On Tuesday February 1, 2011, 6:22 pm EST
Dow over 12,000 as
remarkable bull market rolls on
NEW YORK (AP) -- Two years
ago, the stock market was roadkill along the financial highway. Now one of the
greatest bull markets in history is rolling along -- maybe enough to finally
get the attention of average investors.
The Dow Jones industrial
average closed above 12,000 for the first time in two and a half years Tuesday,
putting the Great Recession even farther in the rearview mirror and erasing
most of the damage it inflicted on tens of millions of retirement accounts.
A broader measure of the
stock market, the Standard & Poor's 500 index, closed above 1,300 for the
first time since Aug. 28, 2008. And at least one widely watched measure
suggests stocks are still cheap by historical standards.
The remarkable run for stocks
began on March 9, 2009. The Dow stood at 6,547, its lowest point in 12 years.
Since then, in the fastest climb since the Great Depression, it has risen 84
percent thanks to surging corporate profits, the unexpected resilience of
personal spending and a bond-buying intervention by the Federal Reserve that
made stocks more appealing. And some of the early gains came because investors
realized that stocks had fallen too far during the financial crisis.
The Dow's total return,
which assumes stock dividends were reinvested, is 92 percent. Anyone who bought
an S&P 500 index fund that day in March 2009 has doubled his money,
assuming dividends were reinvested.
US auto industry off to a
solid start in January
DETROIT (AP) -- Americans
gave automakers a confidence boost in January. They bought more cars and trucks
and showed a still-fragile industry that they were ready to replace their
clunkers in 2011.
Sales were expected to
total around 800,000 for the month. That's still below pre-recession levels of
1 million or more, but better than last January's sales of 698,000.
Nearly all big car
companies reported double-digit gains for the month, a sign that the slow
recovery in U.S. auto sales that began last year remains on track. While the
recovery could falter if turmoil in the Middle East pushed up gas prices or
unemployment stays high, the industry was happy with what it saw last month.
Car buyers were shopping
for just about everything. Sales of recently redesigned SUVS such as the Jeep
Grand Cherokee and Ford Explorer were strong. People also snapped up small cars
such as the Nissan Versa and Honda Fit.
Pickups remained strong,
continuing a streak that began last year thanks to growing demand from
construction crews and other small businesses. Ford F-Series sales rose 30
percent. Crossovers, which combine the roominess of SUVs with car-like
handling, also remained strong. Sales of the Chevrolet Equinox, for example,
rose 35 percent.
Last January, rental-car
companies and other businesses fueled the recovery in auto sales as they began
to restock their fleets after the recession. But last month, individual buyers
propelled sales.
Factory activity grows,
hiring outlook brightens
WASHINGTON (AP) -- The best
month for U.S. factories in nearly seven years is brightening the outlook for
job growth.
Companies are exporting
more construction and mining equipment, and Americans are buying more cars,
appliances and computers.
The Institute for Supply
Management, a private trade group, said Tuesday that its index of manufacturing
activity rose last month to 60.8. It was the highest reading since May 2004 and
the 18th straight month the sector has grown. Any reading above 50 indicates
expansion.
The strong data on
manufacturing activity was a major reason the Dow Jones industrial average
closed above 12,000 for the first time since June 2008. Investors overlooked a
separate report that showed builders spent less on projects in December, and
that the construction spending for 2010 had hit a decade low.
Construction typically
helps drive economic recoveries after a recession. But this time around,
factories are more likely to crank out jobs.
Manufacturers added 136,000
jobs in 2010, the first annual net gain since 1997. And the trade group's
employment index last month rose to its highest level since 1973.
Still, the sector lost
almost 2.2 million jobs in 2008 and 2009. And manufacturers have managed to
boost output in recent years by making their operations more efficient and
getting more work out of the employees they already have.
Egypt protests prompt new
ratings review
CAIRO (AP) -- Egypt's
economy suffered a fresh blow Tuesday after yet another credit agency lowered
its ratings and its currency approached a five-year low with slim chance of a quick
rebound amid surging street protests.
Estimates of the losses
sustained during the week of unrest roiling the country have yet to emerge, but
one thing is certain: Hopes for another year of solid economic growth in the
Arab world's most populous nation are long gone. Companies are suspending
operations, workers are staying home, banks remained closed, and tourists are
fleeing by the thousands.
Standard & Poor's
joined Moody's in cutting Egypt's ratings -- the second such downgrade in as
many days. The third major ratings agency, Fitch, lowered its outlook for the
country to negative last week. All three agencies cited the deteriorating
situation in the country. More than a quarter-million people massed in the
heart of the capital Tuesday in the largest demonstration to date against
Mubarak.
BP resumes dividend payouts
after full-year loss
LONDON (AP) -- BP PLC said
Tuesday it is resuming dividend payouts for the first time since the Gulf of
Mexico well disaster and announced plans to sell off almost half of its U.S.
refinery business, including the Texas City facility where 15 workers died in a
massive explosion in 2005.
BP said a
stronger-than-expected end to 2010, in which high oil prices lifted
fourth-quarter profit by 30 percent, was not enough to avoid a full-year loss
of $3.7 billion, its first since 1992.
It raised to $40.9 billion
its estimate for the overall cost of the spill. The charge covers the cost of
the explosion aboard the Deepwater Horizon rig, which killed 11 workers in
April, as well as plugging the well and cleaning up the southern U.S. coast. BP
said the final total "is subject to significant uncertainty."
BP, which suspended
dividends following the Macondo well blowout in the Gulf of Mexico in April,
said it would pay out 7 cents per share, or about $1.25 billion over all --
half the amount paid in the fourth quarter of 2009.
Spain's rating upheld as
crisis eases
MADRID (AP) -- Standard
& Poor's has given Spain a welcome boost by affirming its credit rating
Tuesday, in another sign that the government debt crisis that threatened to
sink the euro has come off the boil, at least for the moment.
The agency said Spain's
current, solid AA rating partly reflects the government's resolve to cut its
deficit and enact reforms to make its struggling economy more productive.
That positive review from
outsiders comes as a welcome relief for Spain's hard-pressed government and for
worried European Union officials as they try to contain a crisis that has
already forced Greece and Ireland to take bailout loans from their eurozone
partners and the International Monetary Fund to avoid national bankruptcy
FDA declines to approve
Orexigen diet drug
WASHINGTON (AP) -- The
government on Tuesday unexpectedly rejected what appeared to be the most
promising candidate among a class of new diet drugs, wiping out hopes for a new
medication to fight obesity anytime soon.
Orexigen Therapeutics Inc.
said the Food and Drug Administration is concerned about the heart side effects
of its drug Contrave and will require a new study, a costly undertaking that
may prove too burdensome for the small drugmaker.
The FDA's ruling marks the
third rejection of a weight loss drug in recent months, raising questions about
whether any new drugs in the class can be made safe enough to win approval. The
FDA has not approved a new diet pill in more than a decade.
The FDA request for an
additional study suggests the agency may yet approve the drug, but makes that
path much more difficult. The news led to a sell-off that wiped out nearly three-quarters
of the market value of the company.
Orexigen said it is
disappointed with the FDA's decision and will work with the agency to determine
its next step.
Citigroup takes over record
label EMI
LOS ANGELES (AP) --
Citigroup Inc. has taken over debt-strapped EMI Group Ltd., closing a
disastrous purchase of the music label by Guy Hands, founder of British private
equity firm Terra Firma.
The foreclosure by
Citigroup, EMI's main lender, brings the label of British acts such as The
Beatles and Pink Floyd under American control until a new buyer can be found.
The takeover had been long
expected, but came more than a month before Terra Firma Capital Partners Ltd.
officially defaulted on roughly 3.4 billion pounds ($5.48 billion) of
borrowings it took on to buy the label in 2007.
Citigroup's move eliminates
some uncertainty over EMI's future, and restructures EMI by reducing its debt
by 65 percent to 1.2 billion pounds. Citigroup booked a 2.2 billion pound loss,
while Terra Firma saw its 1.75 billion pound investment evaporate.
The agreement leaves EMI,
which also represents Lily Allen, Katy Perry, Coldplay and dozens of other
acts, with more than 300 million pounds of available cash, enough to fund its
operations, and a sustainable level of debt.
For now, it won't have to
rush into the arms of a financial savior, although companies like Warner Music
Group Corp. and private equity firm Kohlberg Kravis & Roberts have been
jockeying to buy the company.
State tax revenues rise for
4th straight quarter
WASHINGTON (AP) -- A new
report says state tax revenues increased in the final three months of last year
as the improving economy boosted income and sales taxes receipts.
Tax revenue increased 6.9
percent in the October-December quarter, according to the report from the
Nelson A. Rockefeller Institute of Government, a research institute at the
State University of New York. That's based on early data from 41 states. If
revenues rise by that pace once all states have reported their data, it would
be the fastest increase since the April-June quarter of 2006.
Still, revenues remain
below pre-recession levels, while spending has risen to meet increasing demands
for social services. That means states still face large budget gaps they will
have to close through more spending cuts or tax hikes.
By The Associated Press
The Dow Jones industrial
average soared 148 points, or 1.3 percent, Tuesday to 12,040.16.
The S&P 500 rose 21, or
1.7 percent, to 1,307.59, its first close above 1,300 since August 2008.
The Nasdaq rose 51, or 1.9
percent, to 2,751.19
In the U.S., benchmark West
Texas Intermediate, or WTI, crude for March delivery fell $1.42 to settle at
$90.77 a barrel on the New York Mercantile Exchange. Brent, which analysts say
better reflects global oil demand, traded as high as $102.08, a level not seen
since October 2008.
In other Nymex trading for
March delivery, heating oil rose 1.67 cents to settle at $2.7570 per gallon,
gasoline futures climbed 1.93 cents to settle at $2.5194 per gallon, and
natural gas lost 7.3 cents to settle at $4.347 per 1,000 cubic feet.
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