A stock market graph trending down © jmiks/Getty Images
Be wary of dire market forecasts

The most likely scenario is that the markets will begin to rise from here -- and that bounce is just beginning to take hold.

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Fund-flow data show US investors' aversion to nearly every asset class. Yet one team of analysts sees no macro indicators of Armageddon.

By TheStreet Staff Aug 4, 2011 1:21PM

Image: Arrow Down (© Image Source/SuperStock)By Robert Holmes, TheStreet

 

Investors, watching in horror as the MSCI World Index of equities has slumped 11% from this year's peak, are pulling out of equities across the world.

 

U.S. equity mutual funds have gone from taking in $11.3 billion in January to redeeming $25.4 billion in July, according to a weekly fund-flow report from research firm TrimTabs. Similarly, U.S. equity ETFs swelled by $17.2 billion in December 2010 and shed $2.9 billion in August.

 

The S&P 500 Index ($INX) has tumbled nearly 10% since July 25 amid the debt debate in Congress and signs that the U.S. economy may be headed toward another recession. Reports on manufacturing from the Institute for Supply Management and gross domestic product for the first and second quarters have sunk markets to their lowest levels of the year.

 

Equities sold off broadly Thursday, with the S&P 500 down 3% and the Dow Jones Industrial Average ($INDU) off 350 points, or nearly 3%, at one point.

 

Assets in exchange-traded funds and notes reached $1.1 trillion last month, an increase of $8.5 billion from June.

By TheStreet Staff Aug 4, 2011 12:36PM

the streetBy Don Dion, TheStreet

 

The market witnessed shaky action over the past few weeks as issues such as Washington's debt-ceiling debate and the sovereign crisis facing the European Union dominated headlines.

 

While these hurdles have cast a thick cloud of uncertainty over the global marketplace, as evidenced by July's ETF flow data compiled by the National Stock Exchange, investors have remained unwavering in their demand for exchange traded products.

 

After falling in May and June, total ETF/ETN assets managed to rebound, closing out the month over the $1.1 trillion mark. This marked an increase of more than $8.5 billion from June. While the month's gains are welcomed, total ETF assets remain nearly $30 billion shy of the all-time record highs witnessed in April.

 

Big yields sometimes hide excessive risk, as evidenced by these two recent examples, which show the importance of watching for warning signals on the charts.

By MoneyShow.com Aug 4, 2011 11:32AM
By Tom Aspray, MoneyShow.com

One of the first lessons income investors normally learn is that when one instrument has a much higher yield than others, it is a signal that the risk is also much higher. 

This year has been a tough one for those looking for yields, while the bond issuers have been in paradise. In May, MIT offered those AAA 100-year bonds with a yield of 5.6%, which were quickly snapped up. This is still hard for me to imagine.

Many have been mesmerized by some of the high-yielding REITs that invest in mortgage-backed securities where the yields have been double or triple that of the 30-year Treasury bond. Buyers of these REITs are trading a higher yield for increased risk, and many were taught a painful lesson last week.

While the debt debacle only hit most investors this week, some of these REIT investors were hit hard the week before. The fear that interest rates would spike, along with a sharp increase in the financing costs of their short-term debt caused a run for the exits, and many of these high-yield bets were hit hard.

Stop-loss selling certainly contributed to the severity of the declines, and in just a few minutes of trading last Friday, some high-yield investments dropped 18%-22% below the previous day’s close. By the end of the day, they had rebounded to close just a bit lower.

I would maintain that these stops were poorly placed and would remind anyone investing in high-yield (high-risk) instruments that they cannot buy and forget. Those who paid close attention to the charts of these two particular high-risk investments could have avoided getting hurt in this mini “flash crash.”
 

Facebook addicts and widespread apathy are still key barriers to Google's social Web ascent.

By TheStreet Staff Aug 4, 2011 11:04AM

By Scott Moritz, TheStreet

 

After its first month, Google+ has flown by a few huge milestones, but it hasn't achieved its ultimate goal as the clear successor to Facebook.

 

Google+, Google's (GOOG) social networking site that allows Gmail users to sort friends and share photos, rocketed to 25 million users in less than a month. This rapid rise makes it the "fastest start" of any social Web service, according to Comscore.

 

But as Wedbush analyst Lou Kerner and others point out, the early rush of curiosity seekers isn't necessarily a sign of a well-woven social web. While Google+ has "captured the imagination of the digital cognoscenti, engagement remains relatively low," Kerner said at the start of a Google+ discussion he hosted Tuesday.

 

One company will sell Oscar Meyer bologna and Stove Top stuffing while another peddles Oreos and Handi-Snacks.

By InvestorPlace Aug 4, 2011 9:36AM
By Jeff Reeves, InvestorPlace.com

 

Kraft Foods (KFT) announced Thursday that it will split into separate companies -- a global snack food powerhouse and a North American grocery specialist. The move is meant to keep momentum going now that Kraft's stock is back to pre-recession levels.

 

Interestingly, the blue-chip company snatched up British foods giant Cadbury in 2010 with a $18.9 billionacquisition. But despite hopping on the buyout bandwagon, Kraft has decided that smaller actually is better for the $60 billion company now that the dust has settled.

 

So why the decision to split up so soon after a big buy?

 

It's OK for executives to sound off against the government -- if they deliver the goods regardless.

By Jim Cramer Aug 4, 2011 9:24AM

jim cramerthe streetWe all know that Washington, D.C., has become the enemy of business. Its pro-labor orientation, its insistence on more regulation (including environmental rules that are expensive to comply with) and its regular bashing of businesses like banking and tourism (think Vegas or the private jet industry) hurt new hiring and business formation.

 

No one can fault business people for grousing about how Washington has become a big impediment to corporate profits. But does that mean everyone has the right to blame Washington for weaker returns? Does it mean that chief executive officers should be sounding off about Washington headwinds on their conference calls?

 

First, I never mind hearing it. When so many leftists are demanding that big businesses hire more people here, you want execs to point out that when Boeing (BA) decided to build a new plant in a state that's not that hospitable to unions, South Carolina, the National Labor Relations Board went after it with hobnail boots.

 

There's plenty of bad news ahead for this economy, and late summer is typically a tough time for stocks anyway.

By Jim J. Jubak Aug 3, 2011 5:37PM

Jim JubakUpdated at 4:30 p.m. ET Thursday


I haven't heard anyone breathe the word, but we've come close this week. 


Pimco's Bill Gross told Bloomberg TV: "We're not looking at a recession yet, but we're at a tipping point."


And Harvard's Martin Feldstein, who was the chairman of the Council of Economic Advisors under President Ronald Reagan, said: "This economy is really balanced on the edge. There's now a 50% chance that we could slide into a new recession."


I love the smell of fear in the market. It usually signals that a buying opportunity is approaching. 


Thursday's slide wiped out all of 2011's gains, with the Dow Jones industrials ($INDU), the Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) all down more than 11% year to date. 

 

The gold market is changing.

By Motley Fool Pick of the Day Aug 3, 2011 5:12PM
Alex Dumortier

 

In a December 2009 interview, with gold around $1,150 per ounce, the Bank of Korea's Lee Eung Baek said to Bloomberg:

There's an illusion in gold. We follow the big trend. Gold isn't the trend. Out of more than 200 nations, how many countries have bought bullion? ... [Gold] offers little value.

A powerful and long-lasting trend
At 25 tonnes (rough worth: $1.3 billion), the purchase isn't huge for a central bank -- hedge fund Paulson & Co.'s position in the SPDR Gold Shares ETF (GLD) at the end of March was over three times that size. However, it's indicative of a phenomenon that I highlighted 13 months ago, when I wrote that, "we may be witnessing an important shift in the way central bankers perceive gold, which could become a powerful and long-lasting trend."

 

Budweiser may have been passed by Coors Light as No. 2 in the US.

By Kim Peterson Aug 3, 2011 3:10PM
Budweiser has a problem. It's called Coors Light.

Coors Light is very close to booting Budweiser from its No. 2 spot as the best-selling beer after Bud Light, Advertising Age reports. It might have already passed Budweiser, but the race is too close to call. And executives from MillerCoors feel so good that they think even Miller Lite will beat out Budweiser by next year.

The trade publication Beer Marketer's Insights said this week that it's probably too late for Budweiser to make a comeback. Budweiser will likely fall to No. 3.

At least Bud Light is untouchable so far. But the iconic Budweiser has watched sales slide for two decades straight. 

Franchisees are dealing with the higher costs of coffee and milk.

By Kim Peterson Aug 3, 2011 2:11PM
Coffee and milk are more expensive these days, and Dunkin' Donuts and Baskin-Robbins are raising prices in response.

The owner of the two chains, Dunkin' Brands (DNKN), said franchisees have raised some prices to cover the spike in coffee costs, Reuters reports. Some Dunkin' Donuts stores raised coffee prices, while others pushed the increases to breakfast sandwiches and cold drinks instead.

Baskin-Robbins stores are paying more for milk, and the company said it expects those costs to remain high. So the ice cream shops are planning to raise prices in the third quarter.

Dunkin' Brands is trying to lower prices by using other suppliers and negotiating contracts, Reuters reports. 

Investors looking for pure exposure to this sector should turn to one fund.

By TheStreet Staff Aug 3, 2011 1:29PM

By Don Dion, TheStreet

 

The media industry will face the spotlight this week as major players including Viacom (VIA.B), DirecTV (DTV), Time Warner (TWX) and Comcast (CMCSA) report earnings.

 

A number of consumer-focused exchange-traded funds provide investors with ample coverage of the industry. For instance, the PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ) lists companies like CBS (CBS), Viacom, and Discovery Communications (DISCA) within its top 10 positions.

 

Investors looking for pure exposure to the media industry, however, should turn to the PowerShares Dynamic Media ETF (PBS).

 

New fears about the economy have trumped the debt resolution, and the sell-off is in full swing. Here are some critical support levels to watch for.

By MoneyShow.com Aug 3, 2011 12:53PM
By Tom Aspray, MoneyShow.com

The anemic market response to the raising of the debt ceiling early Monday was followed by heavy selling Tuesday, and some major averages have already broken below their March lows.

There is little optimism for stocks or the economy this week, and by the time we get the monthly jobs report Friday, things are unlikely to get better. Bearish sentiment will clearly pick up this week, although it currently does not seem to be overly high. This allows for stocks to decline even further.

The McClellan Oscillator tried to bounce but had dropped to oversold levels at minus 276 Tuesday. Stocks were higher early Wednesday, so maybe we will now get an oversold bounce. If we do, it is likely to be followed by another wave of selling.

The Advance/Decline (A/D) lines on the S&P 500 and Dow industrials have broken support after confirming the price highs early in the year. This is similar to what occurred in spring 2010, which resulted in the decline to last summer's lows.

Therefore, another month or two of sideways to lower trading is possible, and it would take several consecutive days of strong market internals to improve the technical outlook. These are the key stock index ETFs and important price levels to watch for on each one.
 

William Marovitz is accused of trading Playboy shares after receiving insider information.

By Kim Peterson Aug 3, 2011 12:47PM
The Securities and Exchange Commission thinks Christie Hefner's husband acted inappropriately with shares of Playboy Enterprises.

The commission sued William Marovitz, the son-in-law of Hugh Hefner, accusing him Wednesday of insider trading. Update: Marovitz announced Wednesday he will pay $168,352 to settle the insider trading charges. That includes $100,952 in improper trading gains, $34,236 in interest and a $33,164 civil fine. He did not admit wrongdoing in the settlement.

According to the SEC, Marovitz got inside information from his wife, the former head of Playboy. He then bought and sold shares ahead of announcements about potential acquisitions, quarterly earnings and stock offerings. 

If transportation stocks are any guide, crude could keep sliding.

By Kim Peterson Aug 3, 2011 12:24PM
If you want to know where gasoline prices are headed, watch the Dow Jones Transportation Index ($DJT). That's the theory of some market watchers, at least.

The transportation sector uses more than 70% of U.S. petroleum production and imports, according to Rigzone. When the transportation index drops, it's usually followed by a drop in crude oil prices. "We suggest keeping a close eye on the transports as the proverbial 'canary in the coal mine' in preparation of rotating out of the energy sector ahead of what historically has signaled grief for the industry," Rigzone writes.

And that could be the case now. The Dow Transportation Index has dropped 12.3% since July 7. 
Tags: oil

The sluggish economy has investors buying Treasurys and yield-paying stocks.

By TheStreet Staff Aug 3, 2011 11:00AM

By Robert Holmes, TheStreet

 

Many Americans are relieved, though angered, that Congress worked out an eleventh-hour deal so the world's largest economy would avoid defaulting on its debt.

 

But the situation is even worse than they may have feared. After legislators stop playing political games with the nation's debt limit, they will face calls to revive the economy, which has slowed dramatically. Restricting borrowing and raising taxes, which is likely, will put an even larger damper on the economy.

 

With such dire circumstances, investors now have an appetite for U.S. Treasurys and dividend stocks as they count on income in tough times, says Jason Brady, a co-portfolio manager for the Thornburg Investment Income Builder Fund (TIBAX). Investors' reaction to recent economic data re-enforces the need for better risk management and dependable income.

 

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[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


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