Stocks trim losses after Spain's banks pass stress test
But markets are still watching for a possible Moody's downgrade of Spanish debt. In the US, the ISM's Chicago PMI slips and consumer spending barely rises. Facebook shares jump 7% on the site's new gift feature.
Stocks trimmed earlier deep losses after results of a stress test on Spain's banks showed them to be mostly solvent.
The Dow Jones Industrial Average ($INDU) was down 43 at 13,442 after having fallen more than 100 points early in the session. The S&P 500 ($INX) was down 5 at 1,442. The Nasdaq Composite ($COMPX) was down 13 at 3,124.
The results indicate the banks' recapitalization needs amount to 59.3 billion euros ($76.3 billion), the Bank of Spain and the Economics Ministry announced. The results came in line with analysts expectations, MarketWatch reported. "The results confirm that the Spanish banking sector is mostly solvent and viable, even in an extremely adverse and highly unlikely macroeconomic setting," the joint press release said.
Markets are still watching for a potential downgrade of Spanish sovereign debt by Moody's Investors Service either late Friday or late Sunday.
All these steps are crucial for when the country asks for aid. European stocks were higher earlier Friday in response to Spain's budget announcement but quickly turned negative later in the session.
On Thursday, U.S. stocks snapped a four-day losing streak after an upbeat jobless claims report and a Spanish austerity plan that focuses on spending cuts instead of tax increases. The plan aims for $16.7 billion in budget cuts. The Spanish government said it expects to meet the 2012 budget deficit goal of 6.3% and set a deficit target of 4.5% for 2013. Borrowing costs in Spain eased after the announcement.
US spending, income barely rise
Consumer spending in the U.S. rose in August by 0.5%. Although that was the most in six months, when adjusted for inflation, spending barely rose 0.1%. Even that small increase reflects mostly rising gasoline prices. Consumer spending accounts for about 70% of economic activity in the U.S., so such a slow rate of spending growth isn't encouraging for GDP growth.
Personal income also rose just 0.1%, and, with inflation and taxes factored in, income fell 0.3%.
Since spending rose faster than income, the U.S. savings rate fell to 3.7% from 4.1% -- the biggest one-month decline in a year. Also, the core PCE price index inflation gauge rose a scant 0.1% in August. Over the past 12 months the core PCE has risen 1.6%, within the Federal Reserve's preferred zero-to-2.0% range.
Business activity in the U.S. unexpectedly contracted in September for the first time in three years. The Institute for Supply Management said its Chicago purchasing managers index fell to 49.7 in September from 53 in August. Any reading below 50 indicates contraction. This is the lowest level in three years. Economists had expected a much smaller decline to 52.9, according to Briefing.com.
Consumer sentiment rose to 78.3 in September from 74.3 in August, according to reports on the University of Michigan-Thomson Reuters consumer sentiment gauge. While sentiment rose to its highest level in four months, it was much lower than a preliminary September reading of 79.2 and economists expectations of 79. The sentiment gauge averaged about 87 in the year before the recession.
Stocks to watch
Research In Motion (RIMM) shares surged after the BlackBerry maker reported better-than-expected sales late Thursday. The company reported an adjusted loss of 27 cents a share, which was much better than the loss of 47 cents per share analysts were expecting, according to FactSet. CEO Thorsten Heins also said Friday on CNBC that RIM will first release a new touchscreen version when the BlackBerry 10 goes on sale in the first quarter of 2013.
Bank of America (BAC) has agreed to settle a class-action lawsuit with with investors who suffered losses after its 2009 Merrill Lynch acquisition for $2.43 billion. The bank will incur charges related to the litigation that will cut third-quarter earnings per share by about 28 cents. The company also said it will institute certain new corporate governance policies as part of the settlement.
Nike (NKE) shares fell after the maker of athletic shoes and apparel reported adjusted earnings of $1.27 per share, which topped analysts estimates of $1.12 per share, according to Thomson Reuters. The problem was that Nike reported narrower fiscal-first-quarter gross profit margin as well as higher costs for raw materials and labor.
Walgreen (WAG) reported that adjusted fiscal-fourth-quarter net income slipped to 63 cents a share from 66 cents in the year-earlier period but topped analysts' estimates of 55 cents a share. Sales decreased to $17.07 billion, from about $18 billion. Walgreen said it expects growth in the coming year as it re-enters the Express Scripts pharmacy provider network.
McDonald's (MCD) shares dropped after the fast-food chain was downgraded to "neutral" from "buy" at Janney Montgomery. The 12-month share-price estimate is $100.
Facebook (FB) announced a gifts program that is expected to help with monetization. The social network also integrated its service with the Dropbox file storage and sharing service.
Sony (SNE) agreed to put 50 billion yen, or about $644 million, into Olympus in exchange for an 11.4% stake, the companies said Friday.
Let's not forget Frances pummeling of the "super rich" with a 75% spike in business taxes!!!
So much for France wanting businesses to hire/keep workers.
Wonder what the countryside's going to look like with factories and buildings closed and up for sale over there...
GO ROMNEY 2012!!!
If Obama gets re-elected........we will find out then how our Ambassador was killed, and what they are hiding.................but Obama will bounce around with more excuses as to why there was not more protection............Lets see now.....the poor being paid with cell phones, Americans not knowing what happened in Libya...............less unemployment but American business down.........government purchased home loans................are you kidding me..........Lies!!!!
Sounds pretty accurate to me.
That might be what you thought when you read my post, I can control what's in your head, but that's not what I said at all.
We all have one vote, and we choose who to give it to. IMO, a politician should EARN our vote. I don't see how Obama has earned anyone's vote based on his performance and the condition of America now that we are getting to the end of his first term. That's all I said.
The stock market is -100 at 10:30 AM. the excuse of the hour is because of Spain. Don't worry. The "mainstream media" tells us; 1) Foreign policy is Urkel's forte; 2) It is Friday ... the Fed will simply pump millions of devalued dollars into the market right before closing so foreigners will think the U.S.S.A. is solvent.
Time to stop the whining and work for what you want in life rather than wait for the freebies like so many of the people do now.
Workers also expect to benefit from the fruits of their labor and time.
The downward DEATH SPIRAL of Lost Jobs and an ever weaker and weaker economy continues for the USA
See how an infinite amount of monies from the central banks is not going to help the economic crisis around the world.
It's like this folks. The US economy is like a car wreck victim who's left arm got cut off in the crash.
The injection of infinite monies into the left arm merely flows out of the arm and onto the pavement. The monies does the person (e.g. the economy) no good. The Federal Reserve knows this their economists understand the truth and yet they do nothing to help the patient the US economy. Would a EMS crew hook up a blood transfusion to the cut off left arm or to the right arm of the car crash???
The solution to the USA economy is jobs and not pouring money into the hands of the super rich.
So what if the super rich get another $5 trillion dollars from the central banks once again this year.
IT DOES NOT HELP THE ECONOMY AS THE MONEY NEVER GETS TO THE PEOPLE WHO NEED IT.
Pretty much we are doomed. Either Geithner (the tax evading criminal who should be in jail and not running the IRS) or Bernanke are totally stupid or they are communist agents bent on destroying the USA. Or perhaps both.
It's about creating 40 million American jobs paying $120,000 a year folks. Anything less than that and we are doomed. By this time next year it will be 60 million new jobs in order to save the economy and after that pretty much you will have to crash the economy and trash the dollar and start all over with a new currency.
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After enjoying a smooth rise in stock prices since May, investors are about to be hit with another bout of volatility.
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