Today Stock Market News

Political columnist Darrell Delamaide looks at hypocrisy and corruption in politics…and says there must be consequences.

SAN FRANCISCO (MarketWatch) - San Francisco Fed President Janet Yellen said expectations the Federal Reserve will hike interest rates by the end of this year, such as those priced into fed funds future contracts, are “jumping the gun,” given pressures on the U.S. economy. “We don’t even have a recovery. All that’s happened is that we’re contracting at arguably a slower pace,” she said after a speech here late Tuesday. The “drumbeat” of commentary that the Fed’s policy of near-zero interest rates will spur high inflation is making her worried the Fed will act too quickly to tighten, “aborting recovery” in an economy that’s only recently showing signs of repair, she said. “History shows that this kind of concern has caused central banks, both ourselves in the Great Depression and in Japan, to tighten too early. That’s a real risk,” she said.

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The dollar gains on the yen after initially dipping as the Bank of Japan’s quarterly tankan survey of business sentiment shows companies are more optimistic for the first time since 2006.

HONG KONG (MarketWatch) — Japanese banking giant Mizuho Financial Group Wednesday said it will issue 2.8 billion new common shares in the domestic and international markets later this month. The decision follows an announcement by the bank in May that it plans to raise up to 600 billion yen through new share issuance to boost capital. Mizuho shares ended up 0.4% in the Tokyo morning trading session.

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China’s manufacturing accelerates for a fourth straight month, adding to a picture of an improving economy as the effects of stimulus spending and new bank lending fuels activity.

HONG KONG (MarketWatch) — The China Federation of Logistics & Purchasing’s key manufacturing index rose to 53.2 in June from 53.1 in May, marking the fourth straight month of gains and adding to a picture of an improving economy. The result was lower than Merrill Lynch’s forecast of 54.5.
Still, analysts saw the data as indicating the industrial sector is picking up steam. “China’s stimulus program is having a demonstrable effect on domestic spending, which has resulted in increased manufacturing activity,” J.P. Morgan’s China equities head Jing Ulrich said in a note Wednesday.

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San Francisco Fed chief says the U.S. must avoid rushing to raise interest rates because of unfounded concerns about inflation if it wants to avoid plunging back into recession.

TOKYO (MarketWatch) — The yen drifted lower after intially firming against the dollar Wednesday as the Bank of Japan’s quarterly tankan survey of business sentiment showed companies were more optimistic for the first time since December 2006. The dollar changed hands at 96.44 yen, up from 96.37 yen in late North American trading Tuesday, and up from 96.23 yen shortly after the tankan data were released. The euro bought $1.4025, down from $1.4032 late Tuesday. The tankan showed Japan’s large manufacturers expect the dollar to trade at an average rate of 94.85 yen in the fiscal year through March 2010, weaker than their forecast of 97.18 yen in the March survey.

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SAN FRANCISCO (MarketWatch) — The Federal Reserve must avoid rushing to raise interest rates because of unfounded concerns about inflation if it wants to avoid plunging the U.S. back into recession, said San Francisco Federal Reserve President Janet Yellen late Tuesday. “If anything, I’m more concerned that we will be tempted to tighten policy too soon, thereby aborting recovery,” said Yellen in remarks prepared for a speech here to the Commonwealth Club of California. A voting member of the Fed’s interest-rate setting committee, Yellen said she anticipates inflation is likely to be too low, or under policymakers’ informal 2% target, rather than too high. The recession will probably end later this year, she said. But recovery is likely to be slow.

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SAN FRANCISCO (MarketWatch) — Freddie Mac’s board has made Charles “Ed” Haldeman its prime candidate for chief executive officer, according to a report published late Tuesday. The online edition of The Wall Street Journal, citing unnamed sources, reported that Haldeman’s appointment as CEO of the government-backed mortgage company is subject to approval by the Federal Housing Finance Agency and the U.S. Treasury. Haldeman recently stepped down as chairman of Putnam Investment Management LLC.

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HONG KONG (MarketWatch) — Japanese stocks rose off their early lows Wednesday as investors considered the Bank of Japan’s tankan survey, which showed large manufacturers were optimistic for the first time since 2006, though their outlook improved less than expected. Commodity-related stocks such as Marubeni Corp. and Inpex Corp. led the decline, while real-estate stocks posted gains. The Nikkei 225 Average, which dropped as low as 9,874 in early minutes, later retraced to trade down 0.2% at 9,941.02, while the Topix Index slipped 0.2% to 927.84. Elsewhere, South Korea’s Kospi bounced off its early losses to rise 0.4%, Australia’s S&P/ASX 200 fell 1.5%, and New Zealand’s NZX 50 gave up 0.5%.

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Japan’s large manufacturers become more optimistic for the first time since December 2006, the Bank of Japan’s quarterly tankan survey shows, though the result misses expectations.

TOKYO (MarketWatch) — Japan’s large manufacturers were more optimistic for the first time since December 2006, the Bank of Japan’s quarterly tankan survey of business sentiment showed Wednesday. The key diffusion index measuring business sentiment improved to minus 48 from minus 58 in the previous quarterly survey in March, still slightly below the consensus expectation for a rise to minus 43. The companies see the index rising to minus 30 in the September survey, indicating they expect further improvement. A negative reading means companies pessimistic about the outlook still outnumber those which are optimistic. Large companies also expect capital expenditures to be down 9.4% in the fiscal year through March 2010.

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SAN FRANCISCO (MarketWatch) — Australia’s manufacturing sector showed signs of recovery in June, according to media reports published Wednesday. The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index rose 0.9 points to 38.4 in June compared to the prior month, according to reports. While the figure fell below 50 and therefore marked the 13th consecutive month of contraction, it still represented a slowing pace of decline, reports said.

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SAN FRANCISCO (MarketWatch) — Newspaper publisher Gannett Co. will cut more than 1,000 jobs, according to a media report published Tuesday. The online edition of The Wall Street Journal, citing an unnamed source, reported that Gannett will make the cuts at its U.S. Community Publishing division, which consists of more than 80 local daily papers. Gannett, like other newspaper publishers, is suffering from a decline in advertising revenue. The company cut more than 10% of its 41,500 employees last year, and had been widely expected to make further reductions.

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LOS ANGELES (MarketWatch) — Kroger Co. said Tuesday it is recalling three of its popcorn seasoning products after a supplier of one of the ingredients warned the company of possible salmonella contamination. Cincinnati-based Kroger said the recall covered Kroger Popcorn Seasoning Movie Theater Butter Flavored, Kroger Popcorn Seasoning White Cheddar Flavored, and Kroger Fat Free Butter Flavored Sprinkles. It said no illnesses have been reported so far in connection with the products.

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SAN FRANCISCO (MarketWatch) — Among the companies whose shares are expected to see active trade in Wednesday’s session are Constellation Brands Inc., General Mills Inc., and Sealy Corp.

Canadian stocks stumble, with prices for energy and metals pulling back on concerns that a downturn in consumer confidence and falling home prices in the U.S. will dent economic recovery.

SAN FRANCISCO (MarketWatch) — Morgan Stanley and Mitsubishi UFJ Financial Group Inc. will create a loan marketing joint venture in the United States in line with their plan to bolster their strategic alliance, the companies said late Tuesday. The financial firms also plan to sign an agreement on business referrals in various areas, including capital markets, loans, and fixed income sales. The two financial giants have already agreed to a referral agreement under which clients of Bank of Tokyo-Mitsubishi, a subsidiary of Mitsubishi UFJ, can be referred to Morgan Stanley Capital Group for commodities business.

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Too-big-to-fail concept has become institutionalized, laments the Fed’s Hoenig.

SAN FRANCISCO (MarketWatch) — Pfizer Inc. said late Tuesday it discontinued a Phase 3 colorectal cancer treatment trial because of the likelihood it would not show a statistically significant improvement in patients. The clinical trial involved adding Pfizer’s Sutent to the chemotherapy drug Folfiri for colorectal cancer patients and comparing the results to patients receiving Folfiri alone. Shares of Pfizer fell 1.5% to $14.78 in after-hours activity.

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The maker of mattresses surpassed most analysts’ quarterly projections but the stock has slumped in evening action.

SAN FRANCISCO (MarketWatch) — Putnam Investments said late Tuesday that Charles E. “Ed” Haldeman, Jr., will step down as chairman of Putnam Investment Management, LLC, president of the Putnam Funds, and member of the Board of Trustees of the Putnam Funds, effective immediately. Putnam Chief Executive Robert Reynolds will replace Haldeman as president of the Putnam Funds, the mutual fund company added. The position of chairman of Putnam Investment Management, LLC will not be replaced, the firm also said. Haldeman was named chairman of Putnam Investment Management, LLC, the investment advisor for the Putnam Funds, in July 2008. Before that, he was president and chief executive of Putnam Investments, a position he took on in November 2003.

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NEW YORK (MarketWatch) — A dip in consumer sentiment sank U.S. stocks on Tuesday, but that barely dented the market’s stellar quarterly performance, which saw the broad S&P 500 index jump 15%. On Tuesday, the Dow Jones Industrial Average ended down 82 points, or 1%, at 8,447. The S&P 500 index fell 8 points, or 0.8%, to 919, and the Nasdaq Composite lost 9 points, or 0.5%, to 1,835. Meanwhile, the performance for the month of June was underwhelming for the market. The Dow fell 0.6%, the S&P 500 was unchanged, even as the Nasdaq rose 3.4%. But previous gains still helped the market maintain strong gains for the second quarter. The Dow rose 11% over the past three months, the S&P 500 gained 15%, while the Nasdaq jumped 20%.

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SAN FRANCISCO (MarketWatch) — Sealy Corp. [s:zz] late Tuesday reported it swung to a net loss of $5.2 million, or 6 cents a share, from a profit of $12 million, or 13 cents a share, in the same quarter last year. The quarterly results included charges of 13 cents a share related to the company’s refinancing of its senior credit facility and rights for convertible notes. Revenue slid to $298.5 million from $375.4 million a year ago, the Trinity, N.C.-based bedding products manufacturer said. Analysts surveyed by FactSet Research, on average, had forecast earnings of 5 cents a share on revenue of $299.6 million.

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WASHINGTON (MarketWatch) — Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, was critical of the government’s “ad hoc” rescue efforts during the financial crisis, saying that the actions have institutionalized the concept of too-big-to fail in our economic system. Fed chief Ben Bernanke has argued that he, and others, acted like the emergency crew that saved a burning home before it destroys an entire neighborhood without asking whether the fire was started carelessly. In response, Hoenig asked “if the fire was started by a homeowner who ignored fire codes and smokes in bed, should the neighbors be required to rebuild the home at twice its original size at their expense?”

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WASHINGTON (MarketWatch) — Republican Norm Coleman conceded the race for a U.S. Senate seat from Minnesota to Democrat Al Franken on Tuesday, after the state’s supreme court ruled Franken won the contested race. Franken would effectively give Democrats 60 seats in the U.S. Senate, the number needed to block a filibuster.

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SAN FRANCISCO (MarketWatch) — A federal judge revoked the bail bond of financier R. Allen Stanford on the grounds that he poses a flight risk, according to media reports Tuesday. Stanford has been charged with masterminding a $7 billion Ponzi scheme. U.S. District Judge David Hittner reportedly sided with prosecutors in overturning a magistrate judge’s decision to allow Stanford free on a $500,000 bond pending his trial.

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Investors see room for more gains in corporate bonds through the end of the year if the economic recovery turns out tepid and with U.S. company debt still paying much higher yields than Treasurys.

Turkey’s economy contract sharply in the first quarter, posting its steepest decline — 13.8% from the first three months of 2008 — in several decades, according to official government data. Turkish investors take the drop in gross domestic product in stride, however.

Minnesota’s Supreme Court rules that Al Franken has won a Senate seat for that state, dealing a blow to incumbent Norm Coleman and leaving him with few remaining options.

SAN FRANCISCO (MarketWatch) — The Department of Justice on Tuesday petitioned a federal court to force Swiss bank UBS AG to divulge the names of all U.S. taxpayers with an undisclosed UBS account. The Internal Revenue Service estimates about 52,000 U.S. taxpayers used UBS accounts to avoid paying taxes. “Contrary to UBS’s claims, enforcing this summons would not constitute an abuse of the court’s process,” The Justice Department said in a court filing. “This case falls squarely within settled U.S. law on obtaining information located abroad and - contrary to UBS’s assertions - does not present a matter of first impression or a novel concept of law.”

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The Obama administration is pushing to create an agency charged with protecting consumers from unsafe and confusing financial products and services, and sends legislation to Congress.

NEW YORK (MarketWatch) — California bonds are showing little reaction Tuesday to the hoopla about whether the state will be able to pay its bills in a matter of days, as lawmakers have so far failed to adopt a budget. State Controller John Chiang said the state will have to issue IOUs to local governments, businesses and taxpayers starting July 2. “The market still believes that bondholders will be paid in cash on a timely basis,” said Gary Pollack, head of fixed-income trading at Deutsche Bank’s private-wealth management unit. Yields on California’s taxable 30-year Build America Bonds are about 3.96 percentage points more than comparable Treasurys , little changed in the past few days, he said.

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SAN FRANCISCO (MarketWatch) — Democrat Al Franken is the official winner of a contested senate seat following a Minnesota Supreme Court ruling, according to media reports Tuesday. Republican Norm Coleman has contested the vote since the November election.

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In the first formal entry to Iraq by Western oil majors in nearly 40 years, a BP consortium beats out Exxon Mobil for the Rumaila oil field, the country’s largest.

U.S. financial stocks fall after a relapse in consumer confidence signals tough conditions for businesses and forces the sector’s roaring three-month performance lower just prior to quarter-end.

WASHINGTON (MarketWatch) — The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

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NEW YORK (Marketwatch) — Oracle Corp. is selling $4.5 billion in debt that is expected to be completed on Tuesday, in three portions, according to Informa Global Markets. The software giant is expected to sell $1.5 billion in 5-year debt, $1.75 billion in 10-year debt and $1.25 billion in securities maturing in 30 years. The company said in a filing the proceeds will be used for general corporate purposes and future acquisitions and for the proposed acquisition of Sun Microsystems . Oracle has spent $1.2 billion in fiscal 2009 buying companies and assets, it said in its annual report on Monday. Oracle shares recently traded down by 0.5% to $21.39.

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American International Group Chief Executive Edward Liddy says he’s been given no assurances that the government’s 78.9% stake in the troubled insurance giant will ever change.

WASHINGTON (MarketWatch) — The Federal Reserve has promised investors that zero interest rates will linger even if the economy picks up, said James Bullard, the president of the Federal Reserve Bank of St. Louis on Tuesday. Rather than focusing on rates, the Fed’s innovative asset purchase programs will be the central focus of policymakers, Bullard said. The Fed’s innovative programs to keep credit flowing through the economy could end next year if financial conditions improve, Bullard said. The central bank’s exit strategy may have to involve the actual sale of assets that the Fed has bought over the past two years, Bullard said. Other exit strategies are untested, he said. Bullard is in the camp of Fed officials worried that the increase in bank reserves could lead to inflation down the road.

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NEW YORK (MarketWatch) — U.S. financial stocks continued in the red during midday trade Tuesday as the sector approached its strongest three-month rally in more than a decade. The benchmark financial sector exchange-traded fund, Financial Select Sector SPDR Fund , was down 1.2% to 11.93. So far, the ETF is up 35.4% in the second quarter, its largest jump by almost a factor of two since its inception. Shares of J.P. Morgan Chase & Co. , the fund’s largest holding, were down 1% to $34.26 a share.

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As Broadcom raises by 19% the amount it’s willing to pay in its all-cash bid to buy Emulex, the suitor also has backed off efforts to change the target company’s bylaws, marking a shift in its acquisitions strategy. Emulex will consider the revised offer and urges shareholders not to tender in to it while it considers its next move.

SAN FRANCISCO (MarketWatch) — U.S. stocks deepened their slide Tuesday after consumer confidence made a surprise drop in June. The S&P 500 sank 11 points, or 1.2%, to 916 points. All sectors were in the red, led by financials. The Dow Jones Industrial Average lost 102 points, or 1.2%, to 8,427, with Caterpillar and Verizon Communications leading decliners. The Nasdaq Composite sank 9 points, or 0.5%, to 1,835. U.S. stocks are headed for healthy gains as the second quarter winds down, with the S&P 500 on pace for a 15% gain and the Nasdaq gearing for a 20% advance.

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NEW YORK (MarketWatch) — Goldman Sachs on Tuesday cut its ratings on refining giants Tesoro and Sunoco to sell from neutral and reiterated its sell rating on Valero in the face of an “ugly outlook” for the sector. “Even with meaningful underperformance having already occured this year, we see little reason for investors to own the sector,” Goldman said in a note to clients. Analysts cited rising gasoline inventories despite the summer driving season, and the ramp up of overseas refineries that can compete with domestic operations. Goldman upgraded Marathon Oil to neutral from sell. Marathon Oil shares rose 0.5% to $29.95. Tesoro dropped nearly 4% to $12.37. Sunoco retreated 2.5% to $22.70.

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Technology stocks were modestly higher Tuesday morning on gains from the chip sector.

Airline stocks are in the red in early activity after a Wall Street brokerage firm lowers its industry forecast for the year, led by the parent companies for American and United airlines.

British shares are steady on Tuesday, the last day of the second quarter.

NEW YORK (MarketWatch) — U.S. stocks turned slightly lower on Tuesday after a report that showed consumer confidence fell in June. The Dow Jones Industrial Average was down 26 points, or 0.3%, at 8,503, off an earlier high of 8,560. The S&P 500 index was down 3.8 points, or 0.4%, at 923, off a high of 930, while the Nasdaq Composite was down 3 points, or 0.1%, at 1,841. The Conference Board said its consumer confidence index fell to 49.3 from a slightly downwardly revised 54.8 in May, as worries grew about jobs and the economy. Economists polled by MarketWatch had expected the June result to hit 55.5, continuing recent confidence gains.

home prices fell at a slower pace in April than in March. Futures for the S&P 500 index were up 2.6 points, or 0.3%, at 923. Futures for the Dow Jones Industrial Average were up 29 points, or 0.3%, at 8,487, while those for the Nasdaq 100 rose 3.7 points, or 0.2%, to 1,485. The S&P Case-Shiller index fell 0.6% in April, after a drop of 2.2% in March.

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WASHINGTON (MarketWatch) — Manufacturing activity improved in the Chicago region in June after a disappointing drop in the prior month. The Chicago purchasing managers index rose to 39.9% in June from 34.9% in May, according to a survey of corporate purchasing managers released Tuesday. Economists surveyed by MarketWatch had expected the index to rise to 39.0%. Readings below 50% indicate overall business contraction. The Chicago PMI is considered a leading indicator to the national Institute for Supply Management manufacturers’ survey to be released Wednesday. The increase in June brings the Chicago PMI in line with other regional surveys. Last month, the Chicago index had fallen more than other regions. Analysts blamed the drop on auto sector weakness. Economists expect a further improvement in the national ISM index in June.

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