US MARKET & NEWS 16.7.2009

Stocks surged Wednesday, with all three major gauges jumping at least 3% after Intel's forecast for a second-half pickup and the Federal Reserve's improved outlook reassured wary investors. Intel reported profit and revenue late Tuesday that dipped from a year ago, but surpassed forecasts. Also, the chipmaker predicted better revenue growth in the third and fourth quarters
thanks to improved demand for personal computers. Both the Dow and Nasdaq saw their best one-day point gains in nearlyMfour months. The S&P 500's gain was the best in two months. The Dow Jones industrial average gained 3.0% (+256.7 pts, close 8,616.2). The Nasdaq gained 3.5% (+63.2 pts, close 1,862.9) and the S&P 500 index gained 3.0% (+26.8 pts, close
932.7). In currency trading, the dollar fell versus the euro and gained versus the yen. U.S. light crude oil for August delivery rose US$2.02 to settle at US$61.54 a barrel on the New York Mercantile Exchange. (CNNmoney)

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Industrial production shrank less than forecast and a New York regional factory gauge showed the smallest contraction in more than a year, signalling manufacturing is on the verge of stabilizing. The 0.4% decrease in output at factories, mines and utilities in June was the smallest in eight months, Federal Reserve figures showed yesterday in Washington. The New York Fed’s Empire Index rose to minus 0.6 in July from minus 9.4 the month before. The Commerce
Department said separately consumer prices rose 0.7% last month, spurred by energy costs. (Bloomberg)
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The cost of living in the U.S. rose more than forecast in June, led by a jump in energy costs that overshadowed slower price gains for other goods. The consumer price index increased 0.7% after a 0.1% advance in May, the Labour Department said yesterday in Washington. Economists forecast consumer prices rose 0.6 percent, according to the median of 74 projections in a Bloomberg News survey. Excluding food and energy costs, the so-called core index rose 0.2%. Compared with a year earlier, prices fell 1.4%, the biggest drop since January 1950. Declines in consumer spending and business investment are forcing companies to boost incentives or keep a lid on prices in order to move merchandise, and preventing them from passing higher energy costs on to customers. A surge in gasoline costs in recent months is now abating, indicating inflation may moderate as the year progresses. (Bloomberg)

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Most Federal Reserve officials judged the economy at risk to further shocks last month even as they rejected an expansion in asset purchases, reflecting doubt at the likely impact of such a move. “Most participants saw the economy as still quite weak and vulnerable to further adverse shocks,” the central bank said in minutes of the Federal Open Market Committee’s June 23-24 meeting released yesterday in Washington. “Although financial market conditions had improved,
credit was still quite tight in many sectors.” Policy makers were concerned that consumer spending will resume its decline once temporary benefits to household incomes from the fiscal stimulus subside, the minutes showed. Some officials also saw a danger of a renewed decline in the housing market, in part as mortgage rates increase. At the same time, the FOMC
concluded that it was best to keep its programs for purchasing Treasuries and mortgage debt unchanged. (Bloomberg)
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European consumer prices fell in June for the first time since at least 1996 as energy costs dropped and rising unemployment curbed household spending. Prices in the 16-nation euro area dropped 0.1% y-o-y, the first annual decline since the data were first compiled in 1996, the European Union statistics office in Luxembourg said yesterday. The core rate of
inflation, which excludes volatile energy and food prices, eased to 1.4% from 1.5%. European Central Bank policy makers have downplayed the threat of deflation, blaming negative inflation on the drop in oil prices from a record last year and pointing to the core rate. Energy prices dropped 11.8% y-o-y in June and food prices fell 0.2%, yesterday’s report showed. From May,
overall prices rose 0.2%. (Bloomberg)
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European car sales rose in June for the first time in 14 months as government-backed incentives boosted demand at Volkswagen AG and Fiat SpA. New-car registrations increased 2.4% to 1.46m vehicles, the first gain since April 2008, the Brussels-based European Automobile Manufacturers’ Association said in a statement yesterday. Sales for the first six months
fell 11% to 7.43m cars. State-funded sales and vehicle-scrapping subsidies have propped up demand after the recession plunged the auto industry into its worst crisis in decades. The incentives, topped by Germany’s 2,500 euro (US$3,500) bonusfor car buyers who junk old vehicles, have favoured sales of smaller models. (Bloomberg)
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Global