Shares add to gains on hopes of Fed action
By Ashley Lau
NEW YORK (Reuters) – Stocks surged on Tuesday, with the S&P 500 and the Nasdaq up more than 2 percent, as buyers emerged before a highly anticipated address by Federal Reserve Chairman Ben Bernanke later this week.
Technology and other growth stocks drove much of the market’s gains, with the S&P Information Technology Index up 2.4 percent.
A weaker-than-expected reading of the U.S. housing sector was the latest in a string of discouraging data that has raised expectations the Fed will take measures to prop up the economy.
New U.S. single-family home sales fell more than expected in July to hit a five-month low.
“People are putting money on the Fed saying something and buying stocks ahead,” said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.
The Dow Jones industrial average .DJI was up 205.22 points, or 1.89 percent, at 11,059.87. The Standard & Poor’s 500 Index .SPX was up 23.50 points, or 2.09 percent, at 1,147.32. The Nasdaq Composite Index .IXIC was up 59.04 points, or 2.52 percent, at 2,404.42.
Some have speculated Bernanke could unveil measures to revive the struggling economy, though others say he is most likely to outline gradual actions, which would fall short of a third round of quantitative easing.
Shares with historically high growth rates or expected to show strong growth were among Tuesday’s leaders after getting hit hard in recent weeks, analysts at Credit Suisse said in a note. Big percentage gainers on the S&P included tech shares Nvidia (NVDA.O: Quote, Profile, Research, Stock Buzz) and JDS Uniphase (JDSU.O: Quote, Profile, Research, Stock Buzz).
“Growth stocks that recently have been hurt the most are doing quite well today, which is encouraging, since in a tough correction or a bear market, growth stocks with higher valuations typically tend to decline more so than the market,” Lip said.
Even financials, which had been knocked lower early, turned positive, with the S&P Financials Index up 1.9 percent.
UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) (UBS.N: Quote, Profile, Research, Stock Buzz) shares trading in the United States advanced 4.5 percent to $13.78. The bank said it plans to slash around 3,500 jobs in a cost-cutting measure.
But Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) remained under pressure, with shares down 2.2 percent to $6.28, the biggest loss on the Dow, on fears of possible write-offs and the need for capital.
“A lot of people are watching it now,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
“People have been looking to the financials for the past couple of weeks as a sign,” Saluzzi said. “They’ve been lagging pretty much for the past couple of weeks… I think as long as there’s pressure in the economy, there’s going to be pressure on financials.”
(Reporting by Ashley Lau; Editing by Kenneth Barry)
Kebangkitan bursa AS berlanjut
Selasa, 23 Agustus 2011 | 22:12 WIB
Bursa saham AS rebound sejenak
Laba emiten topang pembukaan Wall Street
Bursa AS terjun bebas
Kontrak indeks AS terkoreksi 0,5%
Mayoritas saham di Wall Street lesu
NEW YORK: Bursa saham AS terus membaik. Indeks Standar & Poor’s 500 dan Dow Jones sama-sama menguat 1,1% pada sesi perdagangan Selasa pagi.
Pada sesi perdagangan Selasa pagi pukul 10:08 waktu setempat, Indeks S &P 500 naik 1,1% ke level 1.136.61. Sementara itu, Indeks Dow Jones Industrial Average naik 1,1% ke level 10.978,47.
Sentimen positif pasar tersebut terpicu oleh membaiknya kondisi perbankan Negeri Paman Sam yang ditandai dengan berkurangnya jumlah bank bermasalah yang ditangani oleh Federal Deposit Insurance Corp.
Howard F. Ward, Manager Keuangan Gamco Investors Inc, menilai langkah yang diambil Ben S. Bernanke, Gubernur Bank Sentral AS (The Fed), itu memberikan sentimen positif bagi investor.
“Dia [Bernanke] menyadari tekanan yang terjadi di bursa saham harus dia respons,” ujarnya kepada TV Bloomberg.
Howard menilai Bank Sentral AS harus mengambil alih ‘permainan’ guna menyelamatkan perekonomian negeri adi daya itu agar tidak terjatuh ke jurang resesi ekonopmi.
Terlepas dari faktor sentimen positif tersebut, bursa saham AS terangkat oleh mengilapnya kinerja emiten teknologi informasi .
Harga saham Cisco Systems Inc. (CSCO) dan Microsoft Corp. (MSFT) melonjak 2% dan memimpin kenaikan harga saham di Indeks Standard & Poor’s 500. (sut)
FDIC: Fewer banks are troubled, but revenue is shrinking
By Marcy Gordon, Associated Press
Updated 1h 19m ago
WASHINGTON – The number of troubled banks tracked by the Federal Deposit Insurance Corp. fell in the April-June quarter, first quarterly drop in five years. But growth in bank earnings slowed, a sign the financial industry is feeling the effects of a weak economy.
The FDIC said Tuesday that there were 865 banks on its confidential “problem” list in the second quarter, or roughly 11.5% of federally insured banks. That was down from 888 in the January-March quarter and the first decline since mid-2006. Those are banks considered to have low capital cushions against risk.
The FDIC also said the banking industry earned $28.8 billion in the second quarter, up from $20.9 billion in the period last year. That marked the eighth quarter that earnings rose from the previous year. But it was the smallest gain in the past seven quarters.
Banks with assets exceeding $10 billion drove the bulk of the earnings growth. They made up 1.4% of all banks but accounted for about $23.4 billion of the industry’s earnings in the second quarter.
Those are the largest banks, such as Bank of America., Citigroup, JPMorgan Chase and Wells Fargo. Most of these banks have recovered with help from federal bailout money and record-low borrowing rates.
“Banks have continued to make gradual but steady progress,” FDIC Acting Chairman Martin Gruenberg said at a news conference. But he noted that industry revenue hasn’t been growing. “In the last two quarters, revenues were lower than a year earlier,” he said.
Gruenberg and other FDIC officials said the industry continues to struggle with flat growth in loans. Banks’ loan balances increased $64 billion in the second quarter. That was a modest gain, but it marked the first time in three years that there has been growth in balances, the FDIC said.
So far this year, 68 banks have failed. That’s down from the 157 banks shuttered last year, which was the most for one year since 1992.
Most of the banks that have struggled or failed have been small or regional institutions. They depend heavily on loans for commercial property and development — sectors that have suffered huge losses. As companies shut down during the recession, they vacated shopping malls and office buildings financed by those loans.
Still, large banks are less profitable than they were before the 2008 financial crisis. As a result, many are shrinking their staffs.
Swiss bank UBS said Tuesday that it is cutting 3,500 jobs worldwide as part of an effort to save 2 billion Swiss francs ($2.5 billion) annually by the end of 2013.
Bank of America said last week that it is cutting 3,500 jobs. Goldman Sachs Group, Bank of New York Mellon, State Street and other financial institutions have also announced layoffs this summer.
Many banks are posting profits right now. Their layoffs indicate permanent structural changes rather than temporary cuts in response to a weak economy.
U.S. banks employ about 2.09 million people, down from 2.21 million in early 2008, according to the FDIC.
The average salary in the finance and insurance industry was $84,516 last year, according to the Bureau of Labor Statistics. Though that’s far higher than the overall private-sector average of $46,451, finance salaries are shrinking while other salaries are growing.
The average salary in finance and insurance fell $436 from 2007 to 2010, not adjusted for inflation. The average salary in all private-sector jobs rose $2,089.
In recent weeks, stocks of big U.S. banks have been rocked by fears that the impact of the government-debt crisis in Europe could spread to the U.S. financial system.
U.S. banks are sturdier, however, holding more capital now than they did before the financial crisis that struck in 2008. And they have limited direct exposure to the riskiest European countries, Portugal, Ireland, Italy, Greece and Spain.
Last year’s bank failures cost the FDIC’s deposit insurance fund an estimated $21 billion. But in the April-June quarter, fewer failures allowed the insurance fund to strengthen. The fund turned positive in the second quarter, showing a $3.9 billion balance as of June 30. That compared with a $1 billion deficit in the first quarter.
The FDIC is backed by the government, and bank deposits are guaranteed up to $250,000 per account. Apart from its deposit insurance fund, the agency also has tens of billions in loss reserves.