The Star Online: Business
The Star Online: Business |
- Oil higher on weaker US$, stronger home starts
- Moody's eyes debt downgrade for 5 top-rated states
- US stocks rebound on earnings, debt-limit proposal
| Oil higher on weaker US$, stronger home starts Posted: 19 Jul 2011 06:11 PM PDT NEW YORK (AP) - Oil reversed direction again Tuesday, rising 2 percent as traders took their cues from the dollar and stock markets. Crude oil is used to produce gasoline and other fuels, and it's also a major investment commodity. Prices can swing with the collective mood on Wall Street. Recently benchmark oil has fluctuated between $95 and $99 a barrel as investors gauge how Europe deals with Greece's debt crisis and the debate goes on in Washington over spending and the U.S. debt ceiling. "Every day, we hear more about what governments are doing to get their sovereign debt under control," independent analyst Andrew Lipow said. "But you don't see results, and that leads some people to think we're headed in the wrong direction." Benchmark West Texas Intermediate crude for August delivery rose $1.57 to settle at $97.50 per barrel on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, gained $1.01 to settle at $117.06 per barrel on the ICE Futures exchange in London. The dollar fell against other currencies on Tuesday, sending some investors to commodities like oil. Oil, which is traded in dollars, tends to rise as the dollar falls and makes crude cheaper for investors holding foreign currency. A broad stock market rally also helped push oil higher. The Dow Jones industrial average, the Nasdaq and the S&P 500 index all rose about 2 percent in afternoon trading. Some upbeat economic news supported higher oil on Tuesday as well. The Commerce Department said construction of new homes grew by 14.6 percent last month. Builders began work on a seasonally adjusted 629,000 homes in June. That's about half of what economists say is needed to sustain a healthy housing market. Still, analysts consider it a positive sign for the battered industry. The housing market and the unemployment rate are key factors in the nation's economic recovery, which most view as sluggish at best right now. When more people head back to work and buy homes, oil and gas demand is expected to rise. Meanwhile, MasterCard SpendingPulse reported that motorists continued to cut back on gasoline in the U.S. for the 17th consecutive week. Its weekly survey of credit card purchases estimates that Americans bought 1.1 percent less gas than the same period last year, based on a four-week average. In other Nymex trading for August contracts, heating oil added 2.03 cents to settle at $3.098 per gallon, while gasoline futures gained 1.75 cents to settle at $3.1149 per gallon. Natural gas fell 1.3 cents to settle at $4.511 per 1,000 cubic feet. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Moody's eyes debt downgrade for 5 top-rated states Posted: 19 Jul 2011 06:08 PM PDT NEW YORK (AP) - Moody's Investors Service warned Tuesday that it probably will lower the credit rating on five states if it downgrades the U.S. government's credit rating. The credit rating agency said it has placed on review for possible downgrade the triple-A bond ratings of Maryland, New Mexico, South Carolina, Tennessee and Virginia. A triple-A rating is the highest for debt and tells investors an institutional borrower presents a minimal credit risk. Last week, Moody's placed the U.S. government's triple-A credit rating under review for a possible downgrade as Congress and the White House wrestle over raising the nation's $14.3 trillion borrowing limit. Moody's said there is a small but rising risk the government will default on its debt. The government reached its borrowing limit in May. Treasury says the government will default on its debt if the limit is not raised by Aug. 2. Any action on the states' ratings would come within 10 days of a U.S. rating downgrade, the firm said. A downgrade would raise interest rates on U.S. treasury bonds, increasing the interest that taxpayers pay those who buy the bonds. It would also push up rates for mortgages, car loans and other debts, which are linked to Treasury rates. It would have a ripple effect on states, particularly those that depend most on federal revenues and those with more federal government workers, contracts and Medicaid expenditures, among other factors. "One of the factors that goes into a rating for a state is the health of their economy, so if the federal government is cutting back on activity within that state, that could weaken the economy," said Naomi Richman, Moody's managing director. Moody's examined the 15 states that have a triple-A credit rating to determine which might be most vulnerable to the fallout from a downgrade in the U.S. government's rating. The firm concluded that Maryland, New Mexico, South Carolina, Tennessee and Virginia would be most at risk. The firm's review affects some $24 billion in obligations and related debt for the five states combined. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| US stocks rebound on earnings, debt-limit proposal Posted: 19 Jul 2011 06:07 PM PDT NEW YORK (AP) - Strong profits and a bipartisan plan to lift the U.S. debt limit drove a stock market rebound Tuesday. Stock indexes rose after Coca-Cola, IBM and other companies reported better second-quarter earnings. The indexes added to their gains in the afternoon after President Barack Obama backed a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country's $14.3 trillion debt ceiling. The Dow Jones industrial average gained 202.26 points, or 1.6 percent, to close at 12,587.42. That's the Dow's largest one-day jump this year. "It looks like there's bipartisan support for a robust plan," said Burt White, chief investment officer at LPL Financial in Boston. "The stock market had been looking for a reason to have a relief rally. And it looks like they got the start of one today. " The ongoing deadlock in Washington over raising the country's borrowing limit and Europe's debt crisis have been weighing on markets this month. The Dow slid five of the previous seven days. The S&P 500 index rose 21.29 points, or 1.6 percent, to 1,326.73. That's the broader index's best day since March 3. The Nasdaq gained 61.41 points, or 2.2 percent, to 2,826.52. Tuesday's gains turned the three major indexes positive for the month. The Dow and Nasdaq are now up more than 1 percent in July. The S&P 500 is up 0.5 percent. Information technology stocks led industry groups higher after IBM Corp.'s results beat analysts' estimates. Corporate software spending held steady during the quarter. IBM's stock rose 5.7 percent. The tech gains could continue Wednesday. Apple Inc. reported another surge in earnings after the stock market closed as sales of iPhones and iPads again set records. The stock rose 6 percent to $399.53 in after-hours trading. Coca-Cola Co.'s income increased 18 percent in the second quarter on stronger sales overseas. The world's largest beverage maker raised some prices to offset higher ingredient costs. Coca-Cola's stock was up 3.3 percent. KeyCorp rose 4.3 percent after the Cleveland-based banking company reported a jump in earnings thanks to a drop in loan losses. The bank reported income of 25 cents a share, up from 3 cents a share a year ago. Harley-Davidson Inc. rose 8.9 percent, making it the top performing stock in the S&P 500 index. The motorcycle maker reported its first increase in U.S. sales since the final quarter of 2006. Sales of its motorcycles, some of which sell for more than $30,000, had languished throughout the economic slump. A jump in housing construction lifted the stocks of Lennar Corp. and D.R. Horton Inc. The Commerce Department said building of new houses and apartments increased 14.6 percent in June from the previous month. Single-family house construction rose 9.4 percent, the largest increase since June 2009, the month that marked the end of the recession. Much of the monthly increase, however, came from new apartment buildings. Bank stocks were mixed. Wells Fargo & Co.'s profit soared 30 percent to 70 cents per share on stronger results from lending. Uncollected loans dropped for the sixth quarter in a row. The bank's stock gained 5.6 percent. Both Bank of America Corp. and Goldman Sachs Group Inc. fell after posting disappointing results. Bank of America lost 90 cents per share. That's more than analysts polled by data provider FactSet expected. The loss included a $8.5 billion settlement the bank paid to mortgage-bond investors. Goldman's earnings more than doubled to $1.85 per share, up from 78 cents a year ago. But a drop in bond trading kept results from hitting the analysts' estimates of $2.35 per share. Two weeks are left before the Treasury Department says the government must lift the country's $14.3 trillion borrowing limit or risk defaulting on its obligations. Most economists say that if the world's largest economy reneges on its debts, the consequences would be catastrophic. In testimony last week, Federal Reserve Chairman Ben Bernanke said a default would be a "calamitous outcome" and "create a severe financial shock." Bernanke said U.S. government bonds are so widely used in global finance that if faith in them were undermined it would have far-reaching and unexpected consequences. Four stocks rose for every one that fell on the New York Stock Exchange. Trading volume was below average at 3.9 billion shares. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
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