Stock Market Update - Tuesday, October 26, 2010 Cautious Choppy Trend

Stock Market Update

Tuesday, October 26, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: (OCT. 26, 4:05 PM EDT)

Dow Jones 11,169.46 +5.41
S&P 500    1,185.64 +.02
Nasdaq     2,497.29 + 6.44
Dow Jones 1:30 PM Averages: DJIA 11,153.53 DN 10.52
  30 INDUS     11,153.53 DN   10.52 OR    0.09%
  20 TRANSP     4,798.78 UP   23.92 OR    0.50%
  15 UTILS        403.92 DN    1.28 OR    0.32%
  65 STOCKS     3,879.41 UP    1.92 OR    0.05%

US DOLLAR FUTURES INDEX DXY: OCT. 26, 4:03PM EDT: 77.68   0.58 (0.75%)

US COMMODITY PRICES: (OCT. 26, 4:15 PM EDT)

Crude Oil     82.56     + 0.01%
Natural Gas     3.34     - 0.45%
Gasoline     2.09     - 0.26%
Heating Oil     2.25     -
Gold     1340.05     - 0.01%
Silver     23.83     + 0.80%
Copper     3.86     + 0.16%

US STOCKS UP - DOLLAR UP

Stocks finish flat in choppy trading on mixed data and earnings.

Stocks ended up essentially flat after choppy trading all session as investors evaluated mixed consumer confidence/housing data and a spate of earnings reports.

The Dow Jones Industrial Average edged up 5.41 points, or 0.05 percent, to 11,169.46. The S&P 500 barely budged, ticking up 0.02 of a point, to 1,185.64. NASDAQ gained 6.44 points, or 0.26 percent,at 2,497.29.

The S&P/Case-Shiller 20-City index of home prices in major metropolitan areas slipped 0.2 percent in August from July, although they gained 1.7 percent over the past 12 months.

The Conference Board said consumer confidence edged up in October to 50.2 from 48.6 in September, but remained stuck at historically low levels.

U.S. stocks rose slightly Tuesday as strong earnings from Coach and Ford Motor and rising consumer confidence fueled some buying in consumer companies that outweighed a slump in the materials sector.

The Dow Jones Industrial Average edged up 5.41 points, or 0.05%, to 11169.46, its highest close since April 26. The measure's gainers included Walt Disney, which rose 1.4%, and Wal-Mart Stores, which advanced 1.1%. Microsoft also was strong, up 2.8% two days ahead of its quarterly earnings report.


U.S. stocks wobbled most of the day as mixed earnings and economic data prompted some investors wary of the market's recent surge to take a step back on Tuesday.

Paring a steeper early-morning drop, the Dow Jones Industrial Average slipped 20 points to 11143 in recent trading. The Standard & Poor's 500-share index shed 0.2% to 1183.

Leading the Dow lower, DuPont slipped 2%. The chemical giant's third-quarter profit fell 10% on sharply lower pharmaceuticals income due to patent inspirations while company wide revenue and volume both improved.

Checking the measure's losses, Bank of America gained 2.3% in a respite from a bruising month for the bank. The company's shares have fallen 13% in October as investors worried about the impact of new investigations into banks' foreclosure practices.

Microsoft was also strong, up 1.5% two days ahead of its quarterly earnings report.

The Nasdaq Composite edged up 0.4% to 2500. The Standard & Poor's 500-share index was flat a 1186, with gains in its consumer-discretionary sector offset by a decline across materials.

U.S. stocks fell Tuesday morning as corporate earnings and a decline in home prices prompted investors to take a step back.


The dollar strengthened against both the euro and the yen. The euro was trading recently at $1.3873, down from $1.3970 late Monday in New York. A notable gainer against the dollar was sterling, which rose after third-quarter U.K. gross domestic product came in double the expected 0.4%. The U.S. Dollar Index, which tracks the currency against a basket of six others, rose 0.6%.

At the market open the Dow Jones Industrial Average slid 71 points, or 0.6%, to 11093. The Nasdaq Composite lost 0.8% to 2477. The Standard & Poor's 500-share index shed 0.6% to 1178.

Traders have warned the market may be overheating as broad expectations for further support from the central bank fueled a steady climb stretching back to early September. The Dow has climbed 3% this month. 

Demand for Treasurys was mixed, with the two-year note flat but the 10-year down, pushing its yield up to 2.61%. Crude-oil prices slipped, and gold futures also declined in early trading. 

CRUDE OIL:

$82.34 per barrel
NYMEX WTI crude oil up $0.17 (+0.21%) to $82.69

Light, sweet crude for December delivery settled up 3 cents at $82.55 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently traded down 1 cent at $83.53 a barrel.

According to the Energy Information Agency, global demand for crude oil for the remainder of the year is expected to increase to 86.06 million barrels per day, a 2.1% increase from last year.
 
The EIA expects global consumption to jump to 87.44 million barrels per day in 2011, an increase of nearly 300,000 barrels per day from previous forecasts due to resurgent demand in the U.S., Germany and Japan over the past three months.

That increased demand should cause inventories in industrialized nations to decline. Also, production from non-OPEC nations is expected to slow down in 2011, and OPEC is expected to leave its production levels stable in the coming months with minor production increases to come in 2011.

The U.S. Geological Survey said Tuesday that Alaska holds less oil and natural gas onshore at the National Petroleum Reserve and in nearby state waters than previously thought.

The agency now estimates that the area, on and near land in Alaska's North Slope owned by the U.S. government, holds 896 million barrels of conventional, undiscovered oil, about 10% of the amount the agency predicted was there in 2002. 


Wednesday the DOE report on U.S. oil inventories. Analysts expect the U.S. Department of Energy data to show a 700,000-barrel rise in crude stockpiles for the week ended Oct. 22.
Gasoline inventories are expected to fall 200,000 barrels. Stocks of distillates, including heating oil and diesel, are projected to fall by 1 million barrels.

US NATURAL GAS:

Futures Settle Up 1.1% At $3.354/MMBtu



US Cuts Estimated Gas Reserves

The USGS also updated its estimate for natural gas in the area to 53 trillion cubic feet, about 13% less than the agency predicted eight years ago.

"These new findings underscore the challenge of predicting whether oil or gas will be found in frontier areas," USGS Director Marcia McNutt said in a statement.

New geological data from three-dimensional seismic surveys and more than 30 exploration wells that have been drilled in the area show more gas in the area than oil, the USGS said. Many of the new wells show "an abrupt transition from oil to gas just 15 to 20 miles west" of the northeastern boundary of the petroleum reserve, the agency said.

The Interior Department's Bureau of Land Management has held five lease sales in the NPRA from 1999 through 2008. The agency currently administers more than 300 Federal oil and gas leases, according to the agency's Web site.

PRECIOUS METALS:

Gold: $ 1,338
Silver: $ 23.72

A slightly stronger dollar weighed on gold prices Tuesday, with Comex futures trading near steady as investors await economic data.

The most actively traded contract, for December delivery, settled down 0.02%, or 30 cents, at $1,338.60 per troy ounce on the Comex division of the New York Mercantile Exchange. Gold prices had recovered from last week's low of $1,324.40, but are still 2.8% off the record high settlement of $1,376.70.

U.S. BOND RATES:
3 Month     0.11%     0.00 (0.00%)
6 Month     0.16%     0.00 (0.00%)
2 Year     0.39%     +0.02 (5.41%)
5 Year     1.24%     +0.02 (1.64%)
10 Year     2.63%     +0.03 (1.15%)
30 Year     3.99%     +0.04 (1.01%)


US INFLATION CHART:

U.S. Consumer Confidence Rose in October

Confidence among U.S. consumers rose in October from a seven-month low, while measures of labor market sentiment showed the biggest part of the economy will have trouble accelerating.

The Conference Board’s confidence index increased to 50.2 from a revised 48.6 in September, figures from the New York- based research group showed today. The proportion of people who said jobs were plentiful fell to the lowest level this year and income expectations were the weakest since April 2009.

Americans’ attitudes and their spending may be restrained into next year as unemployment is projected to stay above 9 percent. Wal-Mart Stores Inc. is among companies saying consumers are limiting purchases, which account for 70 percent of the economy.

“Confidence is still at a very low level and the present situation is more or less corroborating a very high unemployment rate,” said James O’Sullivan, global chief economist at MF Global Ltd. in New York. “These are clearly not double-dip numbers but we’re not seeing any hard evidence of a strong bounce back yet.”

Economists surveyed by Bloomberg News forecast the index would increase to 49.9 from a previously reported 48.5 for September, according to the median of 75 projections. Estimates ranged from 45 to 53.

CHAIN-STORE SALES UP

Redbook Research said national chain-store sales rose 0.3% in the first three weeks of October from September, though the figure was slightly lower than the expected gain of 0.4%.

WEAK US DATA EQUITIES DECLINE
Weak U.S. economic data and disappointing earnings offered the market a reason to retreat on Tuesday.

U.S. home prices fell in August from a month earlier, according to the S&P/Case-Shiller home-price indexes. The index of 10 major metropolitan areas fell 0.1% in August compared with July, while the 20-city index declined 0.2%. Adjusted for seasonal factors, the 10-area index fell 0.2%, while the 20-area declined 0.3%.



Among stocks in focus, Ford fell 1.1%, despite reporting a $1.7 billion profit and saying it expects to boost fourth quarter production. The company also said it will take steps to reduce its overall debt. Share of Ford had surged almost 16% in October.


Coach climbed 7.2% after its first-quarter profit jumped 34% on stronger sales and margins, while earnings and revenue handily topped analysts' expectations. Comparable-store sales in North America increased 8.5% and Coach saw growth from international stores as well.

Chemical giant DuPont fell 3.3% after its third-quarter profit fell 10% on sharply lower pharmaceuticals income due to patent expirations while company-wide revenue and volume both improved.

 AK Steel Holding Corp. (AKS) swung to a third-quarter loss as higher iron-ore costs and charges related to a furnace-maintenance outage outweighed stronger-than-expected revenue improvement. Shares were recently down 66 cents, or 4.9%, at $12.72. The stock had fallen 37% this year through Monday after more than doubling in 2009.



AK Steel reported a loss of $59.2 million, or 54 cents a share, compared with a prior-year profit of $6.2 million, or 6 cents a share. Revenue jumped 51% to $1.58 billion. Analysts polled by Thomson Reuters had most recently estimated a loss of 34 cents and $1.54 billion in revenue. Shipments rose 40% from a year earlier. Average selling prices rose 8% on year but decreased 2% in the quarter.


United States Steel posted a surprise third-quarter loss despite higher-than-expected revenue improvement as results dialed back from a strong second quarter. Shares were down 5.5%.

Bristol-Myers Squibb slipped 0.5% after its third-quarter profit declined slightly from a year earlier, though fewer shares outstanding and lower costs helped the drug maker's earnings beat Street estimates. Still, the company's sales were flat with a year earlier and fell short of analysts' estimates.

Texas Instruments fell 1.1%. It said after Monday's closing bell that it expects fourth-quarter revenue to decline from third-quarter levels.

Strong Midwest Storm Halts Vessels, Delays Plans, Slows Crop Harvest

A strong autumn storm bore down on the U.S. Great Lakes region Tuesday, cutting electricity, delaying air traffic, restricting commodity transportation and slowing crop harvests.

An intense surface low centered over Minnesota was producing rain from Canada to the U.S. Gulf of Mexico at midday, after halting fall grain harvest with overnight downpours across the Midwest. The storm is one of the strongest to strike the Midwest in decades, drawing comparisons to one that occurred on November 1998, generating wind gusts of up to 90 miles per hour.

The National Weather Service placed parts of 12 states including Illinois, Iowa, Nebraska, North Dakota, and Wisconsin under high wind warnings. The agency predicted wind gusts of up to 60 mph through Wednesday, which could cause damage and yield losses to unharvested crops.

Gale warnings and storm warnings are in effect for the entire Great Lakes system through Wednesday. Forecasts warn of waves topping 22 to 27 feet on Lake Superior and 20 to 25 feet on Lake Michigan. The dangerous conditions caused most vessels already anchored to stay put and ride out the storm.

A range of commodities from grain to iron ore is shipped on the Great Lakes. Commodity movement on the Great Lakes-St. Lawrence Seaway System is up 20% year-to-date, from depressed 2009 levels.

"Vessel delays are expected at the various dock sites at Toledo (Ohio), due to the intense storm," said Jim Hoffman of Great Lakes and Seaway Shipping.

As for the ongoing U.S. harvest, the storm could affect crop yields as high winds caused so-called lodging, when corn stalks are knocked down making the grain more difficult to harvest. The government has reported 83% of the corn crop was harvested as of Sunday, up from 68% the prior week and well above the average of 49%. That leaves an estimated 13.8 million acres of corn yet to be picked in the U.S. 

Chicago Board of Trade January soybeans on Tuesday also settled one cent higher at $12.31 a bushel.

"Much of the remaining (crop) is in the northern Corn Belt, which is being buffeted by very high winds and rain this morning, reinforcing ideas that USDA is likely to trim yields down the road," said Bryce Knorr of Farm Futures.

Yet with most of the U.S. harvest completed, Don Roose, president of U.S. Commodities in Des Moines, Iowa, said the effect of the storm on the total U.S. harvest should be minimal, with the likely result being delays rather than any real damage to the crop. He added farmers knew the storm was coming and likely picked up the pace of harvesting in recent days.

At the Chicago Board of Trade, corn for December delivery recently traded up 0.8% to $5.73 1/4 a bushel.

US COPPER PIPE MAKERS 
PROTECTION APPROVED 
China, Mexico Copper Pipe Imports Threaten US Industry


The U.S. International Trade Commission Tuesday ruled the U.S. copper pipe industry was under threat from Chinese and Mexican imports.

The ruling clears the way for the Commerce Department to issue an anti-dumping order for copper piping imports valued in 2009 at $375 million, representing about 20% of U.S. consumption.

The ruling essentially cements a tariff regime that was put in place earlier this year as U.S. and other trade bodies began to scrutinize prices on imported pipe from China and Mexico.

Copper prices have rallied almost 40% since early June as demand from nations undergoing industrialization is expected to outpace additions to global supply. As the world's largest consumer of copper, China is home to plants that fabricate products such as pipe and ship them to the U.S. and elsewhere. 

Tariffs would render Chinese copper pipes uncompetitive in the U.S. market, and it's unclear whether China would need to consume as much copper if its product exports fell as a result of these tariffs.

It also remains to be seen whether U.S. fabricators have enough idled capacity to fill the void left by China. If not, this may force companies with manufacturing facilities in the U.S. to relocate operations abroad.

Cerro Flow Products Inc., Kobe Wieland Copper Products LLC, Mueller Copper Tube Products Inc. and Mueller Copper Tube Co. Inc. petitioned for the ruling.



CFTC APPROVES CHANGE PROCESS PROPOSAL
The Commodity Futures Trading Commission approves a proposed rule that establishes a process for trading and clearing venues to follow when they are seeking changes to their rules or approval for new products.


BANKS SEEK REVIEW OF FED DISCLOSURE CASE

The association of large commercial banks asks the U.S. Supreme Court to review ruling ordering Fed to disclose information about banks that borrowed from its discount window and other emergency lending programs during financial crisis.



BEFORE THE BELL:

US STOCKS OPEN LOWER - DOLLAR UP

US Stocks are poised to open lower before the bell, prompted by a rise in the overnight dollar value and choppy futures in equity earnings and market news.

S&P 500 futures SPc1 dipped 4.1 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 fell 26 points, and Nasdaq 100 futures NDc1 gave up 4 points.

Equities and the dollar have formed an inverse relationship exacerbated by expectations the U.S. Federal Reserve will embark on another round of economic stimulus. The greenback steadied Tuesday, with investors wary of pushing it lower. The dollar index .DXY was up 0.4 percent.

U.S. stock index futures dipped on Tuesday, the day after the market hit a five-and-a-half month high, while the dollar steadied.

Economic data on tap includes October consumer confidence and the S&P/Case-Shiller Home Price Index for August. Consumer confidence is expected to rise to 49.2 from 48.5 the month before, while the home price index is forecast to fall 0.2 percent, compared with a 0.1 percent drop in July.

AUGUST HOME SALES DECLINE

August home prices in 20 metro areas down 0.2 percent: S&P/Case-Shiller

U.S. home prices fell in August from a month earlier, according to the S&P/Case-Shiller home-price indexes. The index of 10 major metropolitan areas fell 0.1% in August compared with July, while the 20-city index declined 0.2%. Adjusted for seasonal factors, the 10-area index fell 0.2%, while the 20-area declined 0.3%.

The Standard & Poor's/Case-Shiller Home Price Report today showed home prices in 20 U.S. cities rose at a slower pace than forecast in August from a year earlier. The S&P/Case-Shiller index of property values increased 1.7 percent from August 2009, the smallest year-over-year gain since February, the group said today in New York. The median forecast of 27 economists surveyed by Bloomberg projected a 2.1 percent increase.

CONFERENCE BOARD'S REPORT

The Conference Board’s measure of present conditions increased to 23.9 in October from 23.3 a month earlier. The share of consumers who said jobs are currently plentiful fell to 3.5 this month from 3.8. Those who said jobs are hard to get rose to 46.1 percent, the highest since March.

The gauge of expectations for the next six months rose to 67.8 from 65.5 in September. 

LARGE NUMBER OF REPORTS TODAY

In a busy day for corporate earnings, DuPont and Co (DD) posted higher-than-expected profit as sales rose across all business units, while Ford Motor Co (F) posted a profit that exceeded estimates and said it expected to eliminate its net debt by year-end.

Shares of DuPont edged up 0.2 percent at $47.81 in premarket trade, while Ford slipped 1.4 percent to $13.95.

Texas Instruments Inc (TXN.N) lost 1.6 percent to $28.52 the day after it warned that fourth-quarter revenue will be hurt by slowing demand. 


Ford stays on a roll
Ford Motor reported record third-quarter net income Tuesday, far exceeding analyst expectations and continuing a surge in momentum for the recovering automaker.
(CNNMoney.com): http://money.cnn.com/2010/10/26/news/companies/ford_earnings/

Lexmark 3Q Profit Surges
Lexmark International Inc.'s (LXK) third-quarter earnings surged on higher revenue and fewer charges as the printer company also announced longtime CEO will retire in 2011.

Bristol-Myers Profit Rises Greater-Than Estimated 6.4% on Cost Reductions
Bristol-Myers Squibb Co.'s third- quarter profit rose 6.4 percent, topping analysts' estimates.

S&P Raises Outlook for Britain on Strength of Budget Cuts
Britain's deficit-cutting plans got an important vote of confidence Tuesday, as Standard & Poor's said it had raised its outlook for the country's debt. 


High U.S. Unemployment, Chinese Growth 
May Spur Trade War
China's rapid economic growth and refusal to let its currency appreciate sharply could mix with high unemployment in the U.S. to spark a trade war between the countries, economist Nouriel Roubini said Monday.

"Having 10% unemployment in U.S. and 10% growth in China is a recipe for trade wars in a situation in which China doesn't allow its currency to appreciate," Roubini said in a speech to Latin American steel industry executives.

Roubini, who gained international recognition for his gloomy but broadly accurate predictions about the global financial crisis, said that even if the U.S. economy grows this year and next it may not be enough to create jobs and avoid trade tensions.

He expects the U.S. economy to grow about 1% this year, which he said isn't enough to reduce the country's 9.6% unemployment rate.

The U.S. economy needs to create about 200,000 new private-sector jobs a month to lower the jobless rate, he said, adding that the unemployment rate soars to 17.1% if it includes partially employed workers and people too discouraged to look for work.

Last month the private sector added 64,000 jobs, according to the U.S. Labor Department.

Roubini described the unemployment rate as a cyclical problem that could become a structural one if the recovery doesn't pick up speed. "It is going to feel like a recession even if we're not in a recession," he said.

The economist predicted that home prices will continue to drop over the next year and that the federal budget deficit will "automatically become bigger," putting pressure on lawmakers to turn up the heat on China.

Roubini is not optimistic about the U.S. Federal Reserve's effort to boost economic growth through so-called "quantitative easing." He said the U.S. economy will likely grow below its potential for the next two or three years.

"Though you can't discard a double-dip recession," he said.

In contrast, developing countries will likely see solid growth over the next decade, especially as investors pour excess liquidity into their markets.

"There is a shift of economic, trade and financial power from advanced economies to emerging markets," Roubini said. "There's a massive shift in the portfolio preferences of investors to emerging markets and away from advanced markets." 

_____________________________________________________________________
Canadian Market:

Toronto Stocks Mixed

At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was down 10.10 points, or 0.08%, at 12653.48. Advances led declines 711 to 681. Trading volume was 203.70 million shares. The S&P/TSX 60 Index was down less than a point at 727.77.


The stock market was flat at midday Tuesday, as gains in the materials group were offset by declines in the energy and financial services groups.

Among individual stocks, Research In Motion was continuing to gain after presenting a live demonstration of its PlayBook tablet Monay. News that India will consider granting RIM more time to provide solutions to allow India security agencies to monitor messages and emails sent through to and from the BlackBerry also helped the stock Tuesday.



Toronto Indexes, Volume; 3 PM EDT Composite Up 8.71

 S&P/TSX Composite   12672.29  up    8.71  or 0.1%
 S&P/TSX 60 Index      728.86  up    0.18  or 0.0%
 Financials            179.98  unchanged
 Materials             401.69  up    1.79  or 0.4%
 Energy                289.43  off   0.19  or 0.1%
 Industrials           108.44  up    0.14  or 0.1%
 IT                     29.11  up    0.16  or 0.6%

   Volume          Tuesday    Monday
   2-3                 72.4M     43.7M
   9:30-3             399.4M    336.9M







_____________________________________________________________________
South American Markets: 

BRAZIL:

Brazil Stocks Up

Brazilian share prices opened higher Tuesday as risk appetite strengthened after the government indicated no new investment tax measures are imminent in Brazil.

The Ibovespa stocks index opened at 69,582 points, marginally higher than Monday's close of 69,580 points. The index strengthened to 70,141 points shortly after trading began.

Brazil's stock market also responded positively to the central government's announcement before markets opened of a record BRL26.056 billion primary surplus for September, due to the reserves which entered the government's coffers as a result of the sale of new shares in state-controlled oil giant Petroleo Brasileiro SA (PBR, PETR4.BR), or Petrobras, local Estado newswire reported. 

Brazil Real Closes Weaker As Dollar Gains Globally

The Brazilian real closed slightly weaker against the U.S. dollar Tuesday as the American currency posted gains worldwide.

The real closed at BRL1.7040 to the dollar, slightly weaker against the Monday close of BRL1.6955.

The U.S. dollar gained against the euro and other currencies Tuesday as global risk appetite declined on continued worries about the pace of the economic recovery in the U.S. and other industrialized countries.

GDP $55.706 Billion
In the first nine months of the year, the central government surplus was BRL55.706 billion, equivalent to 2.14% of GDP and up from a BRL15.618 billion surplus, or 0.68% of GDP, in the same 2009 period.

Petrobras rose 3.22% in early trading to 25.36 Brazilian reals ($14.91). The company said mid-morning that its P-57 rig will be installed at the Jubarte field in Campos basin late Tuesday to prepare to start oil production. The company is due to start commercial oil production from the giant presalt Tupi field Oct. 28.

Miner Vale SA (VALE, VALE5.BR) gained 0.72% to BRL48.85.

Mobile phone operator Tim SA (TCSL4.BR) rose 2.75% to BRL5.61, after jumping 4.59% Monday, on the expectation of strong financial results later this week and market talk of further consolidation in the Brazilian telecoms industry. Airline Tam SA (TAMM4.BR) rose 0.85% to BRL40.54.

Brazil's New Soy Crop Seen At 69.6M Tons

Brazil's upcoming 2010-11 soybean crop is expected to reach 69.6 million metric tons as farmers flock to plant soy rather than corn, according to agricultural consultancy Agroconsult.

Brazil's 2010-11 soybean crop should hit a new record at 1% higher than the bumper crop last season, analyst Fabio Meneghin said on Tuesday.

Brazil's area of land devoted to soy will be at 24.1 million hectares, up 2.7% with gains especially in the south of the country, he said.

Farmers in Brazil -- the world's No. 2 soy producer after the U.S. -- are opting to plant their land with soy rather than corn because the prices were more attractive up until mid-September, he said.

Brazil Utility Group Sees Rising Industry Investments, Profits

Investment in Brazil's electric power utilities will likely pick up, along with profitability, as consumption rises and financing costs decline, an industry think tank said Tuesday.

Economic Value Added, or EVA--the difference between return on capital and the cost of that capital--has stabilized in the past three years at positive levels for Brazil's non-government utilities, said Augusto Korps Jr. of consulting firm Stern Stewart and Co. Stern Stewart conducted a study of the Brazilian utilities industry in conjunction with Acende Brasil, a local utilities industry think tank.

After nationwide blackouts and subsequent energy rationing pulled down company profitability in 2002, Brazil's utilities industry is now posting returns of around 12%, in line with the global average for the sector, said Korps.

Brazil's improving economy and declining interest rates, meanwhile, have brought down capital costs. "The industry is only sustainable if you have positive EVA," said Claudio Sales, president of Acende Brasil. "Fortunately, Brazil has crossed the line into a healthy EVA."

The country's high cost of capital eliminated some 49.3 billion Brazilian reals ($29 billion) of value from the industry between 1998 and 2009, according to the study.

Despite the recovery in profitability, investors can only expect returns of $0.30 for every $100 invested, Korps said, noting that long-term investors can get better returns with other kinds of assets.

The way to improve returns is to reduce tax burdens, Sales said, repeating a refrain often heard in Brazil. The industry sets aside about 45% of earnings for tax payments, a rate that "doesn't make sense" if Brazil's government wants to expand the supply of cheap and reliable energy, he said.

Brazil Credit Volume Up 1.8% In September

Brazil's credit rates declined in September while credit volume continued its long-running rise, the central bank reported Tuesday.

According to central bank data, total available credit in Brazil, including government-directed and non-directed credit, was up for a 19th consecutive month in September, rising 1.8% to 1.611 trillion Brazilian reals ($945 billion) or the equivalent of 46.7% of gross domestic product. Compared to September 2009, total credit supply in Brazil has expanded 19.6%.

The central bank reported average interest rates paid on loans fell in September to 35.1% from 35.2%. The bank said the average credit rate for businesses rose to 29.0% annually in September from 28.9% the previous month, while the rate for individuals fell to 39.4% from 39.9% in August.

According to central bank economics department coordinator Altamir Lopes, average rates on loans to individuals in September reached their lowest level on record.

An overall decline in interest rates, meanwhile, came despite the Brazilian central bank's elevation of the country's reference Selic rate by 200 basis points so far this year to 10.75% annually in an effort to stem inflation pressure.

Local economic activity has resumed acceleration in recent quarters in response to a series of stimulus measures taken by the government during the global financial crisis in 2008 and 2009.

According to recent market surveys, the country's economy is expected to grow by more than 7% this year after posting growth near zero in 2009.

Brazil's central bank on Tuesday reported the overall average default rates, which take into account loans 90 days past due, fell in September to 4.7% from 5.0%.

The default rate for individual borrowers fell to 6.2% in September from 6.0% the previous month, while the rate for businesses fell to 3.5% from 3.6%.

 
THE NEW HUB OF IT
By Stephanie Overby

Copgemini's announcement that it would invest $298 million in Brazilian IT service provider CPM Braxis attracted a lot of attention in outsourcing circles.

The move gives the Paris based company a 55% percent stake in CPM Braxis and the chance to jump over its global competitors already in the country.

"This is a very promising strategic move," says Atul Vashistha, president of offshore outsourcing consultancy Neo Advisory.

Brazil, with its 250,000 IT professionals, 23,000 annual IT graduates, and infrastructure capable of supporting double-digit growth, is at the heart of the IT services supply chain in the Southern Hemisphere.

Most U.S. players, including HP, Accenture and Unisys, have escalating presences there. But it's far too early to call Brazil a leading off-shore outsouceing destination, at least for US corporate IT.

Multi-national and local IT service firms are working with a variety of customers; financial services, manufacturers, telecom, media, government, but are largly focused on local and regional support.

Brazil's IT outsourcing market presents hughe growth opportunities, says Vashistha. "But there is little offshore support towards U.S. operations."

Visit http://www.cio.com/issue/20101015

MEXICO:

Mexico's Stocks Higher


Mexico's stocks moved slightly higher Tuesday in early trading, reflecting the strength of a few local issues while overall gains were curbed by the general weakness in U.S. markets after a drop in home prices and mediocre corporate news.

The benchmark IPC index was up 0.2% to 35,263 points on volume of 75 million shares worth MXN1.37 million ($108 million).

Cement maker and building supplies company Cemex (CEMEX.MX)  CPO shares rose 5.8% to MXN10.72 following the company's third-quarter earnings. Although earnings were weak as expected, Cemex said that it expects an improvement in the fourth quarter and also that it amended leverage ratios on refinanced debt.

Many of the issues on the IPC index of the 35 most traded shares were in the red as U.S. housing prices slid and earnings disappointed.

The CPO shares of Televisa (TLEVISA.MX) were up 0.2% to MXN54.81, and the shares of chemical maker Mexichem (MEXCHEM.MX) were 0.7% lower at MXN37.50.

Copper miner and railways company Grupo Mexico (GMEXICO.MX) B shares were 0.5% lower to MXN39.90 and the V shares of Mexico's largest retailer Wal-Mart de Mexico (WALMEX.MX) were lower by 0.8% to MXN33.17.

The financial research firm Metanalisis said in a note that the stock market should move laterally during the day but could slip below 34,900 and find its way down to 34,175.

Mexico's peso weakened against the U.S. dollar and was recently quoted in Mexico City at MXN12.3930 after closing at MXN12.3505 on Monday. 


Mexico's Pemex Closes Oil Port Cayo Arcas Due To Bad Weather

MEXICO CITY (Dow Jones)--Mexico's state-owned oil company Petroleos Mexicanos, or Pemex, had its Cayo Arcas oil export terminal temporarily closed Tuesday, due to strong wind and wave action in the southern Gulf of Mexico from the remnants of tropical storm Richard, the Transport and Communication Ministry said.

Two other Pemex crude oil export terminals, Pajaritos and Dos Bocas, remained open, the ministry said in a statement.

In September, more than 26 million barrels of heavy Maya crude were exported from Cayo Arcas in the Campeche Sound, with an export value of more than $1.7 billion. The port averaged 874,000 barrels a day in crude exports, headed primarily to the U.S. Spain, China and Portugal, Pemex said.

Temporary closures of Pemex export terminals, mostly during the hurricane season and winter months, rarely affect its long-term exports, which averaged 1.337 million barrels a day in September. 


ARGENTINA:

Argentina's September Shopping Center Sales Rise 20%
Argentina's shopping center sales rose 20% on year in seasonally adjusted prices in September, national statistics agency Indec said Tuesday.

Shopping center sales last month rose 0.6% from August, Indec said in its survey of 33 shopping centers in the capital city and neighboring province of Buenos Aires.

Indec said the categories that posted the biggest increase in sales were clothing and sporting accessories, toys, and electronics, computers and home appliances.

Shopping centers are benefiting from economic growth the government says might reach 9% this year and elevated levels of inflation that have spurred consumers to buy big-ticket items on expectations that prices will only go higher.

Private-sector economists widely say the annual inflation rate is well above 20%, more than double the rate reported by Indec.



CHILE:

Chile Stocks End At Record High
Chile's blue-chip Ipsa index ended at a record high Tuesday, as participants expected a glut of robust corporate profits as earnings season starts.

The Ipsa closed 0.5% higher at 4834.57, while market volume slipped to 76.6 billion Chilean pesos ($156.0 million), compared with CLP81.7 billion the previous session.

As the South American nation quickly rebounds from the global financial crisis and February's massive earthquake, fueled by firm domestic demand and booming investments, many companies, especially in consumer-related sectors, have seen their profits bulge.

"We're expecting the forestry, retail and transportation sectors to lead Ebitda [earnings before interest, depreciation, taxes and amortization] growth...the forestry sector will continue to benefit from a low year-ago comparison and the strong gains in pulp prices, while retail will benefit from the considerable growth in domestic demand," said local investment bank BCI in a research note.

Among retailers, department stores Falabella (FALABELLA.SN) expanded 1.7% to CLP4,740.00 and Ripley Corp. (RIPLEY.SN) increased 1.2% to CLP670.00. Also, retail holding company Cencosud SA (CENCOSUD.SN), which recently moved to at least double its supermarket sales in Brazil through the purchase of the Bretas supermarket chain for $810 million, rose 1.1% to CLP3,510.00.

  For their part, fuel and forestry conglomerate Copec (COPEC.SN), the Ipsa's heaviest-weighted share, gained 1.1% to CLP9,047.00 and integrated steel and iron ore producer CAP SA (CAP.SN), which is in the process of investing nearly $1 billion to boost iron ore production, jumped 1.4% to CLP23,680.00.

Specialty chemical and fertilizer producer SQM's (SQM, SQM-B.SN) more liquid B-series leapt 2.4% to CLP25,490.00 as a deadline approaches for Canadian authorities to decide on whether to approve BHP Billiton Ltd.'s (BHP, BHP.AU) $38.6 billion hostile bid for Canada's Potash Corp. of Saskatchewan (POT, POT.T). Potash has a 32% stake in SQM.

"SQM is benefiting from the takeover bid. It highlights the interest in fertilizer producers. There's also a positive forecast for demand in fertilizer products that's driving the company's growth," said Rodrigo Andaur, head of research with local brokerage FIT Research.


Chile Peso 1.1% Weaker

Chile's peso was trading 1.1% weaker against the dollar Tuesday, after President Sebastian Pinera said he was looking to open up the nation's capital account to counter peso strength and the central bank said it can't rule out intervention.


The peso ended at CLP491.30 to the dollar, versus Monday's close of CLP486.20, while trading in a range of CLP488.65 to CLP492.50.
 
With the peso trading near 29-month highs, exporters, and in particular the agricultural sector, have implored for help as the local currency's strength cuts into the competitiveness of their sector.

To help counter the peso's strength, the government will look to open up its capital account to expand investment abroad, Pinera said at a national gathering of agricultural businessmen after the market closed Monday.

The central bank reiterated the prior session that it's "closely monitoring" the appreciating peso and can't rule out future intervention in the local currency market.

For his part, Finance Minister Felipe Larrain said Tuesday that the government will continue to look for foreign exchange related and non-foreign exchange related measures to mitigate the peso's strength.

  "All the talk about by the government and central bank, and in particular the move to open up the capital account so that, among other things, pension funds can increase their investments abroad is pulling the peso lower today," said a local currency trader.
 
The euro's fall against the dollar early Tuesday, also helped to pull the peso lower. As Europe is one of Chile's main trade partners, the peso often moves in the same direction as the euro does against the dollar.
 
Also weighing the peso down, is a fall in international copper prices. Chile is the world's premier copper producer, accounting for a third of global supply, as such the peso often takes cues from the metal's international prices.


COLUMBIA:

Colombia Posts 1H Central Government Deficit At 0.8% Of GDP

Colombia's central government posted a deficit equivalent to 0.8% of gross domestic product in the first half of the year, unchanged from the same period in 2009.

The government calculates that its central budget deficit for the year, which doesn't include dividends paid by state oil firm Ecopetrol and other state companies, will be 4.4%.

The government's consolidated budget deficit, which includes state companies and regional governments, came in at 146 billion Colombian pesos ($79.3 million), the Finance Ministry said in a statement.

Authorities estimate a consolidated deficit in 2010 equivalent to 3.6% of the country's GDP.

Finance Minister Juan Carlos Echeverry has said he expects the economy will expand by 5% this year. The economy grew 4.5% in the second quarter, the government's statistics department said on Sept. 23.

Colombian lawmakers approved last week the government's 2011 budget and left it unchanged at COP147.3 trillion. The government's estimated consolidated budget deficit will be equivalent to 3.4% of GDP while the deficit of the central government will be equivalent to 4.1% of GDP.

_____________________________________________________________________
European Markets:

European markets were largely lower Tuesday, weighed down by disappointment with earnings from Swiss bank UBS, whose New York Stock Exchange-listed shares fell 5.1% after its third quarter was marred by weak sales and trading and slow client activity. However, UBS was upbeat in its fourth-quarter outlook.

In Europe, UBS AG (UBSN.VX)(UBS.N) reported an unexpected investment banking loss, sending its U.S.-listed shares down 4.3 percent to $17.15 in pre-market trading.

EU Reaches Pact To Regulate Hedge Fund Industry

A controversial deal on regulating the trillion-dollar hedge fund industry was finally sealed Tuesday after key negotiators from the EU's two main decision-making bodies agreed on the final text that will enter into force next year.

The breakthrough, came just a week after finance ministers from the EU's 27 member nations resolved long-standing differences over the new measures and  unanimously agreed a compromise package.

The final text includes a few new tweaks, but the majority of the work was done last week, negotiators representing EU governments and the European parliament said, when ministers  were persuaded to sign up to a number of requirements sought by parliament. These included allowing hedge fund managers to market their funds throughout the European Union and rules to deter private equity investors from taking over a company solely to make a quick profit.

The hedge fund and private equity fund managers manage some EUR1,000 billion of assets on some days, Barnier said--the equivalent of half of all transactions in the financial market.

The new EU law will require all fund managers operating in Europe to be registered, to disclose financial information and have sufficient capital to support their operations. Their activities will be closely supervised by the new EU-wide regulator the European Securities and Markets Authority.

There will be new rules to protect investors and prevent asset-stripping and EU funds will have passports for EU-wide marketing rights from 2013, with foreign funds able to obtain similar passports from 2015.

The agreed text will be put to a vote at the next full session of the European Parliament on Nov. 11, but few obstacles are foreseen, the negotiators said. Once the new directive enters into force, EU member countries will have two years to transpose the rules into national law.

 

LONDON:

 U.K. GDP Tops Expectations In The 3rd Quarter, GBPUSD Extends Advance

Economic activity in the U.K. soared 0.8 percent in the third quarter after climbing 1.2 percent the quarter prior amid economists’ expectations of 0.4 percent. At the same time, the annualized rate jumped 2.8 percent to mark the highest reading since September 2007. 

The British pound began its advance prior to the release amid rumors that the report was leaked. However, at 8:30 GMT, economic activity was confirmed and the sterling extended its northern journey.

The British Pound rallied to a high of 1.5895 on Tuesday as the advanced 3Q GDP report for the U.K. reinforced an improved outlook for the region. 

FTSE slips as banks, miners fall Against Rising Dollar

Bank of England was called into question by data showing the UK economy grew 0.8 percent in the third quarter, bringing year-on-year growth to 2.8 percent -- the fastest annual rate in three years.

European equities fell on both uncertainty about QE and comments from ArcelorMittal (ISPA.AS) that the basic resources sector faced extended weakness.

"We had a rally since August and now people are waiting to see whether this quantitative easing is going to come through or not. There are still some uncertainties and the market is going to be range-bound until the meeting of the Fed," said Koen De Leus, strategist at KBC Securities, in Brussels.

GERMANY:

Inflation Picks Up Modestly In Northern Rhein German State

Inflation in the German state of North Rhein Westphalia, also known as NRW, picked up modestly in October, indicating that inflation may be on the rise across the country, data from the state's statistics office showed Tuesday.

Consumer prices in NRW increased 0.2% in October on the month, after falling 0.2% in September.

The annual inflation rate in Germany's most populous region rose to 1.2% in October from 1.1% in September.

NRW was the first of six German states scheduled to release regional price surveys Tuesday and Wednesday. The Federal Statistics Office is due to publish its pan-German estimate Wednesday.

Hochtief Wants ACS Bid For Leighton Minorities

German construction company Hochtief AG (HOT.XE), which is fighting a takeover bid from Spanish rival Actividades de Construccion y Servicios (ACS.MC), wants Australia's Takeovers Panel to confirm ACS will have to bid for the minority interests of Hochtief's unit Leighton Holdings Ltd. (LEI.AU), the Takeovers Panel said Tuesday.
 

FRANCE:

Protest Strike Continues

Labor unrest in France continued Tuesday, disrupting supplies for European refineries. Petroplus Holdings AG said it is shutting down its 68,000-barrel-a-day Cressier refinery in Switzerland due to a strike at the Fos-Lavera oil port in France. That strike entered its 30th day Tuesday. Workers at eight out of 12 French refineries are also on strike.

.
France's LVMH Holds 17.1% Of Hermes International

French luxury-goods company LVMH Moet Hennessy Louis Vuitton (MC.FR) said Tuesday in a statement it now holds a 17.1% stake in smaller peer Hermes International (RMS.FR).

French Senate Confirmed Vote - Minister Expects 80% Petrol Stations Supplied Tuesday

French energy and environment minister Jean-Louis Borloo Tuesday said he expects 80% of petrol stations to be supplied today. 


The French Senate confirmed Tuesday its vote to approve the final draft of President Nicolas Sarkozy's fiercely-contested bill to raise the retirement age from 60 to 62.

"The target of four out of five [filling stations being supplied] will, I think and hope, be met," Borloo said at the French national assembly. Borloo reiterated that French imports of oil products have reached record highs as the state tried to bridge the gap in supply. 

Many of France's filling stations ran dry last week as refineries remained on strike, fuel depots were blocked and transport was disrupted in protest against the government's pension reform. 


BELGIUM:

Belgian Unions End Blockade Of Two Fuel Depots

BRUSSELS (AFP)--Belgian unions temporarily blocked trucks from entering two fuel depots Tuesday to secure pledges from energy companies that they wouldn't use them to make up for shortages caused by strikes in France. The SETCA trade union lifted its blockades at a depot owned by French energy group Total SA (TOT) in Feluy and Belgian firm JP Martens in Tertre near the French border after the companies gave them guarantees.

The union said that around 50 more trucks than usual were ferrying fuel out of the distribution centers in order to feed French gasoline stations, which suffered shortages due to blockades at depots across France.

About 450 trucks with 35-cubic-metre tanks usually fill up in each depot, the union said.

The Belgian union accused the Total and JP Martens of taking sides in the French conflict by sending more trucks to help fill the void in France.

_____________________________________________________________________
Asian Pacific Markets:

CHINA:

(pending news)

JAPAN:

Japan's Nikkei .N225 closed down 0.3 percent, with exporters still in focus because of the strong yen.

Sony shares rise on speculation of Apple interest

Sony shares closed up 0.7 percent at 2,742 yen after climbing as high as 2,804 yen.

TOKYO, Oct 26 (Reuters) - Shares of Sony Corp (6758.T) SME.N rose nearly 3 percent at one stage on Tuesday as traders cited media reports speculating that the Japanese electronics maker could be a potential acquisition target of Apple Inc (AAPL.O).

Helping to spark the speculation was a Saturday report in Barron's that said cash-rich Apple could be contemplating a big acquisition and noted speculation about Adobe (ADBE.O), Sony and Disney (DIS.N) as potential targets.

Sony spokeswoman Sue Tanaka said: "We cannot comment on rumours or speculation."

http://www.reuters.com/article/idCNTOE69P05E20101026?rpc=44

SINGAPORE:
The Monetary Authority of Singapore said Tuesday that market regulators need to be satisfied before clearing the proposed A$8.4 billion takeover offer by Singapore Exchange Ltd. (S63.SG) for ASX Ltd. (ASX.AU).

AUSTRALIA:
Australia Greens leader Senator Bob Brown said Tuesday his party has strong concerns about the takeover of ASX Ltd. (ASX.AU) by Singapore Exchange Ltd. (S68.SG) and his party won't support it unless proven to be in the national interest.

Australia Greens: Won't Back ASX Takeover Unless Benefits Proven

Australia Greens leader Senator Bob Brown said Tuesday his party has strong concerns about the takeover of ASX Ltd. (ASX.AU) by Singapore Exchange Ltd. (S68.SG) and his party won't support it unless proven to be in the national interest.

Australia ASX Takeover Bid Poses Number Of Issues

A senior official from Australia's Treasury department on Tuesday said the proposed A$8.4 billion takeover of the country's stock market operator by Singapore Exchange Ltd. (S68.SG) poses a number of regulatory issues.

Australia's ASX Proposal Subject To Extensive Regulatory Assessment

Australia's Treasurer Wayne Swan said Tuesday a proposed A$8.4 billion takeover of Australia's stock market operator ASX Ltd. (ASX.AU) by Singapore Exchange Ltd. (S68.SG) will undergo intense regulatory scrutiny.

Coca-Cola Can't Make Numbers Work On Foster's Beer Buyout

Coca-Cola Amatil Ltd. (CCL.AU) Chief Executive Terry Davis said Tuesday he "can't make the numbers work" on a buyout of Foster's Group Ltd.'s (FGL.AU) beer business. Foster's Group Ltd. has not held any further talks with the unidentified private equity group that it rebuffed following an approach for its wine business earlier this year, Chairman David Crawford said Tuesday.

7.5 Earthquake & Tidal Wave Warning

7.7 Earthquake - Tidal Wave Deaths Climb

Indonesia tsunami death toll rises

At least 23 people have been killed and 167 are missing in Indonesia after a localised tsunami triggered by Monday's earthquake off the coast of Sumatra.

Scores of houses were destroyed by waves after the 7.7 magnitude quake, which struck 13 miles (20km) under the ocean floor near the Mentawai islands.

Ten villages on the islands were swept away by the tsunami, a disaster official told the AFP news agency.

Australian officials are trying to contact a group of missing surfers. The group of between eight and 10 missing Australians was on a surfing charter boat in the area, which is a popular surfing destination reached only by boat.

The search and rescue operation is being seriously hampered by bad weather, officials have told the BBC's Karishma Vaswani in Jakarta. Heavy rain is preventing helicopters from accessing the area and boats cannot reach the islands either, because the dock on the island of South Pagai has been completely destroyed.

Children 'swept away'

There is no tsunami warning system in place around the Mentawai islands, and initial reports about whether a tsunami had actually been generated were confused....

Read the entire article and updates at the BBC:
http://www.bbc.co.uk/news/world-asia-pacific-11626242

MONDAY

Earthquake monitoring agencies issued a tsunami warning on Monday after a powerful tremor measuring more than 7 on the Richter scale under the sea off the west coast of Indonesia's Sumatra island.

USGS Reports a 7.5 earthquake hits Padang, Sumatra, Indonesia

http://earthquake.usgs.gov/earthquakes/recenteqsww/Maps/region/Australia.php

_____________________________________________________________________

WORLD FOREX CURRENCIES SNAPSHOT:
(TUESDAY, OCT 26, 2010 1:45 PM EDT)

EUR/USD     1.3872     -0.0074 (-0.53%)
USD/JPY     81.2900 +0.5200 (0.64%)
GBP/USD     1.5869     +0.0156 (0.99%)
CAD/USD     0.9784     -0.0030 (-0.30%)
USD/HKD     7.7584     +0.0001 (0.00%)
USD/CNY     6.6625     +0.0046 (0.07%)
AUD/USD     0.9861     -0.0040 (-0.40%)

WORLD MARKETS SNAPSHOT:
(TUESDAY, OCT 26, 2010 1:45 PM EDT)

Shanghai     3,041.54     -9.88 (-0.32%)
Nikkei 225     9,377.38     -23.78 (-0.25%)
Hang Seng Index     23,601.24     -26.67 (-0.11%)
TSEC     8,343.23     +36.25 (0.44%)
FTSE 100     5,707.30     -44.68 (-0.78%)
DJ EURO STOXX 50     2,856.31     -15.17 (-0.53%)
CAC 40     3,852.66     -17.34 (-0.45%)
S&P TSX     12,680.11     +16.53 (0.13%)
S&P/ASX 200     4,687.80     -22.20 (-0.47%)
BSE Sensex     20,221.39     -81.73 (-0.40%%

_____________________________________________________________________
TUESDAY'S U.S. ECONOMIC CALENDAR:

7:45 a.m.
Oct 23 ICSC-Goldman Sachs Chain Store Sales Index - WoW (previous -0.7%), YoY (previous +1.7%)

8:55 a.m.
Oct 23 Johnson Redbook Retail Sales Index MoM % Change (previous +0.2%), 12MonChgPct (previous +2.6%), 52WkChgPct (previous +2.7%)

9:00 a.m.
Aug S&P / Case-Shiller Home Price Index SP Composite-10 MoM (previous +0.8%), SP Composite-10 YoY (previous +4.1%), SP Composite-20 MoM (previous +0.6%), SP Composite-20 (expected +0.9%)

10:00 a.m.
Oct Richmond Fed Business Activity Survey Manufacturing Index (previous -2), Retail Revenues Index (previous -8), Services Revenue Index (previous -5), Shipments Index (previous -4)

10:00 a.m.
Oct Consumer Confidence Index (expected 51),Expectation Index (previous 65.4), Present Situation Index (previous 23.1)

4:30 p.m.
New York Fed President William Dudley speech on the state of the regional economy

4:30 p.m.
Oct 22 API Statistical Bulletin Crude Stocks (Net Change) (previous +2.32M), Gasoline Stocks (Net Change) (previous -83K), Distillate Stocks (Net Change) (previous -854K), Refinery Runs (previous 80.9%)

5:00 p.m.
Oct 24 ABC News Consumer Confidence Index (previous -46)

US STOCK MARKET SUMMARY, MONDAY, OCT. 25, 2010:

Stocks:
Stocks rose to a five-and-a-half month high on Monday as a falling dollar, partly driven by expectations of further Fed stimulus, prompted investors to buy riskier assets. U.S. stocks gained, as a weaker dollar boosted materials and hopes for further central bank stimulus kept the market edging higher.As the Dow pulled back from an earlier triple-point gain, some investors said the market may cool a bit after its relentless rise since early September.

Treasurys:
Treasury prices pared gains in afternoon action, which analysts attributed to traders setting up for three days of note auctions starting on Tuesday with 2-year notes. The 10-year Treasury finished flat. Bonds were higher before the government's sale of inflation-indexed debt for a negative yield.

Forex:
The dollar fell broadly as a nonbinding G20 agreement not to engage in "competitive devaluation" gave investors a reprieve from worries about currency moves by governments. The dollar hit a new 15-year low against the yen at, and the Australian dollar led the march forward. The dollar was also hurt by research from Goldman Sachs suggesting the Fed may need to provide another $2 trillion or more in additional quantitative easing.

© Copyright 1999-2010, Online Consultancy Network™. All Rights Reserved.