed fears that the central bank would curtail its stimulus measures.


Federal Reserve Chairman Ben Bernanke downplayed worries that the Fed has fueled asset bubbles that could hurt the economy in a private meeting with bond dealers and investors earlier this month, Bloomberg reported on Friday.


Bernanke's view helped ease fears that the central bank may end its easy money policies. Minutes from the Federal Reserve's January meeting hit markets on Wednesday as investors interpreted divergent opinions on the benefit of stimulus as a sign the measures may be halted sooner than thought.


"They are in uncharted territory with divergent views," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "I could see some pretty heated opinions on what the ultimate outcome is, so I do believe there is dissension."


Hewlett-Packard Co shares jumped more than 12 percent and gave one of the biggest boosts to both the Dow and the S&P 500 after the personal computer maker's quarterly revenue and forecasts beat expectations. Hewlett-Packard's stock rose to $19.20 at the close, up 12.3 percent for the day.


The Dow Jones industrial average <.dji> gained 119.95 points, or 0.86 percent, to 14,000.57 at the close. The Standard & Poor's 500 Index <.spx> rose 13.18 points, or 0.88 percent, to 1,515.60. The Nasdaq Composite Index <.ixic> added 30.33 points, or 0.97 percent, to end at 3,161.82.


With Bernanke's reported comments much on their minds in Friday's session, investors will want the Fed chairman to reiterate his remarks publicly when he speaks before the Senate Banking Committee on Tuesday. That would echo comments made by two top Fed officials on Friday.


Boston Fed President Eric Rosengren and Fed Governor Jerome Powell both defended the U.S. central bank's asset-buying program, arguing that the policy helps the U.S. economy.


The S&P 500 shed 1.9 percent over the previous two sessions, its worst two-day drop since early November, following the release of the Fed's minutes on Wednesday. The selloff marked the end of seven back-to-back weeks of gains for stocks.


For the week, the S&P 500 slipped 0.3 percent and the Nasdaq lost nearly 1 percent. Only the Dow ended the week with a gain - up just 0.1 percent.


HP's results come near the end of a relatively strong earnings season in which 70 percent of S&P 500 companies beat analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.


"Overall, the earnings supports were better than expected in this cycle," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We may see the market rising during the month of March."


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


But with only a handful of companies left to report earnings, investors are looking ahead to the possibility of hefty automatic budget cuts that could happen on March 1.


A large option investor appeared to be adjusting a bearish view on the SPDR S&P 500 Trust fund while locking in previously established gains, in a possible hedge ahead of the automatic budget cuts that are set to take effect at the beginning of next month. The play involved weekly puts, expiring next Friday.


"An institutional investor appears to be rolling down and increasing in size a defensive hedge timed to match the March 1 deadline for the sequester," said Henry Schwartz, president of options analytics firm Trade Alert.


The trader sold 132,000 $149 to $150 weekly put spreads for 22 cents as shares of the exchange-traded fund had traded near $151.14 on Friday morning. The transaction entailed the sale of $150 weekly puts to buy the $149 weekly puts. In addition, the investor purchased another 42,000 $149 weekly puts, which increases the size of the hedge to 174,000 contracts.


"It is likely this large position protects an existing underlying long position in a portfolio," Schwartz said.


In another political risk factor, Italians go to the polls this weekend in an election that could threaten reforms in the indebted country. Silvio Berlusconi's resurgence has thrown the vote wide open, with deep uncertainty over whether the poll can produce the strong government the country needs.


Inconclusive Greek elections last year sparked a protracted selloff and a period of uncertainty in markets.


In the tech sector, Marvell Technology Group Ltd forecast results this quarter that were largely above analysts' expectations. Marvell gained market share in the hard-disk drive and flash-storage businesses. The stock rose 4.4 percent to $9.89.


Texas Instruments Inc raised its dividend by a third and boosted its stock-buyback program, driving its stock up 5.2 percent to $34.18.


The PHLX semiconductor index <.sox> gained 2.1 percent.


"Dividends growing are another way the market's level is justified, if not especially attractive at these levels," said Rex Macey, chief investment officer of Wilmington Trust in Atlanta, who manages about $20 billion in assets.


On the downside, Abercrombie & Fitch dropped 4.5 percent to $46.86 after the youth-oriented clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.


Insurer American International Group Inc posted fourth-quarter results that beat analysts' expectations. AIG's stock advanced 3.1 percent to $38.45.


About three stocks rose for every one that fell on both the New York Stock Exchange and Nasdaq.


Around 5.8 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the 20-day moving average of around 6.51 billion shares.


(Additional Reporting by Ryan Vlastelica and Doris Frankel; Editing by Kenneth Barry and Jan Paschal)



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Wall Street ends lower on growth worries

NEW YORK (Reuters) - U.S. stocks fell for a second straight day on Thursday and the S&P 500 posted its worst two-day loss since November after reports cast doubt over the health of the U.S. and euro-zone economies.


But a late-day rally helped stocks erase some of their losses with most of the pullback concentrated in the technology- heavy Nasdaq. The move suggested investors were still willing to buy on dips even after the sharp losses in the last session.


In Europe, business activity indexes dealt a blow to hopes that the euro zone might emerge from recession soon, showing the downturn across the region's businesses unexpectedly grew worse this month.


"The PMI numbers out of Europe were really a blow to the market," said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire. "The market was expecting signs that recovery is still there, but the numbers just highlighted that the euro-zone problem is still persistent."


U.S. initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to the lowest in eight months.


Gains in Wal-Mart Stores Inc shares helped cushion the Dow. The shares gained 1.5 percent to $70.26 after the world's largest retailer reported earnings that beat expectations, though early February sales were sluggish.


The Dow Jones industrial average <.dji> fell 46.92 points, or 0.34 percent, to 13,880.62 at the close. The Standard & Poor's 500 Index <.spx> lost 9.53 points, or 0.63 percent, to 1,502.42. The Nasdaq Composite Index <.ixic> dropped 32.92 points, or 1.04 percent, to close at 3,131.49.


The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 has fallen 1.8 percent over the period and just managed to hold the 1,500 level on Thursday. Still, the index is up 5.3 percent so far this year.


The abrupt reversal in markets, which started on Wednesday after minutes from the Federal Reserve's January meeting suggested stimulus measures may end earlier than thought, looks set to halt a seven-week winning streak for stocks that had lifted the Dow and the S&P 500 close to all-time highs.


Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, could depress the economy.


Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor Index <.sox> fell 1.8 percent. Intel Corp fell 2.3 percent to $20.25 while Advanced Micro Devices lost 3.7 percent to $2.60 as the S&P 500's biggest percentage decliner.


The Dow also got a helping hand from personal computer maker Hewlett-Packard Co , which rose 2.3 percent to end the regular session at $17.10. The company was scheduled due to report first-quarter results after the closing bell.


Shares of Boeing Co rose 1.6 percent to $76.01 as a senior executive was set to meet with the head of the U.S. Federal Aviation Administration on Friday and present a series of measures to prevent battery failures that grounded its 787 Dreamliner fleet, according to a source familiar with the plans.


In other company news, shares of supermarket operator Safeway Inc jumped 14.1 percent to $22.97 after the company reported earnings that beat expectations.


Shares of VeriFone Systems Inc tumbled nearly 43 percent to $18.24 after the credit-card swipe machine maker forecast first- and second-quarter profits well below expectations.


Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


Berry Petroleum Co jumped 19.3 percent to $46.02 after oil and gas producer Linn Energy LLC said it would buy the company in an all-stock deal valued at $4.3 billion, including debt. Linn Energy shares advanced 2.8 percent to $37.68.


About two stocks fell for everyone that rose on the New York Stock Exchange and Nasdaq. About 7.64 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well above the 20-day moving average of around 6.6 billion shares.


(Editing by Jan Paschal)



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Wall Street ends down sharply after Fed minutes

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M&A deals lift Wall Street shares nearer a record high

NEW YORK (Reuters) - U.S. stocks rose on Tuesday as this year's ongoing surge in merger activity suggested investors were still finding value in the market even as indexes closed in on all-time highs.


Office Depot Inc surged 9.4 percent to $5.02 after a person familiar with the matter said the No. 2 U.S. office supply retailer was in advanced talks to merge with smaller rival OfficeMax Inc , which jumped more than 20 percent.


News of the potential move came just days after Berkshire Hathaway and a partner agreed to acquire H.J. Heinz Co for $23 billion, and following a revised $20 billion takeover of Mexican brewer Grupo Modelo by Anheuser-Busch InBev .


Deal activity has helped equities resist a pullback as investors use dips in stocks as buying opportunities. The S&P is up about 7 percent so far in 2013 and has climbed for the past seven weeks in its longest weekly winning streak since January 2011, though most of the weekly gains have been slim.


The Dow industrials closed 0.9 percent away from their record high while S&P 500 was 2.2 percent off its peak.


"Deals are good for the market," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "The fact that they're being done is a positive."


More than $158 billion in deals has been announced so far in 2013, more than double the activity in the same period last year and accounting for 57 percent of global deal volumes, according to Thomson Reuters Deals Intelligence.


The Dow Jones industrial average <.dji> gained 53.91 points, or 0.39 percent, to 14,035.67. The Standard & Poor's 500 Index <.spx> gained 11.15 points, or 0.73 percent, to 1,530.94. The Nasdaq Composite Index <.ixic> gained 21.56 points, or 0.68 percent, to 3,213.59.


Other stocks in the office supplies sector also rose. Larger rival Staples Inc shot up 13.1 percent to $14.65 as the best performer on the S&P 500.


"Equity investors have to be encouraged by M&A since, if the number crunchers are offering large premiums, that shows how much value is still in the market," said Mike Gibbs, co-head of the equity advisory group at Raymond James in Memphis, Tennessee.


On the downside, health insurance stocks tumbled, led by a 6.4 percent drop in Humana Inc to $73.01. The company said the government's proposed 2014 payment rates for Medicare Advantage participants were lower than expected and would hurt its profit outlook.


UnitedHealth Group lost 1.2 percent to $56.66. The Morgan Stanley healthcare payor index <.hmo> dropped 1.2 percent.


Wall Street's strong start to the year was fueled by better-than-expected corporate earnings, as well as a compromise in Washington that temporarily averted automatic spending cuts and tax hikes that are predicted to damage the economy.


The compromise on across-the-board spending cuts postponed the matter until March 1, at which point the cuts take effect. Ahead of the debate over the cuts, known as sequestration, further gains for stocks may be difficult to come by.


Some investors say the debate could be the catalyst for a long anticipated sell-off after the market's recent strong run.


Carter Worth, a technical analyst at Oppenheimer, pointed to the "especially complacent action of the past six weeks," noting that, as of Friday, stocks have gone 33 sessions without a dip of more than 1.5 percent.


"We would be selling aggressively into the market's current strength," he said in a research note.


Economic data showed the NAHB/Wells Fargo Housing Market index unexpectedly edged down to 46 in February from 47 in the prior month as builders faced higher material costs.


According to the Thomson Reuters data through Monday morning, of the 391 companies in the S&P 500 that have reported results, 70.1 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.


Fourth-quarter earnings for S&P 500 companies have risen 5.6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


Express Scripts rose 2.5 percent to $56.98 after the pharmacy benefits manager posted fourth-quarter earnings.


About two stocks rose for everyone that fell on the New York Stock Exchange and Nasdaq. About 6.48 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, in line with the daily average so far this year.


(Additional reporting by Chuck Mikolajczak Ryan Vlastelica and Rodrigo Campos; Editing by Chizu Nomiyama, Kenneth Barry and Nick Zieminski)



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Yen resumes fall after G20, U.S. holiday thins trade

LONDON (Reuters) - The yen resumed falling on Monday after Japan signaled it would push ahead with expansionist monetary policies having escaped criticism from the world's 20 biggest economies at the weekend.


Industrial metals also dipped and European shares were soft on lingering worries about the economic outlook, especially for the euro zone. While the risk of an inconclusive outcome in Italy's forthcoming election added to investor concerns.


However, activity was curtailed by the closure of markets in the United States for the Presidents' Day holiday.


The yen, which has dropped 20 percent against the dollar since mid-November, fell further after financial leaders from the G20 promised not to devalue their currencies to boost exports and avoided singling out Japan for any direct criticism.


The dollar rose 0.5 percent to 93.95 yen, near a 33-month peak of 94.47 yen set a week ago. The euro added 0.3 percent to 125.40 yen, to be midway between Friday's two-week low of 122.90 and a 34-month high of 127.71 yen hit earlier this month.


Strategists said the yen was likely to stay weak, though its decline could lose momentum until it becomes clear who will be taking the helm at the Bank of Japan when the current governor steps down on March 19.


"The yen probably will weaken a little further in anticipation of more aggressive easing under a new leadership team at the Bank of Japan," said Julian Jessop, chief global economist at Capital Economics.


Japan's Prime Minister Shinzo Abe is poised to nominate the new governor in the next few days. Sources have told Reuters that former financial bureaucrat Toshiro Muto, considered likely to be less radical than other candidates, was leading the field.


Meanwhile the euro dipped slightly against the dollar when European Central Bank president Mario Draghi said the currency's recent gains made any rise in inflation less likely and added that he had yet to see any improvement in the euro zone economy.


Speaking before the European Parliament, Draghi said the euro's exchange rate was not a policy target but was important for growth and stability, adding that appreciation of the euro "is a risk".


The comments left the euro down 0.2 percent at $1.3334.


Elsewhere in the currency market, sterling hit a seven-month low against the dollar, after a key policymaker made comments about the need for further weakness and recent poor data which has kept alive worries of another British recession.


Sterling fell 0.25 percent to $1.5476 having earlier touched $1.5438, its lowest since July 13.


DATA LOOMS


A big week for data on the outlook for the world's economy weighed on other riskier asset markets following the recent dire fourth-quarter growth numbers for the euro zone and Japan, along with Friday's soft U.S. manufacturing figures.


In European markets, attention is focused on the euro area Purchasing Managers' Indexes for February and German sentiment indices due later in the week which could affect hopes for a recovery this year.


Analysts expect Thursday's euro area flash PMI indices, which offer pointers to economic activity around six months out, to show growth stabilizing across the recession-hit region, leaving intact hopes for a recovery in the second half of 2013.


Concerns over an inconclusive outcome in the Italian election on Sunday and Monday have added to the weaker sentiment as a fragmented parliament could hamper a future government's efforts to reform the struggling economy.


The worries about the outlook for Italy were encouraging investors back into safe-haven German government bonds on Monday, with 10-year Bund yields easing 3.5 basis points to be around 1.63 percent.


"Political uncertainty will keep Bunds well bid this week," ING rate strategist Alessandro Giansanti said, adding that only better than expected economic data could create selling pressure on German debt in the near term.


Italian 10-year yields were 4 basis points higher on the day at 4.41 percent.


EARNINGS HIT


European equity markets were taking their lead from corporate earnings reports which have been reflecting the sluggish economic conditions across the region.


Danish brewer Carlsberg , which generates just over 60 percent of its sales in western Europe, became the latest to report a weaker-than-expected quarterly profit, sending its shares to their lowest level in almost a month.


The 5.8-percent drop for shares in the world's fourth biggest brewery helped send the FTSEurofirst 300 index <.fteu3> of top European shares down 0.2 percent. Germany's DAX <.gdaxi>, France's CAC-40 <.fchi> and Britain's FTSE-100 <.ftse> ranged between 0.4 percent up and 0.15 percent lower.


Earlier, the G20 statement and subsequent comment from Prime Minster Abe indicating a renewed drive to stimulate the Japanese economy lifted the Nikkei stock index <.n225> by 2.1 percent, near to its highest level since September 2008.


MSCI's world equity index <.miwd00000pus> was flat as markets extended a two-week period of consolidation that has followed the big run-up in January, when demand was buoyed by the efforts of central banks to stimulate the world economy.


Data from EPFR Global, a U.S.-based firm that tracks the flows and allocations of funds globally, shows investors pulled $3.62 billion from U.S. stock funds in the latest week, the most in 10 weeks after taking a neutral stance the prior week.


But demand for emerging market equities remained strong, with investors putting $1.81 billion in new cash into stock funds, the fund-tracking firm said.


CHINA RETURN


In the commodity markets, traders played catch-up after a week-long holiday last week in China, the world's second biggest consumer of many raw materials, which had kept activity subdued, with worries about the economic outlook weighing on sentiment.


Copper, for which China is the world's largest consumer, dipped to a near three-week low at $8,125.25 a metric ton (1.1023 tons) on the London futures market. Benchmark tin and nickel also touched three-week lows.


Gold managed to edge away from six-month lows as jewelers in China returned to the physical market after the Lunar New Year holiday but a lack of demand from U.S. markets saw the precious metal slip back to be down 0.1 percent to $1,607.06 an ounce.


Crude oil markets were mostly steady after the weak U.S. industrial production data on Friday [ID:nL1N0BF44A] was seen dampening demand, while tensions in the Middle East lent some support.


"We continue to see a mixed picture out of the United States. Industry output was lower than expected but that shouldn't affect the general upward direction," Olivier Jakob, analyst at Geneva-based Petromatrix, said.


Brent crude was down 20 cents at $117.46 a barrel after posting its first weekly loss since the first half of January. U.S. crude slipped 24 cents to $95.62.


(Additional reporting by Marius Zaharia and Ron Bousso; Editing by Philippa Fletcher and Alastair Macdonald)



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G20 steps back from currency brink, heat off Japan


MOSCOW (Reuters) - The Group of 20 nations declared on Saturday there would be no currency war and deferred plans to set new debt-cutting targets, underlining broad concern about the fragile state of the world economy.


Japan's expansive policies, which have driven down the yen, escaped direct criticism in a statement thrashed out in Moscow by policymakers from the G20, which spans developed and emerging markets and accounts for 90 percent of the world economy.


Analysts said the yen, which has dropped 20 percent as a result of aggressive monetary and fiscal policies to reflate the Japanese economy, may now continue to fall.


"The market will take the G20 statement as an approval for what it has been doing -- selling of the yen," said Neil Mellor, currency strategist at Bank of New York Mellon in London. "No censure of Japan means they will be off to the money printing presses."


After late-night talks, finance ministers and central bankers agreed on wording closer than expected to a joint statement issued last Tuesday by the Group of Seven rich nations backing market-determined exchange rates.


A draft communiqué on Friday had steered clear of the G7's call for economic policy not to be targeted at exchange rates. But the final version included a G20 commitment to refrain from competitive devaluations and stated monetary policy would be directed only at price stability and growth.


"The mood quite clearly early on was that we needed desperately to avoid protectionist measures ... that mood permeated quite quickly," Canadian Finance Minister Jim Flaherty told reporters, adding that the wording of the G20 statement had been hardened up by the ministers.


As a result, it reflected a substantial, but not complete, endorsement of Tuesday's proclamation by the G7 nations - the United States, Japan, Britain, Canada, France, Germany and Italy.


As with the G7 intervention, Tokyo said it gave it a green light to pursue its policies unchecked.


"I have explained that (Prime Minister Shinzo) Abe's administration is doing its utmost to escape from deflation and we have gained a certain understanding," Finance Minister Taro Aso told reporters.


"We're confident that if Japan revives its own economy that would certainly affect the world economy as well. We gained understanding on this point."


Flaherty admitted it would be difficult to gauge if domestic policies were aimed at weakening currencies or not.


NO FISCAL TARGETS


The G20 also made a commitment to a credible medium-term fiscal strategy, but stopped short of setting specific goals as most delegations felt any economic recovery was too fragile.


The communiqué said risks to the world economy had receded but growth remained too weak and unemployment too high.


"A sustained effort is required to continue building a stronger economic and monetary union in the euro area and to resolve uncertainties related to the fiscal situation in the United States and Japan, as well as to boost domestic sources of growth in surplus economies," it said.


A debt-cutting pact struck in Toronto in 2010 will expire this year if leaders fail to agree to extend it at a G20 summit of leaders in St Petersburg in September.


The United States says it is on track to meet its Toronto pledge but argues that the pace of future fiscal consolidation must not snuff out demand. Germany and others are pressing for another round of binding debt targets.


"We had a broad consensus in the G20 that we will stick to the commitment to fulfill the Toronto goals," German Finance Minister Wolfgang Schaeuble said. "We do not have any interest in U.S.-bashing ... In St. Petersburg follow-up-goals will be decided."


The G20 put together a huge financial backstop to halt a market meltdown in 2009 but has failed to reach those heights since. At successive meetings, Germany has pressed the United States and others to do more to tackle their debts. Washington in turn has urged Berlin to do more to increase demand.


Backing in the communiqué for the use of domestic monetary policy to support economic recovery reflected the U.S. Federal Reserve's commitment to monetary stimulus through quantitative easing, or QE, to promote recovery and jobs.


QE entails large-scale bond buying -- $85 billion a month in the Fed's case -- that helps economic growth but has also unleashed destabilising capital flows into emerging markets.


A commitment to minimize such "negative spillovers" was an offsetting point in the text that China, fearful of asset bubbles and lost export competitiveness, highlighted.


"Major developed nations (should) pay attention to their monetary policy spillover," Vice Finance Minister Zhu Guangyao was quoted by state news agency Xinhua as saying in Moscow.


Russia, this year's chair of the G20, admitted the group had failed to reach agreement on medium-term budget deficit levels and expressed concern about ultra-loose policies that it and other emerging economies say could store up trouble for later.


On currencies, the G20 text reiterated its commitment last November, "to move more rapidly toward mores market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments".


It said disorderly exchange rate movements and excess volatility in financial flows could harm economic and financial stability.


(Additional reporting by Gernot Heller, Lesley Wroughton, Maya Dyakina, Tetsushi Kajimoto, Jan Strupczewski, Lidia Kelly, Katya Golubkova, Jason Bush, Anirban Nag and Michael Martina. Writing by Douglas Busvine. Editing by Timothy Heritage/Mike Peacock)



Read More..

G20 steps back from currency brink, heat off Japan


MOSCOW (Reuters) - The Group of 20 nations declared on Saturday there would be no currency war and deferred plans to set new debt-cutting targets, underlining broad concern about the fragile state of the world economy.


Japan's expansive policies, which have driven down the yen, escaped direct criticism in a statement thrashed out in Moscow by policymakers from the G20, which spans developed and emerging markets and accounts for 90 percent of the world economy.


Analysts said the yen, which has dropped 20 percent as a result of aggressive monetary and fiscal policies to reflate the Japanese economy, may now continue to fall.


"The market will take the G20 statement as an approval for what it has been doing -- selling of the yen," said Neil Mellor, currency strategist at Bank of New York Mellon in London. "No censure of Japan means they will be off to the money printing presses."


After late-night talks, finance ministers and central bankers agreed on wording closer than expected to a joint statement issued last Tuesday by the Group of Seven rich nations backing market-determined exchange rates.


A draft communiqué on Friday had steered clear of the G7's call for economic policy not to be targeted at exchange rates. But the final version included a G20 commitment to refrain from competitive devaluations and stated monetary policy would be directed only at price stability and growth.


"The mood quite clearly early on was that we needed desperately to avoid protectionist measures ... that mood permeated quite quickly," Canadian Finance Minister Jim Flaherty told reporters, adding that the wording of the G20 statement had been hardened up by the ministers.


As a result, it reflected a substantial, but not complete, endorsement of Tuesday's proclamation by the G7 nations - the United States, Japan, Britain, Canada, France, Germany and Italy.


As with the G7 intervention, Tokyo said it gave it a green light to pursue its policies unchecked.


"I have explained that (Prime Minister Shinzo) Abe's administration is doing its utmost to escape from deflation and we have gained a certain understanding," Finance Minister Taro Aso told reporters.


"We're confident that if Japan revives its own economy that would certainly affect the world economy as well. We gained understanding on this point."


Flaherty admitted it would be difficult to gauge if domestic policies were aimed at weakening currencies or not.


NO FISCAL TARGETS


The G20 also made a commitment to a credible medium-term fiscal strategy, but stopped short of setting specific goals as most delegations felt any economic recovery was too fragile.


The communiqué said risks to the world economy had receded but growth remained too weak and unemployment too high.


"A sustained effort is required to continue building a stronger economic and monetary union in the euro area and to resolve uncertainties related to the fiscal situation in the United States and Japan, as well as to boost domestic sources of growth in surplus economies," it said.


A debt-cutting pact struck in Toronto in 2010 will expire this year if leaders fail to agree to extend it at a G20 summit of leaders in St Petersburg in September.


The United States says it is on track to meet its Toronto pledge but argues that the pace of future fiscal consolidation must not snuff out demand. Germany and others are pressing for another round of binding debt targets.


"We had a broad consensus in the G20 that we will stick to the commitment to fulfill the Toronto goals," German Finance Minister Wolfgang Schaeuble said. "We do not have any interest in U.S.-bashing ... In St. Petersburg follow-up-goals will be decided."


The G20 put together a huge financial backstop to halt a market meltdown in 2009 but has failed to reach those heights since. At successive meetings, Germany has pressed the United States and others to do more to tackle their debts. Washington in turn has urged Berlin to do more to increase demand.


Backing in the communiqué for the use of domestic monetary policy to support economic recovery reflected the U.S. Federal Reserve's commitment to monetary stimulus through quantitative easing, or QE, to promote recovery and jobs.


QE entails large-scale bond buying -- $85 billion a month in the Fed's case -- that helps economic growth but has also unleashed destabilising capital flows into emerging markets.


A commitment to minimize such "negative spillovers" was an offsetting point in the text that China, fearful of asset bubbles and lost export competitiveness, highlighted.


"Major developed nations (should) pay attention to their monetary policy spillover," Vice Finance Minister Zhu Guangyao was quoted by state news agency Xinhua as saying in Moscow.


Russia, this year's chair of the G20, admitted the group had failed to reach agreement on medium-term budget deficit levels and expressed concern about ultra-loose policies that it and other emerging economies say could store up trouble for later.


On currencies, the G20 text reiterated its commitment last November, "to move more rapidly toward mores market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments".


It said disorderly exchange rate movements and excess volatility in financial flows could harm economic and financial stability.


(Additional reporting by Gernot Heller, Lesley Wroughton, Maya Dyakina, Tetsushi Kajimoto, Jan Strupczewski, Lidia Kelly, Katya Golubkova, Jason Bush, Anirban Nag and Michael Martina. Writing by Douglas Busvine. Editing by Timothy Heritage/Mike Peacock)



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Wall Street ends slightly down, S&P positive for seventh week

NEW YORK (Reuters) - The S&P 500 dipped in a late decline on Friday as Wal-Mart dropped following a report of a weak start to February sales, though the index just barely extended its streak of weekly gains to seven.


Equities were little changed for much of the session, with investors finding few reasons to make big bets following an extended rally on Wall Street, but stocks turned lower in afternoon action.


Wal-Mart Stores Inc dropped 2.1 percent to $69.30 after Bloomberg News reported a weak start to February sales, citing internal company e-mails. The stock was the biggest decliner on the Dow, while the S&P retail index <.spxrt> fell 0.5 percent.


"When a retailer of this size comes out with this kind of lousy news, the whole market can fall off, especially on a Friday afternoon," said Mike Shea, trader at Direct Access Partners in New York. "However, I'm not worried that this is indicative of any larger macro issue with retail."


Equities have struggled for direction recently, with major indexes moving only slightly in the past several sessions. The S&P didn't end a session with a move greater than 0.2 percent at all this week.


The benchmark index, up 6.6 percent so far this year, is facing strong technical resistance near the 1,525 level. But investors, expecting the index to advance further in the quarter, have held back from locking in profits.


"There's no news that suggests the strong underpinning for stocks isn't appropriate. We may have gotten ahead of ourselves, but there's also an absence of bad news," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.


Many investors are starting to look ahead to a debate in Washington over sequestration, automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. The cuts are due to kick in March 1 unless lawmakers agree to an alternative.


"This had been far enough out to not yet become an impediment for stocks, but it will start to move into the forefront and cause people to take a bit of a jaundiced eye towards the market," said Luschini, who helps oversee about $54 billion in assets.


The Dow Jones industrial average <.dji> was up 11.27 points, or 0.08 percent, at 13,984.66. The Standard & Poor's 500 Index <.spx> was up 0.32 points, or 0.02 percent, at 1,521.70. The Nasdaq Composite Index <.ixic> was up 1.51 points, or 0.05 percent, at 3,200.17.


For the week, both the Dow and Nasdaq fell 0.1 percent while the S&P rose 0.1 percent in its seventh straight week of gains, a period during which the index rose 8.4 percent. The last such seven-week run was between December 2010 and January 2011.


The New York Federal Reserve said manufacturing in New York state expanded for the first time in seven months, while Thomson Reuters/University of Michigan's preliminary reading of consumer sentiment rose from the prior month and beat expectations.


But U.S. manufacturing fell in January after a rise in the prior month.


Wall Street's gain thus far in 2013 has largely been driven by strong corporate earnings, while data indicated some weakening in economic conditions.


A surge in merger and acquisition activity, with more than $158 billion in deals announced so far in 2013, has given further support to the equity market as it points to healthy valuations and bets on the economic outlook.


Herbalife shares cut earlier gains to rise 1.2 percent to $38.74. Late Thursday, billionaire investor Carl Icahn said in a regulatory filing that he now owns 13 percent of Herbalife and was ready to put it in play.


MeadWestvaco Corp climbed 12.5 percent to $35.65 as the biggest percentage gainer on the S&P index after activist investor Nelson Peltz's Trian Fund Management LP said it had bought about 1.6 million shares of the packaging company.


Burger King Worldwide shares gained 4.7 percent to $17.36 after it beat estimates with a 94 percent rise in fourth-quarter profit, thanks to new menu additions.


Oil service stocks declined, weighed by a 5.1 percent drop in shares of Transocean to $56.26, after the rig contractor reported its fleet update and Deutsche Bank cut its rating on the stock to "sell." The PHLX oil service sector <.osx> lost 1.5 percent.


Slightly more stocks fell than rose on the New York Stock Exchange while about 50 percent of Nasdaq shares ended lower. About 6.69 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.48 billion shares.


(Editing by Nick Zieminski)



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Wall Street ends slightly higher, helped by acquisitions

NEW YORK (Reuters) - The S&P 500 eked out a small gain for a third straight session on Thursday, helped by a flurry of merger activity, though investors see no catalysts to lift the market further with major averages near multi-year highs.


The market's slowed advance took the S&P 500 to its highest intraday level since November 2007 on Wednesday. While the index notched its third straight day of gains, none was more than 0.2 percent.


Shares of H.J. Heinz Co jumped 20 percent to $72.50 after it said Warren Buffett's Berkshire Hathaway and 3G Capital will buy the food company for $72.50 a share, or $28 billion including debt. Berkshire's class B shares rose 1.3 percent to $99.21.


Also supporting the market was data showing the number of Americans filing new claims for unemployment benefits fell more than expected in the latest week. The CBOE Volatility index <.vix> fell 2.4 percent, dropping to 12.67.


"While I'm not bearish, I don't see many upside motivations at these levels," said Donald Selkin, chief market strategist at National Securities in New York, who cited the low level of the VIX as a sign the market was overbought.


Equities have struggled to break above current levels where they have been hovering for almost two weeks. The S&P 500 is up more than 6 percent so far this year.


"We need to digest some of our gains to go higher, but people are so eager to buy on the dips that we're not even seeing dips anymore. People are just chasing the market higher," said Selkin, who helps oversee about $3 billion in assets.


Stocks fell earlier after a report the euro zone's gross domestic product contracted by the steepest amount since the first quarter of 2009. In addition, Japan's GDP shrank 0.1 percent in the fourth quarter, crushing expectations of a modest return to growth.


The Dow Jones industrial average <.dji> was down 9.52 points, or 0.07 percent, at 13,973.39. The Standard & Poor's 500 Index <.spx> was up 1.05 points, or 0.07 percent, at 1,521.38. The Nasdaq Composite Index <.ixic> was up 1.78 points, or 0.06 percent, at 3,198.66.


Constellation Brands soared 37 percent to $43.75 after AB InBev's deal to take over Mexican brewer Grupo Modelo was revised to grant Constellation perpetual rights to distribute Corona and other Modelo brands in the United States. U.S. shares of AB InBev gained 5.1 percent to $92.77.


American Airlines and US Airways Group said they plan to merge in a deal that will form the world's biggest air carrier, with an equity valuation of about $11 billion. US Airways shares fell 4.6 percent to $13.99.


Weakness in Europe contributed to a 5 percent drop in revenue from the region for Cisco Systems , which nonetheless beat estimates as it reported its results late Wednesday. The company's shares dipped 0.7 percent to $20.99.


General Motors Co reported a weaker-than-expected fourth-quarter profit, also citing bigger losses in Europe alongside lower prices in its core North American market. The stock was off 3.3 percent to $27.73.


Only five more stocks rose than fell on the New York Stock Exchange, while 51 percent of Nasdaq-listed shares closed higher.


Volume was light, with about 6.36 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.


(Editing by Nick Zieminski and Kenneth Barry)



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Wall Street pauses after rally to five-year high

NEW YORK (Reuters) - Stocks drifted in light volume on Wednesday, ending little changed, as investors remained cautious after the S&P 500 index briefly hit its highest intraday level since November 2007.


The S&P 500 was buoyed by General Electric after cable company Comcast Corp said it will buy from GE the the part of NBCUniversal it didn't already own for $16.7 billion.


Comcast's stock hit the highest since 1999 before closing up 3 percent at $40.13 and GE gained 3.6 percent to $23.39.


The S&P 500 is up 6.6 percent so far this year, partly due to stronger-than-expected corporate earnings and a better economic outlook. The Dow industrials is about 1 percent away from an all-time intraday high, reached in October 2007.


Volume has been weak in recent days with the S&P moving sideways around 1,520. The index is about 3 percent away from closing at a record high.


A scarcity of sellers after a consistent string of gains is a positive sign and shows the uptrend is intact, King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco, said.


"Last year we had double-digit returns in the first quarter. It's fairly possible we can move higher from here," he said.


The Dow Jones industrial average <.dji> fell 35.79 points or 0.26 percent, to 13,982.91, the S&P 500 <.spx> gained 0.9 point or 0.06 percent, to 1,520.33 and the Nasdaq Composite <.ixic> added 10.38 points or 0.33 percent, to 3,196.88.


The S&P gained 12 percent in the first three months of 2012.


Deere & Co , the world's largest farm equipment maker, forecast a modest increase in sales this year despite the prospect of the biggest corn crop in U.S. history. The forecast fell short of analysts' expectations, sending shares of Deere down 3.5 percent to $90.68.


In extended trading, shares of technology bellwether Cisco Systems fell 2 percent after it posted results.


Dr Pepper Snapple fell 5.8 percent to $42.69 after it forecast profit for the current year below analysts' estimates.


Cliffs Natural Resources lost a fifth of its market value a day after the miner reported a quarterly loss and slashed its dividend by 76 percent. Its shares fell 20 percent to 429.29.


According to the latest Thomson Reuters data, of the 364 companies in the S&P 500 that have reported results, 70.3 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.


About 5.9 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average in February last year of 6.94 billion.


On the NYSE, roughly seven issues rose for every five that fell and on Nasdaq more than six rose for every five decliners.


(Editing by Kenneth Barry and Bernadette Baum)



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Wall Street ends slightly higher, Dow near a record

NEW YORK (Reuters) - Stocks closed modestly higher on Tuesday, putting the Dow within striking distance of an all-time high, as investors looked ahead to President Barack Obama's State of the Union address.


Investors will be listening to Obama's speech for any clues on a deal with Republicans to avert automatic spending cuts due to take effect March 1. The tone of the speech will also be scrutinized, with any sign of compromise likely to be warmly received.


The S&P 500 has risen for the past six weeks, putting it up 6.5 percent so far this year, while the Dow is about 1 percent away from its all-time closing record of 14,164.53, reached in October 2007.


But gains have been harder to come by since the S&P hit a five-year high on February 1. Daily moves have been small and trading volume light as investors search for new reasons to drive stocks higher.


About 5.73 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT on Tuesday, below the daily average so far this year of about 6.48 billion shares.


"We're likely to settle in for a period and digest the gains we've had, though there's still a bias towards positive momentum," said Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina.


"Questions over government spending are the big overhang, and we're looking for Obama to inspire some confidence over that tonight."


The White House has signaled Obama will urge investment in infrastructure and clean energy, suggesting companies in those sectors may be volatile in Wednesday's session.


"Gun makers could also see a reaction if Obama talks about anything with respect to gun control," said Teal, who helps oversee $5 billion. Shares of Smith & Wesson fell 2 cents to $9.11 while Sturm Ruger was up 0.4 percent at $53.91.


The Dow Jones industrial average <.dji> was up 47.46 points, or 0.34 percent, at 14,018.70. The Standard & Poor's 500 Index <.spx> was up 2.42 points, or 0.16 percent, at 1,519.43. The Nasdaq Composite Index <.ixic> was down 5.51 points, or 0.17 percent, at 3,186.49.


Housing shares were among the strongest of the day, led by a 12.5 percent jump in Masco Corp to $20.02 after the home improvement product maker said it expects new home construction to show strong growth in 2013. The PHLX housing sector index <.hgx> rose 3.7 percent.


Avon Products Inc surged 20 percent to $20.79 as the S&P 500's top percentage gainer after the cosmetics company reversed sales declines and cut costs.


On the downside, Coca-Cola Co fell 2.7 percent to $37.56 and was the biggest drag on the Dow after reporting revenue below estimates, hurt by a weaker-than-expected performance in Europe.


Michael Kors Holdings shares jumped 8.8 percent to $62.04 after the fashion company handily beat Wall Street's estimates and raised its full-year outlook.


With earnings season starting to wind down, Thomson Reuters data through Tuesday morning shows of the 353 companies in the S&P 500 that have reported results, 70.3 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.3 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


About 62 percent of stocks traded on the New York Stock Exchange closed higher while 59 percent of Nasdaq-listed shares closed in positive territory.


(Editing by Nick Zieminski)



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Wall Street ends flat as investors seek new catalysts

NEW YORK (Reuters) - Stocks ended a quiet session with slight moves on Monday as investors found few reasons to keep pushing shares higher following a six-week advance, though the longer-term trend was still viewed as positive.


The benchmark index is up more 6.4 percent in 2013, putting both the S&P 500 and Dow industrials near multi-year highs. The S&P is less than 4 percent from its all-time intraday high of 1,576.09, hit in October 2007.


"This is still a market that looks terrific, but when you're up for six weeks in a row, everyone is going to want to take a pause going into the seventh week even if there is no bad news out there," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.


Volume was light, with about 4.812 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well below the daily average so far this year of about 6.48 billion shares.


Wall Street was modestly lower throughout the session but regained some ground in the final hour of trading as Google Inc rebounded off earlier losses. Shares of the Internet search giant dipped 0.4 percent to $782.42, recovering from earlier declines of 1 percent after the company said in a filing former chief executive Eric Schmidt is selling roughly 42 percent of his stake in the company.


Also in the tech space, Apple Inc rose up 1 percent to $479.93 after the New York Times reported the iPhone maker was experimenting with the design of a device similar to a wristwatch.


The Federal Reserve's Vice Chair Janet Yellen, seen as a potential successor to Fed Chairman Ben Bernanke next year, said the Fed is still aggressively stimulating an anemic U.S. economic recovery that has failed to bring rapid progress on employment.


The Dow Jones industrial average <.dji> was down 21.81 points, or 0.16 percent, at 13,971.16. The Standard & Poor's 500 Index <.spx> was down 0.92 points, or 0.06 percent, at 1,517.01. The Nasdaq Composite Index <.ixic> was down 1.87 points, or 0.06 percent, at 3,192.00.


Upbeat U.S. and Chinese data last week helped the S&P 500 extend its weekly winning streak to six. The index gained about 8 percent over that period.


Equities have been strong performers lately and many investors have used any declines in the market as opportunities to buy.


"Everyone wants to buy on a dip in this market, but if you're on the sidelines right now, the decline we're seeing today just isn't the kind you would jump in on," Kuby said.


President Barack Obama will describe his plan for spurring the economy in his State of the Union address on Tuesday. He is expected to offer proposals for investment in infrastructure, manufacturing, clean energy and education.


Opposition has grown to the $24.4 billion buyout of Dell Inc , the No. 3 personal computer maker, as three of the largest investors joined Southeastern Asset Management on Friday in raising objections. Dell said in a regulatory filing it had considered many strategic options before opting to go private in a buyout led by Chief Executive Michael Dell.


Dell shares hovered near $13.65, the buyout offer price.


Regeneron Pharmaceuticals Inc shares rose 2.7 percent at $170.35 after it said longtime drug development partner Sanofi plans to boost its stake.


Moody's Corp was one of the strongest percentage gainers on the S&P 500, rising 4.9 percent to $45.49. Last week the stock plunged 22 percent after the U.S. government launched a civil lawsuit against the company. The sell-off marked the stock's worst week since October 2008.


About 53 percent of stocks traded on the New York Stock Exchange closed lower while slightly more Nasdaq-listed stocks closed in negative territory.


(Editing by Nick Zieminski)



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G20 to skirt potholes and follow growth signposts


LONDON (Reuters) - With the road ahead looking a bit smoother, G20 finance ministers will be happy to ignore the wreck in the rear-view mirror when they meet this week to steer a course for the world economy.


The euro zone as a whole and a clutch of its members, including France, Italy and the Netherlands, are expected to report that their economies shrank last quarter - joining Germany and the United States - while Japan's barely grew, according to economists polled by Reuters.


But the Group of 20 leading economies, which meets in Moscow on Friday, should be able to take heart from a pair of more timely indicators - a New York Fed manufacturing survey and a University of Michigan poll on consumer sentiment.


Economists expect both to show an improvement, despite the gnawing uncertainty of how long-running U.S. deficit reduction negotiations will affect taxes and spending.


Luca Paolini, chief strategist at Pictet Asset Management in London, said he was more positive on the global outlook on balance but a sense of perspective was needed. Buoyant markets risked getting ahead of themselves.


"Our own leading indicators are going up, but we don't think we're in a strong growth environment. We see weak growth, and that's not going to change this year," he said.


PASSING THE GROWTH BATON


Simon Hayes, an economist with Barclays Capital, broadly agreed. "On the whole, recent activity data have been encouraging of our view that the global economy is improving, albeit slowly," he said in a report.


January U.S. retail sales figures are likely to underline this point. Hobbled by the January 1 increase in payroll taxes, economists expect a rise of just 0.1 percent on the month.


By contrast, U.S. capital spending is finally perking up from a low level as corporations, realizing that protracted cost-cutting is hurting productivity and growth prospects, give the green light to pent-up investments, Paolini said.


"But we're not overly optimistic because investment is based on confidence. You can have all the money you want, but you're not going to invest if you expect growth to be weak. So if we have any kind of shock - it can be politics or something else - investment will fall again," he said.


China delivered a boost to confidence on Friday with a batch of strong trade and money data for January.


Economists are wary of reading too much into China's figures at the start of the year because of distortions due to the variable timing of the long Lunar New Year holidays.


But Ting Lu, Bank of America Merrill Lynch's chief China economist, said they supported his view that gross domestic product growth could accelerate to 8.3 percent in the first half of this year from 7.9 percent in the fourth quarter of 2012.


China is not the only developing economy that is doing its bit for global growth.


Mark Williams, chief Asia economist with Capital Economics in London, said there had been signs of a rebound across the emerging world in the past month. Goldman Sachs, too, said there had been a marked improvement in consumer confidence across emerging markets coming into 2013.


"It had been the case that Latin America and Asia were looking up at the end of last year but emerging economies in Europe were still looking very weak. But even they are now joining in the recovery. So it's looking increasingly broad-based," Williams said.


CURRENCY SKIRMISHES


One obvious pothole on the road to recovery is the threat of a spate of competitive devaluations, as growth-hungry countries seek to give their exporters an edge by talking down their currencies or actively pushing them lower by bold monetary easing.


Japan has come in for fierce criticism in some quarters for that very reason, but Finance Minister Taro Aso sought to restore calm on Friday by saying the recent slide in the yen had gone too far.


His emollient words reinforced expectations that the G20 will not point the finger at Tokyo.


At the same time, European Central Bank President Mario Draghi's success in reversing the euro's climb with a few well-chosen words last Thursday has eased the worries of France and others for now that the single currency was approaching levels that would do real damage to the euro area.


So, although Brazilian Finance Minister Guido Mantega fears global currency wars could intensify, the betting is on an anodyne statement from the Moscow meeting that avoids rattling confidence.


"There will be something very vague reminding everybody that if you start getting into currency wars everybody is going to lose," Paolini with Pictet said.


(Editing by Toby Chopra)



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