Financial life in a big town

It was just last summer that the Dow Jones industrial average shed 2,000 points in three terrifying weeks. Investors had a host of things to worry about, including the possibility of another recession.

Now the Dow is within reach of the rarefied 13,000 mark _ a level it hasn’t seen since May 2008, four months before the financial system almost came apart.

A strong one-day rally _ caused by a deal on bailout money for Greece, perhaps, or an unexpectedly positive economic report _ could put it over the top.

What’s more, the average is just a 10 percent rally from an all-time high. And 10 percent rallies can happen fast these days.

The stomach-turning summer is a bad memory. Europe appears to be getting its act together, last summer’s downgrade of the U.S.’ credit rating was quickly forgotten, Washington is mostly behaving, and recession fears are gone.

“There are signs that the economy is getting back on its feet and the market is reacting to that,” says John Prestbo, executive director of Dow Jones Indexes. “The mood is just better in this country than it has been for a while.”

On Wall Street, too. The Dow traded Tuesday at 12,878, a 21 percent rally from Oct. 3, its low point for last year. In January, the average rose more or less in a straight line and added 3.4 percent, its best start to a year since 1997.

From here, the record is tantalizingly close _ 14,164.53, reached Oct. 9, 2007, when the investment houses Bear Stearns and Lehman Brothers still existed and the unemployment rate was 4.7 percent.

A 10 percent surge may seem like a lot, but it’s really not. The Dow has gained almost 15 percent since Nov. 25, just 10 weeks ago.

Though there’s a long way to go to get the country back to economic health, there are pockets of encouragement. Unemployment is still 8.3 percent, but it’s the lowest since February 2009. Economic output grew every quarter last year.

Corporate earnings growth has slowed, but analysts think it will pick up again later this year. Investors, always wary of uncertainty, may even be encouraged by some clarity in the Republican presidential nominating race.

Investors are no longer just trying to stem their losses, says Mark Lehmann, president of JMP Securities in San Francisco: “They’re playing a little offense. Six months ago, they were playing defense.”

There’s evidence that the rally has room to run. In a popular measure of how expensive stocks are, the 30 companies that make up the Dow are trading at an average of about 13 times their annual earnings per share.

The last time the Dow was at 13,000, in May 2008, stocks were trading for about 15 times earnings. Stock-market research firm Birinyi Associates estimates Dow stocks have traded at an average of 16 times earnings over the past two decades.

The fire-sale discounts have already come and gone, though. Those were back in early 2009, when the Dow bottomed at 6,547.05, its Great Recession low _ a little more than half the level now. Back then, Dow stocks traded at nine times earnings quick payday loans.

Not everyone believes the rally will last. Joe Gordon, managing partner at Gordon Asset Management in North Carolina, is dubious. He cites the unresolved European debt crisis, the U.S.’ historically high national debt and the millions of people who have given up looking for work, part of the so-called underemployed.

“This is like drinking a lot of coffee in the afternoon,” says Gordon. “It perks you up, then once it fades 45 minutes later you’re even more tired.”

Another wrinkle is that the Dow tracks just 30 companies, so it doesn’t take the full pulse of the market. The Standard & Poor’s 500, with its much larger roster, is still 16 percent away from its all-time high.

“It’s 30 stocks,” says Rob Leiphart, an analyst at Birinyi. “It doesn’t give you a representation of anything.”

But despite its size, the Dow is the market gauge that penetrates the public consciousness, generating headlines and water cooler buzz more than the less publicized S&P.

That’s important because the stock market, even if it has no direct bearing on the fundamentals of the economy, is a psychological motivator of spending because of something known as the wealth effect.

Even people with no stock investments will let their decisions be influenced by swings in the Dow. When it’s up, we tend to feel richer and spend more. When it’s down _ think back to the 500-point daily declines of 2008 _ we tend to feel poorer and spend less.

There’s good reason the Dow has pull over the financial mood of the country. Its 30 stocks account for 25 to 30 percent of the market value of all U.S. public companies, and about 40 percent of the dividends, Dow Jones Indexes estimates.

“Nothing of substance can happen in this economy without these companies feeling it,” Prestbo says.

A handful of companies have an outsized impact on the index. The Dow is a price-weighted average, which means companies with more expensive stocks have more power to drive the average higher or lower.

If you invest $30 in a mutual fund tracking the Dow, you don’t have a dollar riding on each company. Four times as much of your money would end up on Home Depot, which is trading around $45, than Alcoa, trading around $11.

IBM, the highest-priced stock in the Dow, had a giant influence last year. The Dow rose 5.5 percent in 2011, but without IBM it would have risen only 3.4 percent, according to Leiphart’s calculations.

If you were to cut out the next three stocks on the list, McDonald’s, Chevron and ExxonMobil, then the Dow would have finished down 0.25 percent for the year.

The flip side is that stocks like Chevron, Exxon Mobil, Microsoft and Intel trade well below the 13 times earnings for the full Dow. If they catch up, it could be enough to power the average to a record.

Source

Markets were in a jittery mood on Monday as talks dragged on between Greek political leaders over a fresh austerity package that is required if the debt-ridden country is to get a crucial bailout package.

The leaders of the parties backing Greece’s coalition government are set to hold a second day of emergency talks over austerity measures that rescue creditors are demanding in return for more money. Prime Minister Lucas Papademos will meet with negotiators from the eurozone and the International Monetary Fund in the afternoon and then with the leaders of the three parties backing his coalition.

The parties all publicly oppose steep cuts in private sector pay demanded by the eurozone and IMF, but their backing is needed for the government to reach a deal for the bailout, which must be approved by the Greek Parliament. The new euro130 billion ($171 billion) bailout deal is vital for Greece to avoid bankruptcy next month as it cannot cover a euro14.5 billion ($19.1 billion) bond repayment due March 20 without the rescue funds.

The bailout’s implementation also depends on Greece’s progress in separate talks with banks and other private bondholders to forgive euro100 billion ($131.6 billion) in Greek debt, in exchange for a cash payment and new bonds with more lenient repayment terms.

“Time is running out,” said Lee Hardman, an analyst at The Bank of Tokyo-Mitsubishi UFJ.

Fears that a deal won’t emerge have reinforced concerns of a disorderly Greek debt default that could send shockwaves round the global economy. That’s kept investors on edge on Monday, even though market sentiment has been fairly buoyant of late following a run of strong U.S. economic data, notably last Friday’s forecast-busting jobs figures for January.

In Europe, the FTSE 100 index of leading British shares was down 0.5 percent at 5,871 while Germany’s DAX fell 0 personal business card.7 percent to 6,720. The CAC-40 in France was 1.3 percent lower at 3,384.

Wall Street was also poised for a lower opening following its rally on Friday, when government figures showed the U.S. economy generated a bigger than expected 243,000 jobs in January, pushing the unemployment rate down to 8.3 percent. Dow futures were down 0.4 percent at 12,744 while the broader Standard & Poor’s 500 futures fell 0.6 percent at 1,332.

The euro was also under pressure as investors awaited developments in Athens _ the currency was trading 0.8 percent lower at $1.3041.

Oil prices tracked the broader market trends, with benchmark oil for March delivery down $1.17 at $96.67 a barrel in electronic trading on the New York Mercantile Exchange.

Greece will likely remain the focal point over the week, though a raft of corporate earnings, particularly in Europe, and a host of central bank meetings could garner some interest. The European Central Bank’s monthly policy meeting on Thursday could be crucial in determining market expectations of whether there will be further interest rate reductions. Meanwhile, many traders think the Bank of England will clear the way to inject more money into the U.K. economy in the hope of boosting lending.

Earlier Asian shares mostly traded higher as investors there had their first chance to respond to join in the advance generated by Friday’s upbeat jobs data.

Japan’s Nikkei 225 index rose 1.1 percent to close at 8,929.20, its highest closing in more than three months but Hong Kong’s Hang Seng lost 0.2 percent to 20,709.94. Benchmarks in Singapore and mainland China also rose.

_____

Pamela Sampson in Bangkok contributed to this report.

Source

Orders to U.S. factories rose in December, supported by a rebound in business investment in capital goods such as heavy machinery.

The results cap off another strong year for U.S. manufacturing. Combined with strong figures released Thursday on job growth in January, they signal the economic recovery is gathering strength.

Factory orders rose 1.1 percent following a 2.2 percent gain in November, the Commerce Department reported Friday. For the year, total orders were up 12.1 percent following a gain of 12.9 percent in 2010. Orders had plunged 22.1 percent in the 2009, the year the deep recession ended.

For December, orders for so-called core capital goods, which are viewed as a good measure of business investment plans, rose 3.1 percent to an all-time high. That gain was driven in part by a rush by businesses to take advantage of expiring tax breaks.

The advances in 2011 pushed orders for the year up to $5.36 trillion, still slightly below the peak of $5.44 trillion set in 2008.

For December, orders for durable goods, items expected to last at least three years, rose 3 percent, a figure that was unchanged from a preliminary report last week. Orders for nondurable goods slipped 0.4 percent, reflecting declines in petroleum products.

The orders category that signals business investment plans, non-defense capital goods excluding aircraft, climbed to an all-time high of $68.9 billion in December.

While some of that surge likely reflected a rush to make orders before investment tax breaks expired at the end of last year, many economists believe the boom in spending on new equipment will continue even with the tax breaks gone because there is a large amount of pent-up demand on the part of businesses to modernize their operations.

Companies are hiring more, factories are making more goods and more people are buying cars. Those positive signs for the economy have to be balanced against the threat that Europe’s prolonged debt crisis is acting as a drag on global growth. That would hurt sales of U.S. exports.

In December, orders for commercial aircraft were up 18.9 percent, orders for autos increased 1.7 percent and demand for heavy machinery rose 6.7 percent, reflecting strong demand for oil field equipment and construction machinery.

Manufacturing has been a bright spot in the recovery, although there was a slowdown in the middle of last year as factories dealt with supply shortages caused by the Japanese natural disasters that occurred in March.

The Institute of Supply Management reported this week that its gauge of manufacturing activity expanded in January at the fastest pace in seven months. The index rose to 54.1, up from 53.1 in December. Readings above 50 indicate expansion and the index has been in expansion territory for 30 straight months.

Source

European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are

Listen up, beer lovers — you may soon be able to get your suds in grande form. At Starbucks.

Starbucks said Monday that it would begin offering beer and wine at select locations in Atlanta and Southern California by the end of this year, to go along with several locations in the Chicago area that have previously been announced.

Starbucks (, Fortune 500) began the initiative in the Pacific Northwest in late 2010.

"As our customers transition from work to home, many are looking for a warm and inviting place to unwind and connect with the people they care about," Clarice Turner, Starbucks’ senior vice president for U.S. operations, said in a statement payday loan lenders.

"We’re pleased with the response of our customers to the introduction of wine, beer and premium food at several of our stores in the Pacific Northwest, and we’re excited to see how the idea translates to other markets."

The "enhanced menu" at these locations will also include savory snacks, small plates, and hot flatbreads, Starbucks said. The wines and beers on offer "will be hand-selected to reflect local customer tastes and preferences," the company added. 

Source

Berkshire Hathaway Inc.’s energy business agreed to buy an 81-megawatt wind power project from Invenergy Wind LLC to expand production in Illinois.

The Bishop Hill II project, which is under construction, will use 50 General Electric Co. 1.62-megawatt turbines, according to a statement Friday from Berkshire’s MidAmerican Energy Holdings Co. in Omaha, Neb.

Berkshire, led by Warren Buffett, has been expanding renewable production at the energy unit, which also produces power with coal and natural gas. Mid-American has invested about $6 billion in wind generation and built or acquired more than 3,300 megawatts of the renewable energy source in states including Iowa, Wyoming, Washington and Oregon since 2004. Last month, the unit agreed to buy the $2 billion Topaz solar project in California from First Solar Inc payday loans guaranteed no fax.

Wind “meets current and future energy needs in an environmentally efficient and cost-effective manner,” said MidAmerican Chairman and Chief Executive Greg Abel.

The Bishop Hill II wind project is near the town of Galva, Ill., about 40 miles northwest of Peoria. The project is expected to be in commercial operation in the fourth quarter. A unit of Ameren Corp. in Illinois has agreed to buy electricity from the project under a 20-year power-purchase agreement. Terms of the Invenergy deal weren’t disclosed.

Source

A multiple sclerosis drug made by industry giant Novartis is under investigation after at least 11 patients taking the medicine died.

The drug, Gilenya, was licensed last year in the European Union to treat patients with a severe type of multiple sclerosis.

The deaths raise concerns Gilenya could trigger heart problems after patients take their first dose, according to a statement issued Friday by the European Medicines Agency. The agency, which is now investigating the drug, said it isn’t clear if it caused the deaths.

One of the deaths was in the U.S., where a patient died within 24 hours of taking the first dose.

The European agency said it didn’t know where the other 10 deaths occurred, but that they were reported to its drug database, which monitors side effects from medicines in the European Union.

A spokeswoman at the U.S. Food and Drug Administration said it also is conducting a data analysis but has not made any definitive conclusions and does not know when its review will be complete.

More than 30,000 patients have taken Gilenya worldwide payday loan. The European Medicines Agency advised doctors to increase their monitoring of patients after the first dose of the medicine. The agency said the risk of a slow heart rate after the first dose of Gilenya was known when it was approved.

Novartis AG said it was advising doctors of new recommendations on using Gilenya. They had previously recommended all patients be monitored for six hours after their first dose, but are now tightening that to include continuous heart monitoring using electrocardiograms and measuring blood pressure and heart rate every hour. In certain patients, that monitoring should be extended, the drug maker said in a statement.

This new guidance applies only to patients taking their first dose, Novartis said in a statement.

The EU drug regulator hopes to finish its review of the drug by March.

Source

Agribusiness conglomerate Archer Daniels Midland Co. says it will cut 1,000 jobs company wide.

CEO Patricia Woertz said in a Wednesday statement that the majority of the positions will be salaried staff. The move will cut about 15 percent of the company’s corporate staff.

The Decatur, Ill.-based company employs 30,000 people worldwide.

Woertz says the company is cutting jobs to boost productivity and profits. The company does everything from processing crops to make food ingredients, to shipping grain overseas.

The last year has been a volatile one for agribusiness companies, with crop prices swinging wildly on global markets.cher Daniels Midland to cut 1,000 jobs

Eds: APNewsNow. Will be updated.

Agribusiness conglomerate Archer Daniels Midland Co business card. says it will cut 1,000 jobs company wide.

CEO Patricia Woertz said in a Wednesday statement that the majority of the positions will be salaried staff. The move will cut about 15 percent of the company’s corporate staff.

The Decatur, Ill.-based company employs 30,000 people worldwide.

Woertz says the company is cutting jobs to boost productivity and profits. The company does everything from processing crops to make food ingredients, to shipping grain overseas.

The last year has been a volatile one for agribusiness companies, with crop prices swinging wildly on global markets.

Source

Industrial orders in Germany dropped sharply in November as demand from abroad dropped _ nearly erasing a strong gain from the previous month.

Orders were down 4.8 percent compared to the previous month, the Economy Ministry reported Friday. In October, orders rose 5 percent _ a figure that was revised downward from the initial reading of 5.2 percent.

The decline was the largest monthly drop since January 2009 but UniCredit economist Andreas Rees said it was less a “harbinger of a nasty recession” than giving back some ground after October’s “tremendous rise.”

“There is no reason to get overly concerned about the state of the German economy, or even to become panicky,” Rees said. “As a matter of fact, exactly the opposite is true for German industrial companies as indicated by forward-looking sentiment indicators in the last few weeks overnight pay day loans.”

According to the report, foreign orders were down 7.8 percent on the month in November while orders from inside Germany _ Europe’s biggest economy _ declined 1.1 percent.

The sharpest month-on-month drop was in orders for investment goods such as factory machinery, which fell 6.5 percent.

On a less volatile quarter-on-quarter basis, the ministry says figures so far show orders in 2011’s final three months were “slightly under” the level of the third quarter.

Source

American bought more cars and trucks last year, spurred by easier credit, an improved economy and a desire to replace the aging vehicles that got them through the Great Recession.

Sales rose sharply for Detroit’s three carmakers and for Japan’s Nissan in 2011, aided by a surge in November and December. Analysts expect that momentum to continue into 2012.

Low interest rates, looser credit standards and pent-up demand are driving demand. The average age of a car on U.S. roads is the oldest ever, closing in on 11 years. Americans want to trade in those older vehicles now that a tentative recovery has begun and they’re feeling a little more secure about jobs and finances.

Buyers also were drawn out by an array of high-quality small cars with nice, roomy interiors and more features than in the past. That made it easier to downsize from bigger cars amid high gas prices. Pickups also sold well as business began to replace the trucks they need to haul equipment.

Those trends were good for the industry, which needs sales to keep growing after a scary drop in 2009. Healthy sales are also good for the economy, which benefits from jobs created by carmakers and spending by buyers.

After final figures are tallied late Wednesday, U.S. auto sales should rise to around 12.7 million for 2011. That’s a 10 percent jump from 2010 and 22 percent from 2009, when the U.S. auto industry and the financial system were in peril. Sales are almost certain to rise again in 2012, perhaps as high as 13.8 million, marking the third straight year of growth.

“Over the course of the fourth quarter of 2011, clear signs emerged that U.S. consumers are more confident and that other underpinnings of our economy are either stable or slowly improving,” said Don Johnson, GM’s U.S. sales chief.

Chrysler led the 2011 sales gains with a 26 percent increase, followed by Nissan at 15 percent, GM at 13 percent and Ford at 11 percent, the companies reported Wednesday.

For December, Chrysler sales surged 37 percent from a year earlier on strong demand for the Jeep Wrangler and the Chrysler 200 sedan. GM was up 5 percent for the month, aided by the Chevrolet Cruze compact and pickup sales. Ford sales rose 10 percent, led by the new Explorer SUV. Nissan sales rose nearly 8 percent for December.

Chrysler Group LLC’s strong showing for December capped a remarkable turnaround under its new Italian ownership. And it’s expected to jump ahead of Honda as the No. 4 U.S. automaker in 2011.

Chrysler and GM nearly ran out of cash in 2009 and needed government help and a trip through bankruptcy protection to survive.

Chrysler, now majority owned by Fiat SpA, sold 1.37 million vehicles last year, about 284,000 more than in 2010. It has introduced 16 new or revamped models in the past two years, vehicles that have fueled its recovery.

Sergio Marchionne, CEO of Chrysler and Fiat SpA, is predicting a net profit for 2011 of $600 million.

“Over the past 12 months, we successfully changed the conversation from Chrysler’s survival to products and service that consumers expect and want from a great American automaker,” Marchionne said in an e-mail to employees.

Nissan sold just over one million cars and trucks last year, its best calendar year ever. The company said it sold 944,000 Nissans and more than 98,000 of its Infiniti luxury cars and SUVs. Previously, 2007 had been the company’s best year.

Source