Thousands of people waited in line outside banks in Bangladesh yesterday as subscription for the country's largest initial public offering opened,an event seen as a key test for the national stock market.
The country's top mobile phone operator, Grameenphone, is raising $70.4 million through the IPO sale of 69.44 million shares.
The company,62% owned by Telenor of Norway, has raised the same amount from institutional investors.
Grameenphone says the money will be spent on network expansion and developing its information technology infrastructure.
The face value of the shares has been fixed at 10 taka (seven cents) with a 60 taka premium on each share. A private investor can buy a maximum lot of 200 shares.
Pensioners, students and workers converged on 500 bank branches nationwide to deposit money for the subscription,which closes on Oct 18.
"In the first two hours some 400 people have submitted applications," said Saiful Islam, a manager of private Dutch Bangla Bank at the capital, Dhaka.
"My family is making five applications for a maximum 1,000 shares. It's a lifetime opportunity to be able to buy Grameenphone shares," said Hanif Ahmed,a retired government official.
Grameenphone is 38%-owned by Grameen Telecom, a subsidiary of microfinance giant Grameen Bank, which was set up by 2006 Nobel peace prize winner Muhammad Yunus.
It has around 21 million of Bangladesh's fast-growing 46 million cellular subscriber base. It is also the country's largest private company in terms of revenue.
Securities and Exchange Commission chief Ziaul Haq Khandekar hailed the IPO as a "watershed event", saying it would bring "depth and maturity" to the country's share market.
"The GP IPO will bring qualitative change to the market. I think the move will instill confidence in other major companies to follow suit. It will make the stock market more stable and the centre of our economic activity," he said.
Dhaka Stock Exchange president Rakibur Rahman said Grameenphone's IPO was the largest in the country's history,dwarfing the previous record set by a private bank by more than four times.
The DSE, which hosts companies with a market capitalisation of around $15 billion, is a minor player compared to other Asian bourses.
Silmat Chisti, capital market head of issue manager Citigroup Global Market, an affiliate of Citibank, said trading of Grameenphone shares was expected to start by end of November.
Sunday, October 4, 2009
Diversification still essential
The worst of the global recession may have passed but enough uncertainties remain to make investors desperate for expert advice.
Suppamas Payakapan, an analyst at Phillip Securities, said asset allocations could be divided into three markets:high-risk (commodities and equities),medium-risk (debt instruments) and lowrisk (money market).
"Investors should allocate 30% of their investment portfolios to high-risk assets,50% to debentures and 20% to the money market," she said.
For the high-risk market, investors may increase their weighting on gold to about 10-15%, as it is a safe asset and good for speculation, while stocks could make up 10% and oil 5%, she said.
"Growth stocks are still attractive as they have been on an upward trend in the past three months and are expected to continue rising until the first half of next year," she said.
Attractive sectors remain energy, property and banking, as they tend to move with broad market conditions, while oil prices are likely to rise further into the next year.
Patchara Samalapa, deputy managing director of Kasikorn Asset Management,said that although the economy had picked up, it had not yet reached the point where everyone could feel relieved.Stock prices could be affected by risk factors in the fourth quarter relating to economic uncertainties and the performance of listed companies.
"When investors are not sure whether stock prices will go up or down, as at this time, they should make sure of liquidity," he said.
At the moment, he said, investors should not lock their money into long-term government bonds that mature in three to five years as they will not be able to get money when they want to invest in stocks as the market goes up.
Somjin Sornpaisarn, CEO of TMB Asset Management, said investors should have a neutral asset allocation among three areas: equity, short-term fixed income,and long-term fixed income.
"Equity has been on a rise during this period. The money market offers quite little return and 10-year bonds yield only 4%, so it's not the time to overweight your investment on either type," he said.
"It's better for investors to consider the period of investment to match the money they have."
Investors might add commodities in a ratio of about 10-15% of their portfolios,said Dr Somjin. Diversifying to overseas markets to reduce risk is also essential.It could be 20% for domestic equity and 10% overseas.
Suppamas Payakapan, an analyst at Phillip Securities, said asset allocations could be divided into three markets:high-risk (commodities and equities),medium-risk (debt instruments) and lowrisk (money market).
"Investors should allocate 30% of their investment portfolios to high-risk assets,50% to debentures and 20% to the money market," she said.
For the high-risk market, investors may increase their weighting on gold to about 10-15%, as it is a safe asset and good for speculation, while stocks could make up 10% and oil 5%, she said.
"Growth stocks are still attractive as they have been on an upward trend in the past three months and are expected to continue rising until the first half of next year," she said.
Attractive sectors remain energy, property and banking, as they tend to move with broad market conditions, while oil prices are likely to rise further into the next year.
Patchara Samalapa, deputy managing director of Kasikorn Asset Management,said that although the economy had picked up, it had not yet reached the point where everyone could feel relieved.Stock prices could be affected by risk factors in the fourth quarter relating to economic uncertainties and the performance of listed companies.
"When investors are not sure whether stock prices will go up or down, as at this time, they should make sure of liquidity," he said.
At the moment, he said, investors should not lock their money into long-term government bonds that mature in three to five years as they will not be able to get money when they want to invest in stocks as the market goes up.
Somjin Sornpaisarn, CEO of TMB Asset Management, said investors should have a neutral asset allocation among three areas: equity, short-term fixed income,and long-term fixed income.
"Equity has been on a rise during this period. The money market offers quite little return and 10-year bonds yield only 4%, so it's not the time to overweight your investment on either type," he said.
"It's better for investors to consider the period of investment to match the money they have."
Investors might add commodities in a ratio of about 10-15% of their portfolios,said Dr Somjin. Diversifying to overseas markets to reduce risk is also essential.It could be 20% for domestic equity and 10% overseas.
Wall Street sinks on job losses data, heads into corporate earnings spell
Having lost some of its swagger from a powerful six-month rally,Wall Street heads into corporate earnings season with renewed skittishness about prospects for an economic recovery.
The latest economic data has cast fresh doubt on the notion of a strong recovery from recession, and investors will look to the upcoming quarterly reports for signs of whether Americans are emerging from a long retrenchment.
In the week ending on Friday, the blue-chip Dow Jones Industrial Average slid 1.84% to 9,487.67, in a second straight weekly loss after the indices hit 11-month highs in September.
The technology-rich Nasdaq composite sank 2.05% to 2,048.11 and the Standard & Poor's 500 broad-market index slid 1.84% to 1,025.21.
The losses came on disappointing economic news, highlighted by a shock unemployment report on Friday that showed the labour market reversing course after several months of improvement.
Official data showed job losses accelerated to 263,000 in September and the unemployment rate rose to 9.8%,pouring cold water on the notion of a quick and strong recovery from the nearly two-year-old recession.
"The market practitioners who believe the recovery is based on sand are seeing a lot of evidence in this and other recent data," said Cary Leahey, senior economist at Decision Economics.
The market now looks to corporate earnings, starting with Wednesday's report from aluminum giant Alcoa the first of the blue chips to report results - for clues on the direction of economic activity.
"The looming question is whether investor expectations are now set at a reasonable level or too high considering the challenges that continue to face the US economy," said Fred Dickson, market strategist at DA Davidson & Co.
"We feel comfortable forecasting a nice rebound in corporate earnings even in a weak growth economy as most companies have trimmed costs thereby significantly raising productivity of their workforce during the last 18 months."
The market is still sitting on hefty gains after a solid 15% rise in the JulySeptember quarter for the Dow and S&P 500, and a six-month rally of around 50%.
Analysts say the market needs to see evidence the economy is on the mend to add to those gains.
"US equity markets may have racked up their finest third quarter in seven decades, but the low hanging fruit has almost certainly been picked, as the last few days can attest," said Sal Guatieri at BMO Capital Markets."Less-bad news no longer will sustain the rally, as the economy must now prove it can sustain a recovery. But the mish-mash of indicators released this week, showing the economy took two steps forward in the summer and a big step back in early fall,was less than inspiring."
RBC Wealth Management analyst Bob Dickey said the rally still has legs since the worst of the economic crisis is over.
"The market is already in a modestly oversold condition, and as such, could bottom and rally again at any time," he said.
In the coming week, the market will also ponder a purchasing manager survey of the services sector by the Institute of Supply Management and data on the US trade balance.
The latest economic data has cast fresh doubt on the notion of a strong recovery from recession, and investors will look to the upcoming quarterly reports for signs of whether Americans are emerging from a long retrenchment.
In the week ending on Friday, the blue-chip Dow Jones Industrial Average slid 1.84% to 9,487.67, in a second straight weekly loss after the indices hit 11-month highs in September.
The technology-rich Nasdaq composite sank 2.05% to 2,048.11 and the Standard & Poor's 500 broad-market index slid 1.84% to 1,025.21.
The losses came on disappointing economic news, highlighted by a shock unemployment report on Friday that showed the labour market reversing course after several months of improvement.
Official data showed job losses accelerated to 263,000 in September and the unemployment rate rose to 9.8%,pouring cold water on the notion of a quick and strong recovery from the nearly two-year-old recession.
"The market practitioners who believe the recovery is based on sand are seeing a lot of evidence in this and other recent data," said Cary Leahey, senior economist at Decision Economics.
The market now looks to corporate earnings, starting with Wednesday's report from aluminum giant Alcoa the first of the blue chips to report results - for clues on the direction of economic activity.
"The looming question is whether investor expectations are now set at a reasonable level or too high considering the challenges that continue to face the US economy," said Fred Dickson, market strategist at DA Davidson & Co.
"We feel comfortable forecasting a nice rebound in corporate earnings even in a weak growth economy as most companies have trimmed costs thereby significantly raising productivity of their workforce during the last 18 months."
The market is still sitting on hefty gains after a solid 15% rise in the JulySeptember quarter for the Dow and S&P 500, and a six-month rally of around 50%.
Analysts say the market needs to see evidence the economy is on the mend to add to those gains.
"US equity markets may have racked up their finest third quarter in seven decades, but the low hanging fruit has almost certainly been picked, as the last few days can attest," said Sal Guatieri at BMO Capital Markets."Less-bad news no longer will sustain the rally, as the economy must now prove it can sustain a recovery. But the mish-mash of indicators released this week, showing the economy took two steps forward in the summer and a big step back in early fall,was less than inspiring."
RBC Wealth Management analyst Bob Dickey said the rally still has legs since the worst of the economic crisis is over.
"The market is already in a modestly oversold condition, and as such, could bottom and rally again at any time," he said.
In the coming week, the market will also ponder a purchasing manager survey of the services sector by the Institute of Supply Management and data on the US trade balance.
GRIM JOBLESS RATE POUNDS STOCKS
"Reality is beginning to set in that the recovery is going to be very slow and erratic."
US Stock fell for a fourth day and the dollar slumped as employers cut more jobs than economists forecast, increasing speculation the Federal Reserve will postpone the withdrawal of monetary stimulus as the economy struggles to recover.
The dollar fell against the euro as the economy shed 263,000 positions in September, more than the 175,000 median estimate of economists in a Bloomberg survey.
Gold rallied as an alternative to the falling greeback. Treasuries declined as yields near the lowest in more than four months hurt demand before next week's US$78 billion (Bt2.6 trillion) in auctions. Oil fell after two days of gains.
"Reality is beginning to set in that this recovery is going to be very slow in developing and erratic as it goes on," said Bruce Bittles, chief investment strategist at Robert W Baird in Nashville,Tennessee, which manages $18 billion, Tennessee, which manages $18 billion. "The market was up for seven straight months. It's due for a correction."
The Standard & Poor's 500 Index fell 0.5 per cent to 1,025.21. The Dow Jones Industrial Average lost 21.61 points to 9,487.67.
The S&P 500 declined 1.8 per cent this week on concern the seven-month rally in equities has outpaced prospects for an economic recovery.
The benchmark index umped almost 15 per cent in the July-to-September period to give it a two-quarter advance of 34 per cent, the biggestsince a 42 pr cent surge in the first half of 1975.
September's job losses increased the unemployment rate from 9.7 per cent in August to 9.8 per cent, the highest since 1983.
Since the recession began in December 2007, 7.2 million positions have been eliminated, the biggest declien since the Great Depression.
"The number shows this is going to be a slow and painful recovery process,_said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. "We will have sub-trend growth for an extended period. There is still too much debt in the system and if we keep losing jobs like this we will not get income growth."
The dollar touched the strongest level versus the euro in almost a month before erasing its gain as concern rising unemployment will push back the timeline for an interst rate increase by the Fed. Interest-rage futures contractrs on the Chicago Board of Trade showed a 38-per-cent chance the central bak would increase the fed funds target from the range of zero to 0.25 per cent through March, compared with 45 per cent odds on Thursday.
Over the past few months, the dollar tended to appreciate on negative US economic reports as investors sought safety in the world's main reserve currency.
That pattern may be changing as bad news cements expectations for the Fed to keep its interest rates low while other central banks may start to increase theirs, according to Laurent Desbois, president in Montreal of Fjord Capital, a currency fund manager with $750 million under management.
Oil for November delivery fell 99 today's economic numbers point it out very clearly," said James Cordier, port folio manager at OptionSellers.com in Tampa, Florida. "Main Street is not getting better, and that is where the rubbler hits the road as far as demand goes."
Gold futures for December delivery climbed $3.60, or 0.4 per cent to $1,004.30 an ounce on the Comex division of the New York Mercantile Exchange. This week, the metal gained 1.3 per cent.
"It's about the buck," said Frank Lesh, an analyst at FuturePath Trading in Chicago. "The dollar is, has been and will be the main driver for gold."
US Stock fell for a fourth day and the dollar slumped as employers cut more jobs than economists forecast, increasing speculation the Federal Reserve will postpone the withdrawal of monetary stimulus as the economy struggles to recover.
The dollar fell against the euro as the economy shed 263,000 positions in September, more than the 175,000 median estimate of economists in a Bloomberg survey.
Gold rallied as an alternative to the falling greeback. Treasuries declined as yields near the lowest in more than four months hurt demand before next week's US$78 billion (Bt2.6 trillion) in auctions. Oil fell after two days of gains.
"Reality is beginning to set in that this recovery is going to be very slow in developing and erratic as it goes on," said Bruce Bittles, chief investment strategist at Robert W Baird in Nashville,Tennessee, which manages $18 billion, Tennessee, which manages $18 billion. "The market was up for seven straight months. It's due for a correction."
The Standard & Poor's 500 Index fell 0.5 per cent to 1,025.21. The Dow Jones Industrial Average lost 21.61 points to 9,487.67.
The S&P 500 declined 1.8 per cent this week on concern the seven-month rally in equities has outpaced prospects for an economic recovery.
The benchmark index umped almost 15 per cent in the July-to-September period to give it a two-quarter advance of 34 per cent, the biggestsince a 42 pr cent surge in the first half of 1975.
September's job losses increased the unemployment rate from 9.7 per cent in August to 9.8 per cent, the highest since 1983.
Since the recession began in December 2007, 7.2 million positions have been eliminated, the biggest declien since the Great Depression.
"The number shows this is going to be a slow and painful recovery process,_said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. "We will have sub-trend growth for an extended period. There is still too much debt in the system and if we keep losing jobs like this we will not get income growth."
The dollar touched the strongest level versus the euro in almost a month before erasing its gain as concern rising unemployment will push back the timeline for an interst rate increase by the Fed. Interest-rage futures contractrs on the Chicago Board of Trade showed a 38-per-cent chance the central bak would increase the fed funds target from the range of zero to 0.25 per cent through March, compared with 45 per cent odds on Thursday.
Over the past few months, the dollar tended to appreciate on negative US economic reports as investors sought safety in the world's main reserve currency.
That pattern may be changing as bad news cements expectations for the Fed to keep its interest rates low while other central banks may start to increase theirs, according to Laurent Desbois, president in Montreal of Fjord Capital, a currency fund manager with $750 million under management.
Oil for November delivery fell 99 today's economic numbers point it out very clearly," said James Cordier, port folio manager at OptionSellers.com in Tampa, Florida. "Main Street is not getting better, and that is where the rubbler hits the road as far as demand goes."
Gold futures for December delivery climbed $3.60, or 0.4 per cent to $1,004.30 an ounce on the Comex division of the New York Mercantile Exchange. This week, the metal gained 1.3 per cent.
"It's about the buck," said Frank Lesh, an analyst at FuturePath Trading in Chicago. "The dollar is, has been and will be the main driver for gold."
FIFTH HONG KONG IPO MAKES AN INGLORIOUS DEBUT
Glorious Property Holdings yesterday fell as much as 20 per cent on its first day of trading in Hong Kong, the fifth straight debut slump for an initial public offering in the city.
The stock dropped 15 per cent to 3.76 Hong Kong dollars(Bt16) at the close.Glorious Property last week raised HK$9.9 billion in the largest Hong Kong IPO by a Chinese property company in two years.
The developer joins four other companies,including China South City Holdings,in falling on the first day in the past two weeks.
The declines have heightened investors' concern the market's appetite for offerings is waning as Wynn Macau prepares to start trading on October 9 after raising US$1.63 billion (Bt54 billion).
"It's a massacre," Francis Lun,general manager at Hong Kong-based broderage Fulbright Securities, said in an interview."Right now investors have lost all confidence in new shares and I can't see this changing in the near term."
Hong Kong's benchmark Hang Seng Index,which has rallied 80 per cent from a four-month low on March 9,fell 3.1 per cent this week,the biggest drop since the five days ended August 21.
Wilmar Intrnational,the world's biggest palm oil trader,said on September 30 that it has not decided on the timing of a Hong Kong share sale of its China assets and is monitoring market conditions.Wilmar is delaying the sale to mid October or latr from October 5 initially, FinanceAsia reported.
Glorious Property "is the latest in a line of IPOs that has performed worse than people were expecting", said Andrew Sullivan,a sales trader at Mainfirst Securities Hong Kong."The next IPOs will probably have to be priced more attractively."
JPM organ Chase, deutsche Bank and USB were the global coordinators in the Glorious Property IPO.
companies including Wynn Macau and Yingde Gases Group,China's largest independent onsite supplier of industrial gases,will start trading on the Hong Kong exchange next week.
Wynn Macau,the casino company led by billionaire Stephen Wynn,is scheduled to start trading in Hong Kong on October 9.It raised HK$12.6 billion,selling shares at HK$10.08 apiece,the top end of the price range.
"It's a massacre.Investors have lost all confidence in new shares.I can't see this changing in the near term."
The stock dropped 15 per cent to 3.76 Hong Kong dollars(Bt16) at the close.Glorious Property last week raised HK$9.9 billion in the largest Hong Kong IPO by a Chinese property company in two years.
The developer joins four other companies,including China South City Holdings,in falling on the first day in the past two weeks.
The declines have heightened investors' concern the market's appetite for offerings is waning as Wynn Macau prepares to start trading on October 9 after raising US$1.63 billion (Bt54 billion).
"It's a massacre," Francis Lun,general manager at Hong Kong-based broderage Fulbright Securities, said in an interview."Right now investors have lost all confidence in new shares and I can't see this changing in the near term."
Hong Kong's benchmark Hang Seng Index,which has rallied 80 per cent from a four-month low on March 9,fell 3.1 per cent this week,the biggest drop since the five days ended August 21.
Wilmar Intrnational,the world's biggest palm oil trader,said on September 30 that it has not decided on the timing of a Hong Kong share sale of its China assets and is monitoring market conditions.Wilmar is delaying the sale to mid October or latr from October 5 initially, FinanceAsia reported.
Glorious Property "is the latest in a line of IPOs that has performed worse than people were expecting", said Andrew Sullivan,a sales trader at Mainfirst Securities Hong Kong."The next IPOs will probably have to be priced more attractively."
JPM organ Chase, deutsche Bank and USB were the global coordinators in the Glorious Property IPO.
companies including Wynn Macau and Yingde Gases Group,China's largest independent onsite supplier of industrial gases,will start trading on the Hong Kong exchange next week.
Wynn Macau,the casino company led by billionaire Stephen Wynn,is scheduled to start trading in Hong Kong on October 9.It raised HK$12.6 billion,selling shares at HK$10.08 apiece,the top end of the price range.
"It's a massacre.Investors have lost all confidence in new shares.I can't see this changing in the near term."
STOCK EXCHANGE EXPECTS 100,000 AT SET IN THE CITY
THE Stock Exchange of Thailand is targeting 100,000 securites-rekated investment accounts at the fair,SET said yesterday.
They will be able to attend the presentations of 30 listes companies at the event,to be held on November 12 and 13 at Paragon Hall.Nine commercial banks will offer a full array of investment products at this,the sixth annual SET in the City
Securities houses,mutual fund companies, gold futures brokerages,insurance companies,the Securities and Exchange Commission, the Revenue Department and the lslamic Bank of Thailand are among the exhibitors.
The Innovative and Investment stages are the highlight of this year's show.
The Innovative stage will host uniqus investment products and investment views while the Investment Stage will be the venue for seminars by securities analysts.
The main seminars are "Point Out Economic Direction and Stock Market in 2010 " and "In-depth Economics... Crisis or Investment Opportunity?"
Long- term equity funds and retirement mutual funds will likely receive a warm welcome from investors as the year-end is approaching ,Patareeya added.
"The fairgoers are expected to open 10,000 securitiesrelated investment accounts at the fair."
They will be able to attend the presentations of 30 listes companies at the event,to be held on November 12 and 13 at Paragon Hall.Nine commercial banks will offer a full array of investment products at this,the sixth annual SET in the City
Securities houses,mutual fund companies, gold futures brokerages,insurance companies,the Securities and Exchange Commission, the Revenue Department and the lslamic Bank of Thailand are among the exhibitors.
The Innovative and Investment stages are the highlight of this year's show.
The Innovative stage will host uniqus investment products and investment views while the Investment Stage will be the venue for seminars by securities analysts.
The main seminars are "Point Out Economic Direction and Stock Market in 2010 " and "In-depth Economics... Crisis or Investment Opportunity?"
Long- term equity funds and retirement mutual funds will likely receive a warm welcome from investors as the year-end is approaching ,Patareeya added.
"The fairgoers are expected to open 10,000 securitiesrelated investment accounts at the fair."
Surprise slide in manufacturing sends stocks lower
The stock market has ended a strong third quarter with trading that reflected investors' mixed emotions about the US economy.
The major indexes closed slightly lower after zigzagging through the day. Prices got a lift from the government's latest reading on the gross domestic product,then plunged on news of a surprise drop in Midwestern manufacturing.
The Dow Jones industrial average ended down 30 points as investors remained uneasy about economic data and shifted bets as the dollar strengthened. The drop shaved only a modest amount from the Dow's 15% gain for the July-September period, its strongest quarter in 11 years.
The day's slide-and-bounce performance was a fitting one for the end of the quarter. When bad news hits the market, reminding investors of the economy's fragility, stocks slide. But within a few days, or even the same day, they start to recover as investors seem to grab hold of the fact that no one expects the recovery,or stocks, to have an unbroken path upward.
"Any legitimate decline in the market is just seen as a buying opportunity," said David Waddell, senior investment strategist and CEO of Waddell & Assoc. "That pattern has continued now ever since the rally began."
The slide that pulled the Dow down by more than 100 points in early trading began when the Chicago Purchasing Managers Index came in weaker than expected. Investors worried that the drop meant the national Institute for Supply Management index due yesterday also would be weak.
Not all the news rattled investors. The Commerce Department said the economy didn't sink as fast in the second quarter as it had estimated. The gross domestic product, which is the broadest measure of the economy, slid at a pace of 0.7%, rather than 1% as it had projected.
Stocks pulled off their lows as the dollar weakened.That makes US goods cheaper to overseas customers and is seen as a boost for the US economy.
Occasional squalls are to be expected after the quarter the stock market has seen. The Dow's gain was its biggest since a surge of 17.1% in the final quarter of 1998, when the dot-com bubble was still inflating. The rise was even stronger than the 11% jump the Dow logged from April-June.
The Dow ended down 29.92, or 0.3%, at 9,712.28 after falling as much as 134 points.
The broader S&P 500 index fell 3.53, or 0.3%, to 1,057.08. It rose 15% for the quarter after gaining 15.2%in the previous quarter. The index, which is the basis for many mutual funds, is up 56.3% since hitting a 12-year low in March.
The Nasdaq composite index fell 1.62, or 0.1%, to 2,122.42. It rose 15.7% for the quarter.
The Russell 2000 index of smaller companies fell 6.17, or 1%, to 604.28.
Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.8 billion shares compared with 1.3 billion shares traded at the same point Tuesday.
Investors were uneasy ahead of today's September employment report from the Labour Department.
A snapshot Wednesday on employment showed some modest improvement in the labor market. The ADP National Employment Report found that private sector employment fell by 254,000 in September following a revised loss of 277,000 jobs in August. It was the fewest jobs lost since July 2008.
Traders are waiting to see whether there will be a significant drop in the number of jobs cut nationwide during September.
The market could have trouble continuing its advance if economic reports don't boost optimism.
Steve Hagenbuckle, managing principal for TerraCap Partners in New York, expects that corporate earnings will likely exceed expectations again in the third quarter and help boost the market.
"The corporate numbers will continue to be met or exceeded so I think we'll continue to run up," he said.
But many investors have doubts. The latest weekly survey by the American Association of Individual Investors found that bearishness among investors stood at 44.5%, above the long-term average of 30%.
As a result, many investors are still paddling to safer investments. In August, investors funneled $42.9 billion into bond funds and only $3.9 billion into stock funds, according to the Investment Company Institute,the mutual fund trade group.
The stock market often rewards the contrarian so many analysts see investors' doubts as one of the strongest signals that the rally will continue.
Some of the hardest-hit stocks in the market's slide that intensified a year ago posted spectacular gains in the third quarter. Financial stocks led the 10 industry groups that make up the Standard & Poor's 500 index with a gain of 25%. Industrials rose about 21%, as did materials companies like chemical producers and paper makers.
Some stocks logged enormous advances for the quarter. Newspaper publisher Gannett Inc surged 250%,while Hartford Financial Services Group Inc jumped 123%. There were exceptions. Commercial lender CIT Group Inc tumbled 43.7% as investors worried about its stability. Sprint Nextel Corp slid 17.9%.
Meanwhile, bond prices were little changed Wednesday. The yield on the benchmark 10-year Treasury note,which moves opposite its price, rose to 3.31% from 3.29% late Tuesday. AP
LONDON 5,133.90 -25.82
Britain's top share index closed lower after disappointing Chicago PMI data, with energy stocks, banks and miners among the biggest laggards on the last session of a strong quarter.
The FTSE 100 closed at 5,133.9 points, down 25.82 or 0.50%.
European shares fell after US regional business activity contracted in September, but the main FTSEurofirst 300 index still managed to post its best quarterly rise in nearly 10 years.
The FTSEurofirst 300 index of top European shares ended 0.5% lower at 997.56 points, dragged down by banks and oil producers.
The index was up 17.3% in July-September, its biggest quarterly rise since December 1999. It rose nearly 16%in the previous quarter but was still down 39% from a peak in mid-2007.
In Frankfurt, the DAX index ended at 5,675.16 points,down 38.36 or 0.67%. In Paris, the CAC-40 index closed at 3,795.41 points, down 18.69 or 0.49%.
The index was up 17.3% in July-September, its biggest quarterly rise since December 1999. It rose nearly 16% in the previous quarter but was still down 39% from a peak in mid-2007.
Banks, which have rallied 171% since March, were among the stand-out losers after the Institute for Supply Management-Chicago business barometer fell to 46.1 in September from 50 in August.
Economists had forecast the index at 52.0. A reading above 50 indicates expansion in the regional economy.
BNP Par ibas, HSBC, BBVA, UBS, Deutsche Bank,Commerzbank and Societe Generale were down 1.2-3%.
"In the near term, there is some vulnerability because the market did get quite overbought in the last week or two,' said Ronan Carr, European equity strategist at Morgan Stanley in London.
Although the FTSEurofirst 300 is near its 12-month highs, the 14-day momentum and the 14-day Relative Strength Index have been trending down over the past week, a sign that the market could be overbought technically.
"On a six-to-nine-month view, the rally can go a little bit further. We do expect the recovery in growth to continue to come through and at the same time, monetary and fiscal policy will stay ver y loose _positive backdrops for equities,' Carr said.
The major indexes closed slightly lower after zigzagging through the day. Prices got a lift from the government's latest reading on the gross domestic product,then plunged on news of a surprise drop in Midwestern manufacturing.
The Dow Jones industrial average ended down 30 points as investors remained uneasy about economic data and shifted bets as the dollar strengthened. The drop shaved only a modest amount from the Dow's 15% gain for the July-September period, its strongest quarter in 11 years.
The day's slide-and-bounce performance was a fitting one for the end of the quarter. When bad news hits the market, reminding investors of the economy's fragility, stocks slide. But within a few days, or even the same day, they start to recover as investors seem to grab hold of the fact that no one expects the recovery,or stocks, to have an unbroken path upward.
"Any legitimate decline in the market is just seen as a buying opportunity," said David Waddell, senior investment strategist and CEO of Waddell & Assoc. "That pattern has continued now ever since the rally began."
The slide that pulled the Dow down by more than 100 points in early trading began when the Chicago Purchasing Managers Index came in weaker than expected. Investors worried that the drop meant the national Institute for Supply Management index due yesterday also would be weak.
Not all the news rattled investors. The Commerce Department said the economy didn't sink as fast in the second quarter as it had estimated. The gross domestic product, which is the broadest measure of the economy, slid at a pace of 0.7%, rather than 1% as it had projected.
Stocks pulled off their lows as the dollar weakened.That makes US goods cheaper to overseas customers and is seen as a boost for the US economy.
Occasional squalls are to be expected after the quarter the stock market has seen. The Dow's gain was its biggest since a surge of 17.1% in the final quarter of 1998, when the dot-com bubble was still inflating. The rise was even stronger than the 11% jump the Dow logged from April-June.
The Dow ended down 29.92, or 0.3%, at 9,712.28 after falling as much as 134 points.
The broader S&P 500 index fell 3.53, or 0.3%, to 1,057.08. It rose 15% for the quarter after gaining 15.2%in the previous quarter. The index, which is the basis for many mutual funds, is up 56.3% since hitting a 12-year low in March.
The Nasdaq composite index fell 1.62, or 0.1%, to 2,122.42. It rose 15.7% for the quarter.
The Russell 2000 index of smaller companies fell 6.17, or 1%, to 604.28.
Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.8 billion shares compared with 1.3 billion shares traded at the same point Tuesday.
Investors were uneasy ahead of today's September employment report from the Labour Department.
A snapshot Wednesday on employment showed some modest improvement in the labor market. The ADP National Employment Report found that private sector employment fell by 254,000 in September following a revised loss of 277,000 jobs in August. It was the fewest jobs lost since July 2008.
Traders are waiting to see whether there will be a significant drop in the number of jobs cut nationwide during September.
The market could have trouble continuing its advance if economic reports don't boost optimism.
Steve Hagenbuckle, managing principal for TerraCap Partners in New York, expects that corporate earnings will likely exceed expectations again in the third quarter and help boost the market.
"The corporate numbers will continue to be met or exceeded so I think we'll continue to run up," he said.
But many investors have doubts. The latest weekly survey by the American Association of Individual Investors found that bearishness among investors stood at 44.5%, above the long-term average of 30%.
As a result, many investors are still paddling to safer investments. In August, investors funneled $42.9 billion into bond funds and only $3.9 billion into stock funds, according to the Investment Company Institute,the mutual fund trade group.
The stock market often rewards the contrarian so many analysts see investors' doubts as one of the strongest signals that the rally will continue.
Some of the hardest-hit stocks in the market's slide that intensified a year ago posted spectacular gains in the third quarter. Financial stocks led the 10 industry groups that make up the Standard & Poor's 500 index with a gain of 25%. Industrials rose about 21%, as did materials companies like chemical producers and paper makers.
Some stocks logged enormous advances for the quarter. Newspaper publisher Gannett Inc surged 250%,while Hartford Financial Services Group Inc jumped 123%. There were exceptions. Commercial lender CIT Group Inc tumbled 43.7% as investors worried about its stability. Sprint Nextel Corp slid 17.9%.
Meanwhile, bond prices were little changed Wednesday. The yield on the benchmark 10-year Treasury note,which moves opposite its price, rose to 3.31% from 3.29% late Tuesday. AP
LONDON 5,133.90 -25.82
Britain's top share index closed lower after disappointing Chicago PMI data, with energy stocks, banks and miners among the biggest laggards on the last session of a strong quarter.
The FTSE 100 closed at 5,133.9 points, down 25.82 or 0.50%.
European shares fell after US regional business activity contracted in September, but the main FTSEurofirst 300 index still managed to post its best quarterly rise in nearly 10 years.
The FTSEurofirst 300 index of top European shares ended 0.5% lower at 997.56 points, dragged down by banks and oil producers.
The index was up 17.3% in July-September, its biggest quarterly rise since December 1999. It rose nearly 16%in the previous quarter but was still down 39% from a peak in mid-2007.
In Frankfurt, the DAX index ended at 5,675.16 points,down 38.36 or 0.67%. In Paris, the CAC-40 index closed at 3,795.41 points, down 18.69 or 0.49%.
The index was up 17.3% in July-September, its biggest quarterly rise since December 1999. It rose nearly 16% in the previous quarter but was still down 39% from a peak in mid-2007.
Banks, which have rallied 171% since March, were among the stand-out losers after the Institute for Supply Management-Chicago business barometer fell to 46.1 in September from 50 in August.
Economists had forecast the index at 52.0. A reading above 50 indicates expansion in the regional economy.
BNP Par ibas, HSBC, BBVA, UBS, Deutsche Bank,Commerzbank and Societe Generale were down 1.2-3%.
"In the near term, there is some vulnerability because the market did get quite overbought in the last week or two,' said Ronan Carr, European equity strategist at Morgan Stanley in London.
Although the FTSEurofirst 300 is near its 12-month highs, the 14-day momentum and the 14-day Relative Strength Index have been trending down over the past week, a sign that the market could be overbought technically.
"On a six-to-nine-month view, the rally can go a little bit further. We do expect the recovery in growth to continue to come through and at the same time, monetary and fiscal policy will stay ver y loose _positive backdrops for equities,' Carr said.
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