Dow was up 12, advancers & decliners were equal & NAZ gained 15 helped by a strong day for Apple (AAPL). The MLP index was up 1+ to the 410s (1 below its record highs reached earlier this year) & the REIT index rose 1 to 263. Junk bond funds were mixed to higher & Treasuries were marginally lower. Oil fell to a 2 month low after the gov reported that US crude output
climbed to the highest level in more than 15 years & fuel
consumption decreased. Gold had another gain as it pushes for $1800.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
US service industries expanded in Sep the most in 6 months, underpinning an economy that lost momentum in the first half of the year. The Institute for Supply Management non-manufacturing index climbed to 55.1, exceeding the estimate of 53.4, from 53.7 in Aug. Readings above 50 signal expansion. A sustained pickup in industries from construction to retailing that account for almost 90% of the economy will help make up for recent weakness in manufacturing. At the same time, a cooling global economy has prompted some service providers such as FedEx (FDX) to trim growth forecasts. These figures stand in contrast to other data today showing services industries from Asia to Europe slowed after the euro-area debt crisis pulled economies including Spain & Italy into recession.
Services in U.S. Expanded More Than Forecast in August
Photo: Yahoo
Hewlett-Packard, a Dow stock, is expecting earnings to fall by more than 10% next year as CEO Meg Whitman struggles to fix a wide range of problems in a weakening economy. Whitman gave this forecast at a meeting pioneer held for analysts & investors. She was trying to persuade investors that she has come up with a compelling strategy for turning around HPQ one year after being named CEO after inheriting a bloated company that hasn't been innovating quickly enough in any of its division. The headaches are so severe that Whitman believes HPQ revenue growth might not accelerate again until 2015. "It is going to take longer to right this ship than any of us would like," Whitman said. HPQ expects its EPS for fiscal 2013 to be $3.40 -$3.60, after stripping out charges for layoffs & other accounting measures unrelated to its ongoing business. The projection translates into an 11-16% drop from the adjusted EPS of $4.06 that the company expects to deliver in its current fiscal year ending Oct 31. Analysts had predicted adjusted EPS would be $4.17. Next year's revenue also will decrease, although HP didn't say by how much. The biggest problems will be concentrated in the technology consulting division, where revenue is expected to fall by 11-13% next year. Technology consulting also faltered during the past year, prompting HP to absorb an $8B charge to account for the diminished value of Electronic Data Systems, which was bought for $13B in 2008. In an effort to maintain profits, HPQ is eliminating 29K jobs thru employee buyouts, attrition & layoffs. The stock plunged $2.22 (13%) to its lowest level in years.
Hewlett-Packard Plunges as Whitman Projects Profit Drop
The ECB eased investors' fears about Europe's financial crisis when it said last month that help was at hand for countries struggling with their debts. But the bank, which holds a monthly policy meeting tomorrow, isn't likely to take further action anytime soon to help the 17 countries that use the € with their ailing economies. The eurozone's economy shrank at a 0.2% annual rate in Q2 & is in danger of shrinking again Q3. Unemployment is at 11.4%, the highest since the shared € currency was introduced by the EU in 1999. Inflation in the eurozone is running at 2.7% on an annualized basis, above the bank's goal of just under 2%, making it difficult for the ECB to further reduce its rates. By lowering rates now, the ECB runs the risk of having to tackle even higher inflation later. The ECB's benchmark rate is already at a record low of 0.75%. Lower rates tend to boost growth by encouraging businesses & consumers to borrow & spend. At its last policy meeting on Sep 6, the ECB said it would buy unlimited gov bonds to help lower borrowing costs for countries struggling to manage their debts. To get help from the ECB, a country must first ask for assistance from the rest of the eurozone by approaching the bloc's emergency fund, the European Stability Mechanism. But the ECB hasn't bought any bonds yet under the program because no gov has asked for help. Euro problems are never ending.
ECB faces sluggish economy with rates already low A
As has been the case for almost 3 weeks, all is not well in the markets. There is no really new news, but a continuous string of stories about a slowdown in China & the rest of Asia, the dreary picture in Europe & a US economy that is huffing & puffing which results only in limited growth is keeping the bulls on the sidelines. The jobs report on Fri can not provide a large amount of good news & then the corps will report earnings next week. Bulls are optimistic but nervous, keeping many on the sidelines. Dow remains close to its sideways trend-line of 13.5K.
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Treasury yields:
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| CLX12.NYM | ....Crude Oil Nov 12 | ....87.93 | .... 3.96 | (4.3%) |
US service industries expanded in Sep the most in 6 months, underpinning an economy that lost momentum in the first half of the year. The Institute for Supply Management non-manufacturing index climbed to 55.1, exceeding the estimate of 53.4, from 53.7 in Aug. Readings above 50 signal expansion. A sustained pickup in industries from construction to retailing that account for almost 90% of the economy will help make up for recent weakness in manufacturing. At the same time, a cooling global economy has prompted some service providers such as FedEx (FDX) to trim growth forecasts. These figures stand in contrast to other data today showing services industries from Asia to Europe slowed after the euro-area debt crisis pulled economies including Spain & Italy into recession.
Services in U.S. Expanded More Than Forecast in August
Hewlett-Packard, a Dow stock, is expecting earnings to fall by more than 10% next year as CEO Meg Whitman struggles to fix a wide range of problems in a weakening economy. Whitman gave this forecast at a meeting pioneer held for analysts & investors. She was trying to persuade investors that she has come up with a compelling strategy for turning around HPQ one year after being named CEO after inheriting a bloated company that hasn't been innovating quickly enough in any of its division. The headaches are so severe that Whitman believes HPQ revenue growth might not accelerate again until 2015. "It is going to take longer to right this ship than any of us would like," Whitman said. HPQ expects its EPS for fiscal 2013 to be $3.40 -$3.60, after stripping out charges for layoffs & other accounting measures unrelated to its ongoing business. The projection translates into an 11-16% drop from the adjusted EPS of $4.06 that the company expects to deliver in its current fiscal year ending Oct 31. Analysts had predicted adjusted EPS would be $4.17. Next year's revenue also will decrease, although HP didn't say by how much. The biggest problems will be concentrated in the technology consulting division, where revenue is expected to fall by 11-13% next year. Technology consulting also faltered during the past year, prompting HP to absorb an $8B charge to account for the diminished value of Electronic Data Systems, which was bought for $13B in 2008. In an effort to maintain profits, HPQ is eliminating 29K jobs thru employee buyouts, attrition & layoffs. The stock plunged $2.22 (13%) to its lowest level in years.
Hewlett-Packard Plunges as Whitman Projects Profit Drop
Hewlett-Packard (HPQ)
The ECB eased investors' fears about Europe's financial crisis when it said last month that help was at hand for countries struggling with their debts. But the bank, which holds a monthly policy meeting tomorrow, isn't likely to take further action anytime soon to help the 17 countries that use the € with their ailing economies. The eurozone's economy shrank at a 0.2% annual rate in Q2 & is in danger of shrinking again Q3. Unemployment is at 11.4%, the highest since the shared € currency was introduced by the EU in 1999. Inflation in the eurozone is running at 2.7% on an annualized basis, above the bank's goal of just under 2%, making it difficult for the ECB to further reduce its rates. By lowering rates now, the ECB runs the risk of having to tackle even higher inflation later. The ECB's benchmark rate is already at a record low of 0.75%. Lower rates tend to boost growth by encouraging businesses & consumers to borrow & spend. At its last policy meeting on Sep 6, the ECB said it would buy unlimited gov bonds to help lower borrowing costs for countries struggling to manage their debts. To get help from the ECB, a country must first ask for assistance from the rest of the eurozone by approaching the bloc's emergency fund, the European Stability Mechanism. But the ECB hasn't bought any bonds yet under the program because no gov has asked for help. Euro problems are never ending.
ECB faces sluggish economy with rates already low A
As has been the case for almost 3 weeks, all is not well in the markets. There is no really new news, but a continuous string of stories about a slowdown in China & the rest of Asia, the dreary picture in Europe & a US economy that is huffing & puffing which results only in limited growth is keeping the bulls on the sidelines. The jobs report on Fri can not provide a large amount of good news & then the corps will report earnings next week. Bulls are optimistic but nervous, keeping many on the sidelines. Dow remains close to its sideways trend-line of 13.5K.
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