Stocks struggle ahead of Fed meeting

Weak China data drags on global stocks even as it increases hopes for more stimulus. An eventful week in Europe could provide more hurdles for the eurozone. The government will sell $18B in AIG shares.

By Melly Alazraki Sep 10, 2012 9:23AM
stock marketUpdated at 12:02 p.m. ET

Stocks maintained a narrow range Monday ahead of the Federal Reserve's meeting this week and as China reported data that heightened concerns of a slowdown in growth in the world's second-largest economy.

The Dow Jones Industrial Average ($INDU) was up 8 points at 13,315. The S&P 500 ($INX) was down 1 point at 1,437. The Nasdaq Composite ($COMPX) was down 10 points at 3,126.

Last week, stocks posted multiyear highs as investors bet the Federal Reserve will approve more easing measures this week to stimulate the economy, and as the European Central Bank announced details of its bond-buying plan to help curb borrowing costs of struggling eurozone countries. And a lackluster employment report Friday -- which showed only 96,000 jobs were gained in August, compared with the expected 130,000 -- added to expectation the Fed will act.
China data increases hopes of more stimulus
This trend of bad data actually boosting stocks because they raise expectations for further stimulus repeated itself Monday in Asia. Most markets finished higher despite weak Chinese data that had analysts expecting the Chinese economy to have its weakest year of expansion since 1999.

Imports in China fell 2.6% on the year in August, well below expectations for a 3.5% rise. Exports grew 2.7%, again below forecasts for a 3% rise in a Reuters poll. Exports in China generate 25% of GDP, causing some economists to fear China may miss its official 7.5%.

Also, data on Sunday showed China industrial output growth hit its weakest annual pace in August in more than three years. The data, however, solidifies expectations that the government will initiate more stimulus measures.

Concern over Europe far from over
In Europe, stock markets moved lower as investors remained cautious ahead of a German constitutional court ruling and the Fed's policy meeting Wednesday and Thursday.

While the IMF backed the ECB's plan to buy unlimited government debt to ease pressure on struggling eurozone economies, the German court is set to rule Wednesday on a challenge to Germany's participation in the European Stability Mechanism, the eurozone's permanent rescue fund.

The same day, there will be general elections in the Netherlands. And European finance ministers will meet in Cyprus on Friday to try to solve differences over banking supervision and possible extra aid for Spain and Greece.

Stocks to watch

American International Group (AIG) fell after the U.S. Treasury Department said it will sell most of its stake in the insurer, or $18 billion in stock. This transaction will likely make the government a minority investor, according to Bloomberg -- from the current 53% stake to as low as 23% -- for the first time since it rescued the company four years ago with a $180 billion bailout.


Michael Kors (KORS) dipped after the high-fashion retailer said after the close Friday that some of its investors will sell 20 million shares in a so-called secondary sale.


Plains Exploration & Production (PXP) will buy BP's (BP)stake in some of its Gulf of Mexico oil fields for roughly $5.55 billion, Reuters reported.


Apple (AAPL) is expected to unveil information about the iPhone 5 later this week.


Intel (INTC) shares dipped again Monday. The chipmaker cut its revenue outlook Friday, but the Wall Street Journal's Heard On The Street reported it may have to cut its revenue further as sales from developing nations may be declining at a faster rate than the company and analysts are expecting.


Sprint Nextel (S) shares jumped Monday after Nomura Securities upgraded the stock to a "buy" rating and boosted the price target on the wireless operator to $7 from $2.50.


Tyco International (TYC), the maker of fire-detection systems whose former executives were convicted of fraud, fell in Europe as JPMorgan Chase advised reducing holdings in the company, Bloomberg reported.

220Comments
Sep 10, 2012 10:01AM
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American working man struggling to make it in this country but politicians have a grand time at HIGH DOLLAR CONVENTIONS patting each other on the back telling each other what a grand job they are doing for their country and raking in lobbyist money at our expense............PATHETIC A$$ES!!!!!!!
Sep 10, 2012 10:06AM
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He we are in the worst economic crises sent the great depression and our only solution is to print more money? The economic intellegent of the world is a joke.
Sep 10, 2012 10:18AM
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If we print any more money it will take a wheel barrel full to buy a loaf of bread
Sep 10, 2012 10:23AM
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If money supply were the problem companies would not have 2 trillion on the sidelines, food and energy would not be pushing people into lower classes and the stock market would be much lower.  So printing more money will do what exactly?
Sep 10, 2012 10:10AM
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China, will do what China has to do....Beholden to no one.

 

Europe has so much infighting, roadblocks and jealously....That it is pathetic.

 

And half of America,(maybe less) approves of what Bernanke does; The others ??

So the FED is accused of being a Political football.

 

Americans should concentrate more on pulling her up by the boot straps, and kicking the azz of a do nothing Congress.

Sep 10, 2012 9:52AM
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It's the same thing as before Draghi's rally.  Manipulators will push the markets down for a few days.  (or at least try to), in anticipation of Ben's Rally. 

 

After that, we'll get a "lowered 3Q earnings forecast" slump, followed by an "3Q earnings surprise" rally.  Then in October, we'll get "the fiscal cliff is coming!" slump, follow by a "Congress reaches agreement" rally.  At the end of it all, S&P will be pretty much same is it is today.

 

Sep 10, 2012 10:17AM
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Inflation................during a resession..................NOT GOOD !!! Go Romney!!!!!
Sep 10, 2012 9:43AM
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there's a stahl going on.  we were at the los angeles county fair friday night and it was unusually empty for a summer fair in a pretty populated area.

 

$5 admission and of course they raised parking from $9 last year to $12 this year. 

 

LOTS of typical smaller vendors were gone.  only the corporate big boys seemed to have booths there. 

Sep 10, 2012 10:27AM
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Would someone please explain to me the end game or any game of central banking.  What world are these people living in?  I have no confidence they  have a clue and short of maintaining the fraudulent status quo they are hindering the inevitable shakeout of world currencies needed to move on.  The Philosophy of manipulating  monies and creating something out of nothing is fraudulent.  This is especially true for the masses.  What benefit do they offer or propose to offer to you or me?.  I think they are just in it for maintaining control and income for themselvers and their corrupt political buddies.   We need to direct full disclosure and poltical discussion of these people and what they are up to. If you look back over the last 15 or so years what exactly have they contributed beneficially to the citizens of this country?  They have become more removed, more secretive, and more selective as to who their masters are.  We need to put the brakes on this something out of nothing mentality now!  It isn't working folks.
Sep 10, 2012 10:03AM
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US Treasury selling off most of its stake in AIG. I wonder what they know, or suspect.

Probably a good idea to get out before the fiscal cliff dip. The fall will be in the fall.

Sep 10, 2012 10:56AM
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Fat Cat - in what world are you living in that there is no inflation.  Stock prices are inflated, food and energy are inflated.  Food prices have been rising long before this drought.  Core inflation is tame yes, but it is a near meaningless number.  The price of a coffee table is stable but how in the hell does that help a struggling family that has a lower paying job then before?  Food and energy prices are crushing them.  Housing prices could be half of what they are if you can't pay your bills you aren't making any big purchases.
Sep 10, 2012 10:15AM
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Steve, in my area the local governments have raised vendor fees big time over the past couple of years as a way to raise revenues.  At a local spring festival, vendor fees were up 20% YOY, and they were up 33% YOY at a local 4th of July event.  They have also jacked up vendor fees at the local farmer's markets, to the point that local "mom and pop" growers are a rarity.
Sep 10, 2012 10:45AM
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Brutus - if money was not being printed then the American dollar would be worth more making gas, food everything cheaper.  That would make people feel better then stocks that they can't afford a meaningfull amount of being higher.
Sep 10, 2012 11:23AM
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According to the business pundits, corporations are making all-time record profits, worker productivity is at an all-time high, and so is executive pay. Yet worker wages are stagnant or falling, pensions are being phased out, and the health insurance burden is gradually being shifted onto workers. They've been systematically reducing our standard of living for the past thirty years. And the vast majority of Americans seem content to sit back and just take it, maybe watch another asinine football game or movie.
Sep 10, 2012 11:00AM
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China, will do what China has to do....Beholden to no one.

 

No, but we are becoming beholden to China.  We need them to keep buying more and more

of our debt.  Pretty soon they will own enough of it to really make us beholden.  And they

won't be the only ones.

 

 

 

Sep 10, 2012 11:46AM
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No comment about GM and its best selling car the Chevrolet Volt.  A news article states GM is losing $49,000 per vehicle.  Sales were up in August as below market leases of as little as $199 per month boosted sales.  A dealer in Toms River, NJ stated they sale about 100 vehicles a month, but the dealership has sold only one VOLT in the last year!

 

And -for the second time this year the production plant will be closed so the glut of inventory can be reduced. 

 

GM is not  NO. 1 -TOYOTA is again and VW is second.  Only reason GM was No. 1 in 2011 was due to the Tsunami in Japan in 2011.

 

One thing hurting the VOLT is the amount of time to recharge the vehicle.  The article stated you can retrofit your home with a booster type charger for $2,000.  What a deal.

 

There is still a $7,500 tax credit for purchase of this vehicle.  The article also stated Nissan, Toyota and others are struggling to sale electric cars.

 

GM was not bailed out .  The Auto Union was bailed out, but not the Adelpi (non union workers), they received the SHAFT.

 

By the way - why is gas down only $0.05 a gallon now that the hurricane is a thing of the past and the oil rigs are now going full blast.  The price increased at least $0.25 a gallon prior to the hurricane. 

 

President Obama wants $8.00 a gallon gas! 

 

 

Sep 10, 2012 10:19AM
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we're in a stage of our time (decline?) where the separation between parties ~ their inability to give and take on topics and actually synergize into a better-than approach than either side can conceive on their own ~ is more important than the people at large. 

Sep 10, 2012 10:42AM
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Mr. Fat Cat...

Of course the taxpayers get reamed...    Look at Chicago teachers strike.   Do you think for one minute the teachers union will not win in the end, and stick it to the taxpayers?  Do you think for one NY minute that the democrats that run Chicago, and need those union kickback dollars will not cave, in return for said contributions?

The poor taxpayers of Chicago will have their pockets fleeced again.  Illinois could use a man like Scott Walker!  Someone to turn off the taxpayer funding of the democrat party!
Sep 10, 2012 10:58AM
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If a market is corrupt nothing you can add to it is beneficial.  It either needs to be made right or disolved.  Markets work when they are honest, unimpeeded, and balance is maintained over the long term.  Do we all agree the present stock market is fraudulent?  Does the guberment buying into it make it work better?  My contention is it is all smoke and mirrors made for folks to have a false belief everything is okay so the Rep/Dem. union stays in power.   The Central Bankers are active coconspirators in this fraud.
Sep 10, 2012 11:05AM
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As we await election day we will soon realize the we have another take it or leave

it election and that doesn't  just apply to the Presidential choices.  Goes all the way

down the ticket. 

 

There should be 2 referendums on the ballot.  Term limits and line item veto.  Much

more important that choosing the same fools to run this country without any limits

on their power.

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