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 $18B in AIG shares.
Stocks maintained a narrow range Monday ahead of the Federal Reserve's meeting this week and as China reported data that heightened concerns of a slowdown in growth in the world's second-largest economy.
The Dow Jones Industrial Average ($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.
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.
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.
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.
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.
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.
Probably a good idea to get out before the fiscal cliff dip. The fall will be in the fall.
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.
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!
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.
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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