By Jeannine Aversa, AP Economics Writer
On Wednesday July 29, 2009, 6:26 pm EDT

WASHINGTON (AP) — The economy is finally showing signs of stabilizing in some regions of the country — especially in parts of the Northeast and Midwest — bolstering hopes of a broader-based recovery this year.

A Federal Reserve snapshot of economic conditions issued Wednesday found that most of the Fed’s 12 regions indicated either that the recession was easing or that economic activity had “begun to stabilize, albeit at a low level.”

The economy remains fragile. But the fact that some Fed regions reported signs of activity beginning to level out raises hope that the recession, which started in December 2007, is drawing to a close.

Four Fed regions — New York, Cleveland, Kansas City and San Francisco — pointed to “signs of stabilization,” the survey said. Two regions — Chicago and St. Louis — reported that the pace of economic declined appeared to be “moderating.”

Five other regions — Boston, Philadelphia, Richmond, Atlanta and Dallas — described activity as “slow,” “subdued” or “weak.” Only one region — Minneapolis — indicated that its downward slide in economic activity had worsened.

Combined, the assessments of businesses on the front lines of the economy appeared to be brighter than those they provided for the previous Fed report in mid-June.

The observations in the Fed survey are consistent with an assessment made just last week by Fed Chairman Ben Bernanke: that the economy should start growing in the second half of this year, ending the longest recession since World War II.

Many analysts predict the recession eased considerably in the April-to-June quarter. They’re forecasting that the economy shrank at only a pace of 1.5 percent in the second quarter.

That would mark a big improvement from the annualized 5.5 percent drop in the first three months of this year. The government will release the second-quarter results on Friday. Many economists also believe that the U.S. could start growing as soon as the current quarter.

The survey’s findings will figure into discussions when Bernanke and his colleagues meet next on Aug. 11-12. The Fed is expected to keep a key bank lending rate at a record low near zero to help nurture a recovery. Economists say the Fed is likely to hold rates at such record low levels through the rest of this year.

Worsening joblessness remains a major concern. More than 90 percent of the nation’s largest metropolitan areas saw their unemployment rates climb in June from the previous month, the Labor Department reported Wednesday. Some of the biggest increases hit college towns, where the annual summertime exodus of students causes bars, restaurants and other businesses to cut staff.

The metro-area unemployment rates aren’t adjusted to account for seasonal trends, such as lifeguards hired during summer or retail clerks let go after the holiday shopping season. So they tend to be volatile from month to month.

The U.S. jobless rate, which hit 9.5 percent in June, is expected to rise to 9.7 percent when the department reports the July rate next week.

Separately Wednesday, the government said orders to U.S. factories for big-ticket durable goods plunged in June by the largest amount in five months, reflecting the troubles in the auto industry and a steep drop in demand for commercial jets.

Overall, orders fell 2.5 percent, much larger than the 0.6 percent decline economists had expected. Orders for commercial aircraft, dampened by the global recession, plunged 38.5 percent.

In the Fed report, manufacturing activity showed “some improvement” in the Richmond, Chicago and Kansas City regions. The regions of St. Louis and Dallas said the rate of decline in factory activity is moderating. The Philadelphia and Minneapolis regions saw manufacturing activity drop, while the rest of the regions described activity at “low levels.”

In the factory sector, reports overall suggested that activity “remained subdued” but “slightly more positive” than in the previous survey.

Meanwhile, auto sales were mixed across the country, while travel and tourism was down in a majority of the regions.

Most regions reported “sluggish” retail activity, with shoppers continuing to be price-conscious.

But the Fed regions of Boston, Kansas City and San Francisco reported either “modest sales increases or less negative sales results,” the Fed said. The Philadelphia, Atlanta, St. Louis, New York and Dallas regions reported “flat or mixed sales.” The remaining Fed regions described them as “soft.”

Residential real estate remained “soft” in most Fed regions, though “many noted some signs of improvement.” By contrast, commercial real-estate activity weakened further.

Meanwhile, “competitive pressures” were restraining companies’ ability to jack up prices. And the weak job market meant companies were more interested in cutting wages than in boosting them. Those observations are consistent with the Fed’s prediction that inflation will stay low this year.

By Michael Liedtke and Jessica Mintz, AP Technology Writers
On Wednesday July 29, 2009, 5:54 pm EDT

SAN FRANCISCO (AP) — Microsoft finally persuaded Yahoo to surrender control of the Internet’s second most popular search engine and join it in a daunting battle — taking on the overwhelming dominance of Google in the online advertising market.

A 10-year deal announced Wednesday gives Microsoft its best shot yet to show its new search technology, Bing, is as good as or better than Google’s. Microsoft also hopes to use Yahoo to divert sales from Google, which generates more than $20 billion a year from ads.

Gaining access to Yahoo’s audience would instantly more than triple Bing’s U.S. market share to 28 percent. That’s still a far cry from the remarkable 65 percent of U.S. searches handled by Google, according to the research firm comScore Inc.

By joining forces, Microsoft and Yahoo are betting they will be able to focus on their respective strengths. By turning over responsibility for search technology to Microsoft, Yahoo can concentrate on sales of billboard-style advertising on the Web — and figuring out how to keep luring traffic to its Web sites, which already attract more than 570 million people worldwide every month.

While the agreement shapes up as a potential boon for Microsoft, it was greeted in the stock market as a letdown for Yahoo. Just 14 months ago, Microsoft dangled $9 billion in front of Yahoo in an attempt to forge a search advertising partnership, only to be rebuffed. Yahoo had also turned down Microsoft’s $47.5 billion bid to buy the entire company.

Yahoo has been struggling so badly since then that Microsoft isn’t paying any money in advance. Instead, it will give Yahoo 88 percent of the search ad sales made on its Web site, above the usual commission of 70 to 80 percent.

By spending less on its own search technology, Yahoo expects to boost its annual operating profit by about $500 million — but not until 2012, when the two companies expect to have all the pieces of a complex technological puzzle in place.

“I think a lot of people are kind of looking at the numbers and seeing a lot of question marks where they expected to see exclamation points,” said Scott Kessler, a Standard & Poor’s equity analyst.

Yahoo Inc. shares plunged $2.08, or 12 percent, to $15.14 as investors expressed disappointment over the absence of an immediate windfall. Microsoft Corp. shares gained 33 cents to $23.80 while Google Inc. shares shed $3.61 to $436.24.

It took Carol Bartz, Yahoo’s chief executive, just six months to strike a deal with Microsoft — something that neither of her predecessors, Terry Semel and Yahoo co-founder Jerry Yang, seemed interested in doing.

“This move makes up for a lot of the stupid mistakes made by the preceding administration,” said technology analyst Rob Enderle, who thinks Yahoo will be able to devote more energy to developing services to compete with online hangouts like Facebook.

Shortly after her arrival, Bartz made it clear she was willing to farm out Yahoo’s search engine for “boatloads of money” as long as she as thought the company would still get adequate information about its users’ interests. Bartz predicted the deal will enrich the company over the long run.

“This agreement comes with boatloads of value for Yahoo, our users, and the industry,” Bartz said.

Yahoo will have limited access to the data on users’ searches, which yield insights that can be used to pick out ads more likely to pique a person’s interest. The value of that information is why Microsoft wants to process more search requests.

Microsoft CEO Steve Ballmer could barely contain his excitement as he gushed about finally getting Yahoo on his side — something he has been trying to do for at least three years.

“I am very enthusiastic,” Ballmer said in an interview. “This is what I have basically been saying for the past 18 months: The world will be better served for consumers, advertisers and publishers, and there will be more competition for Google, if we can somehow figure out how to get Microsoft and Yahoo together in search.”

Antitrust regulators plan to review the agreement to make sure it doesn’t lessen competition or compromise the privacy of people who use the search engines.

Google tried to stop Yahoo from falling into Microsoft’s camp. Last year it formed its own proposed search advertising deal with Yahoo, only to be forced to retreat after U.S. antitrust officials threatened to sue.

Microsoft helped spearhead the campaign against a Google-Yahoo partnership. Now many people, including Ballmer, expect Google to try to turn the tables on Microsoft by opposing its Yahoo deal.

“There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users,” Google spokesman Adam Kovacevich said. “We’re interested to learn more about the deal.”

Advertisers will probably support Microsoft because a stronger player in the search market should protect them from potential abuses by Google, said Kevin Lee, CEO of online marketing specialist Didit Inc.

“If there’s only one choice in search, that’s just an uncomfortable position to be in,” Lee said.

Like Yahoo, Microsoft has invested billions in search technology during the past decade. Yet it remained a distant third in market share while its online losses piled up. Microsoft is counting on Bing, unveiled last month, to turn things around.

Bing has been getting mostly positive reviews and picking up slightly more traffic with the help of a $100 million marketing campaign. Analysts believe the successful debut pushed Microsoft to reopen negotiations so it could expose its search engine improvements to a wider audience.

While Microsoft and Yahoo await government approval of their partnership, there is no doubt Google will try to increase its lead by upgrading its own search engine, said Danny Sullivan, editor of the online newsletter SearchEngineLand.

Already, Google is going after Microsoft’s bread-and-butter business of software for personal computers. It’s working on a free operating system for inexpensive PCs, a move that could threaten Microsoft’s Windows.

“Google is very paranoid about Microsoft,” Sullivan said. “They are always trying to figure out what kind of `evil’ thing Microsoft is going to do next.”

Jessica Mintz reported from Seattle. AP Business Writer Christopher S. Rugaber contributed to this report from Washington.

A group of fiscally conservative House Democrats announced Wednesday they reached a deal with the chamber’s Democratic leaders on a health care reform bill.

Rep. Mike Ross of Arkansas, speaking for the so-called Blue Dog Democrats, said the agreement calls for the House Energy and Commerce Committee to begin debating the bill later Wednesday, but for no vote by the full House until after the upcoming August congressional recess.

Ross and the Blue Dogs had threatened to derail the bill in the Energy and Commerce Committee due to concerns that it cost too much and failed to address systemic problems in the nation’s ailing health care industry.

The Energy and Commerce Committee is one of three House committees that needs to pass the bill before it is voted on by the full chamber. The other two committees have already cleared it.

The deal was announced as President Barack Obama hit the road to build more public support for reform, telling a North Carolina audience that a failure to fix the system now will have catastrophic consequences in the years ahead.

If Congress fails to act soon, he warned a Raleigh town hall audience, health costs will double over the next decade, make millions more Americans uninsured, and bankrupt government on both the state and federal level.

The president accused his critics of mischaracterizing his plan as a government takeover of health care.

“No one is talking about some government takeover,” he said. “I’m tired of hearing that. … These folks need to stop scaring everybody.”

He also brushed aside criticism that the plan is being rushed through Congress without adequate time for review and debate.

Congressmen will have plenty of time to read the bill, Obama insisted. Noting that Congress won’t finish deliberating the legislation until after its August recess, Obama said he’d be willing to invite any representative or senator over to the White House to review the bill “line by line.”

The president is slated to make a similar health care pitch later Wednesday to an audience in rural Virginia — a region typically hostile to national Democratic leaders.

Phil Younce, a frozen food clerk at a Kroger supermarket in the town of Bristol, where Obama will speak, told CNN he fears health reform is being rushed, just like the stimulus.

“Like the last package that we pushed through, I think it was too hurried, and a lot of mistakes, a lot of things that shouldn’t be,” said Younce, who voted for Republican candidate John McCain in the presidential election.

But assistant produce manager Cathy Montgomery, who voted for Obama, said she’s excited the president is getting tough with Congress.

“I like the fact that he’s stepped up, and he’s being aggressive, I really do. I mean, I’m all for that,” she said.

Bristol, which is near the Tennessee border, is also where Obama kicked off his general election campaign after defeating Hillary Clinton in the primaries.

Thousands in the area showed up at a health expo offering free medical care over the weekend, exposing a problem all too familiar to doctors in the region.

“Clearly, we all recognize — any physician in the hospital would recognize — that it’s a system in crisis,” said Dr. Bennett Cowan.

But like most employees at the Kroger supermarket, produce manager Steve Shipplett gets generous health benefits.

Even though he voted for Obama, he’s nervous those benefits may be taxed to cover the uninsured. He demanded more specifics from the president.

Obama’s “going to have to spit out some numbers and let the public know exactly what it’s going to cost them and what they’re going to have to give up,” he said.

Shipplett added, however, that if the president successfully steps up and sells his plan, then he’s willing to step up, too.

“We’ve got to do something, and if it means me paying these taxes to get this reform through I would begrudgingly do it, yes,” he said.

Younce said he is ready to do his share, too.

“No matter what kind of plan you are going to come up with, somebody has to pay for it. So eventually, it comes down to us — the people that’s working and paying taxes. We’re going to have to pay for it one way or another. I just hope we can come up with a plan that is worth paying for,” he said.

– CNN’s Dana Bash and Ed Henry contributed to this report.

By Tim Paradis, AP Business Writer
On Wednesday July 29, 2009, 5:57 pm EDT

NEW YORK (AP) — The stock market is holding up, just not pressing ahead as the economic signs look a little less promising.

Stocks had their fourth straight day of minimal moves Wednesday as commodity prices slid and orders for big-ticket manufactured goods fell, injecting more uncertainty into the market.

Investors are uneasy but aren’t giving up on stocks. The Dow Jones industrials lost only 26 points on Wednesday and major indexes are still up about 11 percent since mid-July. Analysts say the market’s buoyancy after such a big gain is a welcome sign of stability, but also that more good news is needed for stocks to resume their climb.

For now, though, investors are finding more reasons for concern. The price of oil and other commodities fell for a third day after stocks tumbled in China on fears that growth in that country would slow. That could hurt demand for a range of commodities.

The Commerce Department said orders to U.S. factories for manufactured goods — those expected to last at least three years — fell an unexpectedly steep 2.5 percent in June. The slide reflected troubles in the auto industry and a drop in demand for commercial aircraft. It was the largest drop in five months, and was worse than the 0.6 percent analysts expected.

Lackluster demand at a government debt auction for the second straight day fanned worries that rising interest rates could hobble a recovery. That boded poorly for a big auction of 7-year Treasury notes on Thursday.

Traders are facing an intense seven-day run of economic reports that will help shape views about how quickly the United States can pull out of the longest recession since World War II. On Thursday, weekly unemployment figures are due and a reading of gross domestic product for the April-June quarter comes on Friday. Next week, reports are expected on manufacturing, housing, employment and the service industry.

Manny Weintraub, president of Integre Advisors in New York, said some good numbers could bring out more buyers because investors are betting on what the economy will look like in the coming months, not what it looks like now.

“As long as things are getting better the market can go up,” Weintraub said.

The Dow fell 26.00, or 0.3 percent, to 9,070.72. The Dow also fell Tuesday after a weak reading on consumer confidence. The two-day drop was the first for the Dow in more than a month. The average is on pace to record its best July in 20 years.

The broader Standard & Poor’s 500 index fell 4.47, or 0.5 percent, to 975.15, while the Nasdaq composite index slid 7.75, or 0.4 percent, to 1,967.76.

Energy and materials stocks fell after China’s benchmark Shanghai Composite Index dropped 5 percent on worries that authorities might try to keep the country’s economy from growing too quickly. A slowdown in China’s economy would erode demand for a range of resources.

Investors were also unnerved after U.S. crude inventories rose more than expected last week. The rise prompted worries that weakness in the economy was curbing demand for energy.

Occidental Petroleum Corp. fell $2.21, or 3.1 percent, to $69.48, while Schlumberger Ltd. fell $2.11, or 3.9 percent, to $52.49.

Light, sweet crude slid $3.88 to settle at $63.35 a barrel on the New York Mercantile Exchange.

Bond prices were mixed after a disappointing auction of five-year notes. That raised fears that Washington will have to offer investors higher returns on debt, which can drive up borrowing costs on consumer loans like mortgages. The yield on the benchmark 10-year Treasury, which moves opposite its price, fell to 3.67 percent from 3.69 percent late Tuesday.

Investors took some comfort from a Federal Reserve report that found the economy is seeing early signs of stabilizing in some parts of the country. That comes as traders have been cautious following the surge in stocks that began July 13 when corporate earnings reports started coming in stronger than expected.

In corporate news, Microsoft Corp. and Yahoo Inc. announced a 10-year deal that gives Microsoft access to the Internet’s second-largest search engine audience. Microsoft rose 33 cents to $23.80, while Yahoo fell $2.08, or 12.1 percent, to $15.14.

Three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume came to 5.4 billion shares compared with 5.6 billion Tuesday.

The Russell 2000 index of smaller companies fell 3.57, or 0.7 percent, to 548.38.

The dollar was mixed against other major currencies, while gold prices fell.

Overseas, Britain’s FTSE 100 rose 0.4 percent, Germany’s DAX index rose 1.9 percent, and France’s CAC-40 advanced 1 percent. Japan’s Nikkei stock average rose 0.3 percent.

By Ricardo Alonso-Zaldivar, Associated Press Writer
On Wednesday July 15, 2009, 3:01 pm EDT

WASHINGTON (AP) — Praising and prodding Congress, President Barack Obama on Wednesday said a vast reform of the nation’s health insurance system is required to head off instability to families, industry and the government itself.

“Deferring reform is nothing more than defending the status quo — and those who would oppose our efforts should take a hard look at just what it is they’re defending,” Obama said in the Rose Garden, pushing for landmark bills to get through the House and Senate before Congress’ August recess.

Putting more of his own political stake behind the effort each day, Obama outlined the troubles with the U.S. approach to health care coverage, with an emphasis on the cost to consumers. He spoke of soaring premiums, deductibles and out-of-pocket costs and promised with reform, “You’ll save money.”

“If you lose your job, change your job or start a new business, you’ll still be able to find quality health insurance that you can afford,” Obama promised. Once again assuring Americans who are dubious of what might be changing, he said those happy with their doctor and health care plan will be able to keep it.

To make his point, Obama surrounded himself with nurses and proclaimed that they’re “on board” with reform.

Any proposed health care package still must clear the complexities and politics of getting through the House and Senate, with Obama’s ambitious goals of slowing cost increases and bringing coverage to nearly 50 million uninsured. How to pay for it all remains one of the most vexing parts of the debate.

The Senate health committee cast a milestone vote Wednesday to approve legislation expanding insurance coverage to nearly all Americans, becoming the first congressional panel to act on Obama’s top domestic priority.

A day earlier, House Democratic leaders pledged to meet the president’s goal of health care legislation before their August break, offering a $1.5 trillion plan that for the first time would make health care a right and a responsibility for all Americans. Left to pick up most of the tab were medical providers, employers and the wealthy.

“This progress should make us hopeful, but it can’t make us complacent,” Obama said. “It should instead provide the urgency for both the House and the Senate to finish their critical work on health reform before the August recess.”

Indeed, Obama’s brief comments amounted to a presidential pep talk. “It’s time for us to buck up Congress, this administration, the entire federal government to be clear that we’ve got to get this done.”

In the Senate, the health committee’s 13-10 party line vote advanced a $600 billion measure that would require individuals to get health insurance and employers to contribute to the cost.

The health committee bill calls for the government to provide financial assistance with premiums for individuals and families making up to four times the federal poverty level, or about $88,000 for a family of four, a broad cross-section of the middle class. The legislation is but one piece of a broader Senate bill still under development.

“This time we’ve produced legislation that by and large I think the American people want,” said Sen. Chris Dodd, D-Conn., who stood in for the committee chairman, Sen. Edward M. Kennedy, D-Mass. Kennedy, who’s made health care legislation a lifelong priority, is being treated for brain cancer.

But ranking Republican Sen. Mike Enzi of Wyoming argued that the bill would break Obama’s promises by adding to the deficit.

Obama quickly issued a statement of praise, and then he took to the Rose Garden. It marked the third straight day the president has kept up a full-court press on health care. The drive included a television ad blitz by Obama’s political operation, targeting moderate lawmakers of both parties.

Senate Majority Leader Harry Reid said he wanted floor debate to begin a week from Monday. With the Senate Finance Committee still struggling to reach consensus, however, that timetable could slip.

Senate Finance Chairman Max Baucus, D-Mont., met Wednesday with committee Democrats to try to settle how to pay for the bill and other issues.

“We’re just not quite there,” Baucus said after the meeting. Obama has pushed Baucus to have a bill ready by week’s end, but Baucus declined to say whether he’d made a timetable commitment to the president.

“I’m just pushing as hard as I can,” said Baucus, who’s aiming for a bipartisan deal. “I’m very sympathetic to the desire to get this … as soon as possible and that’s my goal.”

Obama’s political organization is launching a series of 30-second television ads on health care, which will begin airing Wednesday in Washington and on cable TV nationally. A version will run on local stations in eight states — Arkansas, Indiana, Florida, Louisiana, Maine, North Dakota, Nebraska and Ohio — to prod senators to back the health care effort. They will run for two weeks.

In the ads, private citizens describe problems they’ve had with the medical system and say it’s time for action. The sponsor is Organizing for America, Obama’s campaign organization, which has become part of the national Democratic Party. The group would not reveal the cost.

The Republican National Committee was answering back.

In a fundraising appeal titled “Hillarycare revisited,” the RNC warned about “Obamacare” and said the government “already runs car companies, banks and mortgage companies. Republicans believe that the last thing the American people want is government telling them when and where — or even whether — they can get medical treatment for their families.”

Associated Press reporters David Espo, Ben Feller, Alan Fram and Erica Werner contributed to this report.

By Tim Paradis and Stephen Bernard, AP Business Writers
On Wednesday July 15, 2009, 2:27 pm EDT

NEW YORK (AP) — Investors are betting on the economy again.

Strong earnings and an upbeat forecast from Intel Corp. pulled investors into the stock market Wednesday as hopes grew that the economy could be starting to recover. The chip maker’s results signal that computer sales are picking up faster than had been expected.

That welcome sign for the economy was enough to draw out buyers after a month of little direction in the stock market. Major stock indicators jumped more than 2.5 percent, including the Dow Jones industrial average, which rose 200 points. Intel lifted the technology-heavy Nasdaq composite index 3 percent.

Investors also latched onto a report showing that industrial companies cut production far less in June than they had in previous months. The Federal Reserve said output at the nation’s factories, mines and utilities slipped 0.4 percent last month after sliding 1.2 percent in May.

Traders found more goods news when the Federal Reserve, which now expects the economy will slide at a slower pace this year than it had earlier predicted.

The central bank now expects the economy to shrink 1 to 1.5 percent, not at severe as the 1.3 to 2 percent drop it predicted in May.

The Intel report and economic data are giving traders the fresh information they have been craving. The stock market began ripping higher in March but lost its momentum last month as investors worried the economy wasn’t showing enough strength to justify the 40 percent surge in the Standard & Poor’s 500 index.

“What we’re seeing is some confirmation that stabilization is in fact upon us,” said Matthew Kaufler, portfolio manager at Federated Clover Investment Advisors in Rochester, N.Y.

Even a slow recovery was good news for investors who have been worried in the past month that the strong rally in the spring was based on too optimistic a view of the economy.

In midafternoon trading, the Dow rose for the third straight day, jumping 210.93, or 2.5 percent, to 8,570.42. The S&P 500 index rose 22.64, or 2.5 percent, to 928.48, while the Nasdaq gained 54.22, or 3 percent, to 1,853.95.

Nine stocks rose for every one that fell on the New York Stock Exchange, where volume came to 677 million shares, compared with 566 million traded at the same point Tuesday.

Stocks also surged overseas after Intel’s strong results came out. Britain’s FTSE 100 jumped 2.6 percent, Germany’s DAX index rose 3.1 percent, and France’s CAC-40 gained 2.9 percent. Hong Kong’s Hang Seng index gained 2.1 percent.

A report showing higher than expected consumer price inflation in June did little to affect stock prices but it did send bond prices lower for a third straight day.

The Labor Department’s Consumer Price Index rose 0.7 percent last month as gasoline prices surged. It was the fastest increase in 11 months and slightly worse than economists’ projections of 0.6 percent. The bond market is highly sensitive to signs of inflation, which erodes the value of a bond’s fixed returns over time.

The renewed surge in stock prices also robbed Treasurys of some of their safe-haven appeal as investors became more willing to take on risk. Bonds also fell on Tuesday after a report showing sharper-than-expected wholesale price inflation in June.

The 10-year Treasury note, a widely used benchmark for mortgages and other loans, fell 24/32 point, pushing its yield up to 3.59 percent from 3.47 percent late Tuesday.

Intel’s upbeat report followed strong earnings earlier Tuesday from Goldman Sachs Group Inc. Goldman kicked off earnings in the banking industry by easily topping analysts’ earnings predictions. The Wall Street banking giant said it earned $2.72 billion, after paying preferred dividends, only two quarters after posting a steep loss during the peak of the credit crisis.

Investors will now set their sights on three other major banks — JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. — reporting second-quarter results later in the week to see if the broader sector is actually recovering from the malaise that beset the sector late last year.

JPMorgan Chase, Bank of America and Citigroup all have strong retail banking operations, unlike Goldman, that could pose problems as loan defaults continue to rise. Moderation in loan defaults could be a sign the economy is strengthening as customers are better able to repay loans.

Robert B. MacIntosh, chief economist at Eaton Vance Management in Boston, said that investors had been bracing for weak earnings so it doesn’t take much to beat expectations. He said excitement over earnings could mask troubles such as with unemployment.

“Real growth is when you stat to create some jobs,” he said. “People are going to be disappointed in the weakness and the length of the recovery.”

Intel rose $1.17, or 7 percent, to $18 but not all stocks were charging higher.

Abbott Laboratories, a drug and medical-device company Abbott Laboratories said its profit fell 3 percent, though earnings met expectations. The stock fell $1.63, or 3.5 percent, to $44.86.

Commodities stocks gained as the dollar weakened and commodity prices rose.

The dollar fell, and gold prices rose. Light, sweet crude rose $2.08 to $61.60 per barrel on the New York Mercantile Exchange.

In other trading, the Russell 2000 index of smaller companies rose 16.56, or 3.3 percent, to 513.07.

By Jeannine Aversa, AP Economics Writer
On Wednesday July 15, 2009, 2:58 pm E

The Fed now predicts the economy will shrink between 1 and 1.5 percent this year, an improvement from its old forecast issued in May. At that time, the Fed projected the economy would contract between 1.3 and 2 percent.

The upgrade comes from the expectation that the economy’s downhill slide in the first half of 2009 wasn’t as bad as previously thought. The Fed said the economy should start growing again in the second half of this year, although the pace is likely to be plodding.

Most Fed policymakers said it could take “five or six years” for the economy and the labor market to get back on a path of full health in the long term.

Against that backdrop, the Fed’s forecast for unemployment this year worsened. The central bank predicted the jobless rate could rise as high as 10.1 percent, compared with the previous forecast of 9.6 percent.

The nation’s unemployment rate climbed to 9.5 percent in June, a 26-year high.

The predictions are based on what the Fed calls its “central tendency,” which exclude the three highest and three lowest forecasts made by Fed officials. The central bank also gives a range of all the forecasts. That range showed that some officials expect the jobless rate could rise as high as 10.5 percent this year, and 10.6 percent in 2010. The post-World War II high was 10.8 percent at the end of 1982, when the country had suffered through a severe recession.

For 2010, the Fed predicted the economy would grow between 2.1 and 3.3 percent. That’s a slight upgrade from its old forecast of growth between 2 and 3 percent.

Still, it would mark a slow recovery and that will keep unemployment elevated well into 2011, the Fed said. Companies won’t be in any mood to ramp up hiring until they are certain that any recovery has staying power.

To help lift the country out of recession, the Fed has slashed interest rates to a record low near zero. In March, the Fed launched a $1.2 trillion effort to drive down interest rates to revive lending and get Americans to spend more freely. Those actions — along with President Barack Obama’s $787 billion stimulus package of tax cuts and increased government spending — should help the economy return to growth in the second half of this year, the Fed said.

At its last meeting in late June, Fed Chairman Ben Bernanke and his colleagues pledged to hold its key bank lending rate near zero for an extended period of time to help brace the economy. Many analysts believe the Fed will leave rates at record lows through the rest of this year.

The Fed last month also decided against expanding its $1.2 trillion program of buying government bonds and mortgage-backed securities to drive down rates on mortgages and other consumer debt.

Part of the reason the Fed stayed the course was out of fear that expanding the programs could stir up investor fears that the central bank’s aggressive actions could spur inflation later on, documents of the closed-door June meeting indicated. In addition, “it seemed that economic activity was in the process of leveling out.”

On the inflation front, Fed policymakers did bump up their forecasts for this year and next. The Fed expects inflation to rise between 1 and 1.4 percent in 2009, reflecting the influence of higher oil and commodity prices. The old forecast called for a gain of between 0.6 and 0.9 percent this year.

Even with the projected pickup, the Fed believes inflation “would remain subdued for some time.” That’s because the sluggish recovery, idle plants, a weak employment market and cautious consumers will restrain companies from jacking up prices.

Next year, inflation should rise between 1.2 and 1.8 percent, the Fed said. That’s up from the old forecast of between a 1 and 1.6 percent gain.

By Ieva M. Augstums, AP Business Writer
On Wednesday July 8, 2009, 9:24 am EDT

The stock market headed toward a modestly higher start Wednesday as investors wait for aluminum maker Alcoa Inc. to give some guidance about the economy.

Related Quotes

Symbol	Price	Change
AA	9.41	0.00

{”s” : “aa”,”k” : “c10,l10,p20,t10″,”o” : “”,”j” : “”}

U.S. stock futures rose slightly while markets around the world were little changed. The falling price of oil, which stock investors are interpreting as a sign of economic weakness, has contributed to selling on world exchanges over the past week.

The uptick in futures means Wall Street might extend Tuesday’s sharp drop, but there’s likely to be little conviction in the selling. Investors want to see what Alcoa has to say about the economy in its earnings report, which comes out after the market’s close.

“(Their report) gives an indication if we are moving out of the doldrums and potentially into more recovery, or are we potentially falling backward, again,” said Doug Lockwood, chief investment officer at Cornerstone Wealth Management.

Wall Street analysts expect Alcoa to post a second-quarter loss of 38 cents per share. In the same period a year earlier, Alcoa earned 66 cents per share on revenue of $7.6 billion.

Dow Jones industrial average futures are up 2, or 0.02 percent, at 8,133, while the broader Standard & Poor’s 500 index futures are up 1.20, or 0.1 percent, at 880.50. Nasdaq 100 index futures are up 3.25, or 0.2 percent, at 1,411.25.

Investor confidence has waned after poor U.S. and European jobs data and plunging commodities prices.

Oil prices have declined to near $62 a barrel from $73 last week as investors believed that demand for energy would fall because of the weak economy. A barrel of crude traded at $62.01, down 92 cents, in electronic trading ahead of the opening on the New York Mercantile Exchange.

Overseas Wednesday, Japan’s Nikkei stock average fell 2.4 percent. In afternoon trading, Britain’s FTSE 100 index was little changed and Germany’s DAX was up 0.4 percent while France’s CAC-40 was off 0.6 percent.

World leaders including President Barack Obama will be discussing the global economy as they start a three-day meeting in Italy.

Investors will also be looking to glean what they can from a key report on May consumer credit data, due out at 3 p.m. EDT.

The Federal Reserve report is expected to show that consumer credit fell $9.5 billion from April, according to Wall Street economists surveyed by Thomson Reuters. If they are right, it would mark the latest move by consumers to curb their borrowing, pay down debt and get their household budgets in better shape. That is a concern for investors because it means consumers aren’t spending at the levels needed for an economic recovery.

Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.44 percent from 3.46 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18 percent from 0.17 percent late Tuesday.

The dollar mostly rose against other major currencies, while gold prices fell.

The WallStreet Journal | July 7, 2009

Major market benchmarks sank as energy stocks declined amid a turn lower in oil prices.

The Dow Jones Industrial Average was recently lower by about 60 points. The S&P 500-stock index and the Nasdaq Composite Index were each lower by about 0.6%.

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Crude-oil futures fell, sliding about $1 to near $63 a barrel. Through Monday’s settlement, crude has fallen about 8% this month.

Some analysts think oil prices will rise. Bank of America-Merrill Lynch raised its estimate of oil prices for this year and next, saying that oil could reach $82 by the fourth quarter of 2010. The brokerage cited limited growth in non-OPEC supply, a shrinkage of OPEC spare capacity, emerging-market demand and more dollars in circulation.

Oil and other energy stocks were the largest drain on the stock market, with the energy sector of the S&P 500 sliding about 1.9% in recent trading. Chevron and Exxon Mobil each sank more than 1%, weighing on the Dow industrials.

Industrial, utilties and consumer-discretionary stocks also fell. Caterpillar, the Dow component, was down about 2%. DuPont declined more than 2%.

Among other stocks to watch, Intel rose over 1% and Marvell Technology rose 4% after Merrill Lynch upgraded its view on the chip sector. Merrill increased its 2010 sector growth estimate to 21% from 14% based on an improved global economic outlook.

Overseas, Japan’s Nikkei 225 closed down 0.3%, while South Korea’s Kospi Composite closed 0.3% higher and Hong Kong’s Hang Seng Index was down 0.6%. European stocks were slightly higher in afternoon trading.

Write to the Online Journal’s editors at newseditors@wsj.com

On Monday July 6, 2009, 7:45 am ED
By Leah Schnurr | Reuters

NEW YORK (Reuters) – U.S. stock index futures pointed to a lower open on Monday with a slide in oil prices set to weigh on energy shares and as investors remained anxious about the potential strength of the economic recovery.

Oil sank to a five-week low below $64 a barrel, as investors remained cautious over the prospects of a speedy global economic turnaround in the wake of last week’s grim U.S. jobs data. Shares of Exxon Mobil (XOM – News) were down 1.4 percent at $67.54 in premarket trade.

Although the weaker oil prices bode well for recession-weary consumers, strong commodity prices have been viewed as a signal the global economy is stabilizing.

Last week’s much weaker-than-expected jobs data weighed heavily on the market as investors questioned what the economic recovery will look like. Market-watchers were also looking ahead to the start of earnings season, which kicks off with Alcoa (AA – News) this week.

“A little bit of fear factor is back into the marketplace,” said Peter Cardillo, chief market economist at Avalon Partners in New York.

“The unemployment report was not a good report and it does cast some doubt, but I don’t think it reverses the trend (of stabilization).”

Investors will take in the latest data with a look at the services sector as the Institute for Supply Management releases its June non-manufacturing index, at 10:00 a.m. EDT.

S&P 500 futures fell 8.40 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 slid 74 points, and Nasdaq 100 futures lost 10.50 points.

Over the weekend, Vice President Joe Biden said the White House does not favor another stimulus package now, though he said that when it came into office, the current administration had misread how bad the economy was.

A U.S. judge on Sunday approved General Motors Corp’s (Other OTC:GMGMQ.PK – News) bankruptcy sale in a move that will allow the company’s most profitable assets to exit bankruptcy protection under government ownership.

Stocks tumbled on Thursday, driving the S&P 500 down to its third-straight weekly loss, as a slide in June non-farm payrolls revived caution about economic recovery prospects. U.S. markets were closed on Friday for the Independence Day holiday.

(Editing by Theodore d’Afflisio)