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NEW YORK (AP) -- Stocks wavered between slight gains and losses Tuesday after the Dow Jones industrial average had its best week in two years.
The Dow Jones industrial average slipped 2 points to 12,580 in afternoon trading. The Dow had risen as many as 19 points after the Commerce Department reported an increase in factory orders. The Standard & Poor's 500 index fell 2, or 0.2 percent, to 1,338. The Nasdaq composite index rose 4, or 0.2 percent, to 2,820. All three indexes were moving in a narrow range.
Trading volume is expected to be light this week. U.S. markets were closed Monday for the July 4th holiday. Many traders are looking ahead to next week, when aluminum maker Alcoa Inc. becomes the first major U.S. company to report financial results.
Last week the Dow rose 648 points, its best week in two years, after Nike reported strong earnings and Greece cleared its final hurdle before receiving another round of loans. Automakers also reported that their sales rose 7 percent in June, compared to a year ago.
The gains erased nearly six weeks of losses. Prior to last week stocks had been falling since late April because of concerns about the debt crisis in Europe, weak home sales in the U.S. and slowing manufacturing. By mid-June, stocks had given up most of their gains for the year.
With last week's rally, the Dow is now down just 1.8 percent from April 29, when it reached a three-year high. The Dow is up 8.5 percent for the year. The S&P 500 index and the Nasdaq composite are both up about 6 percent.
Analysts are optimistic about the corporate earnings reports that will start to come in next week. Earnings from companies in the S&P 500 index are expected to rise 14 percent from the same period a year ago, according to FactSet. Revenue is expected to rise 11 percent.
"There hasn't yet really been a reason to get concerned about corporate America," said Randy Warren, chief investment officer of Warren Financial Service. "It's the rest of the America that's struggling."
Even while companies have been reporting higher profits, unemployment has remained stubbornly high since the recession officially ended in June 2009. The Labor Department will report the latest figures on unemployment and payrolls on Friday, and analysts expect to hear more bad news. They forecast that the unemployment rate will remain unchanged from May at 9.1 percent. They also expect that employers added only 90,000 jobs last month, below the 100,000 threshold that economists say is needed to prevent the unemployment rate from increasing.
Several stocks rose sharply after deals were announced. Immucor Inc. rose 30 percent after the maker of blood-testing equipment agreed to be bought by private-investment firm TPG Capital in a deal worth $1.97 billion.
Southern Union Co. rose 2.9 percent after Energy Transfer Equity LP said it would pay $5.1 billion for the pipeline company. The deal trumped a $4.9 billion bid made in late June by rival Williams Cos.
Netflix Inc. rose 7.4 percent to $287.85 after announcing that it would expand its online video streaming service to 43 countries in Latin America and the Caribbean.
Stocks wavered between slight gains and losses Tuesday after the Dow Jones industrial average had its best week in two years?
A. TRUE
B. FALSE
Southern Union Co. rose 2.9 percent after Energy Transfer Equity LP said it would pay $5.1 billion for the pipeline company. The deal trumped a $4.9 billion bid made in late June by rival Williams Cos?
A. TRUE
B. FALSE
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NEW YORK (AP) -- Stocks wavered between slight gains and losses Tuesday after the Dow Jones industrial average had its best week in two years.
The Dow Jones industrial average slipped 2 points to 12,580 in afternoon trading. The Dow had risen as many as 19 points after the Commerce Department reported an increase in factory orders. The Standard & Poor's 500 index fell 2, or 0.2 percent, to 1,338. The Nasdaq composite index rose 4, or 0.2 percent, to 2,820. All three indexes were moving in a narrow range.
Trading volume is expected to be light this week. U.S. markets were closed Monday for the July 4th holiday. Many traders are looking ahead to next week, when aluminum maker Alcoa Inc. becomes the first major U.S. company to report financial results.
Last week the Dow rose 648 points, its best week in two years, after Nike reported strong earnings and Greece cleared its final hurdle before receiving another round of loans. Automakers also reported that their sales rose 7 percent in June, compared to a year ago.
The gains erased nearly six weeks of losses. Prior to last week stocks had been falling since late April because of concerns about the debt crisis in Europe, weak home sales in the U.S. and slowing manufacturing. By mid-June, stocks had given up most of their gains for the year.
With last week's rally, the Dow is now down just 1.8 percent from April 29, when it reached a three-year high. The Dow is up 8.5 percent for the year. The S&P 500 index and the Nasdaq composite are both up about 6 percent.
Analysts are optimistic about the corporate earnings reports that will start to come in next week. Earnings from companies in the S&P 500 index are expected to rise 14 percent from the same period a year ago, according to FactSet. Revenue is expected to rise 11 percent.
"There hasn't yet really been a reason to get concerned about corporate America," said Randy Warren, chief investment officer of Warren Financial Service. "It's the rest of the America that's struggling."
Even while companies have been reporting higher profits, unemployment has remained stubbornly high since the recession officially ended in June 2009. The Labor Department will report the latest figures on unemployment and payrolls on Friday, and analysts expect to hear more bad news. They forecast that the unemployment rate will remain unchanged from May at 9.1 percent. They also expect that employers added only 90,000 jobs last month, below the 100,000 threshold that economists say is needed to prevent the unemployment rate from increasing.
Several stocks rose sharply after deals were announced. Immucor Inc. rose 30 percent after the maker of blood-testing equipment agreed to be bought by private-investment firm TPG Capital in a deal worth $1.97 billion.
Southern Union Co. rose 2.9 percent after Energy Transfer Equity LP said it would pay $5.1 billion for the pipeline company. The deal trumped a $4.9 billion bid made in late June by rival Williams Cos.
Netflix Inc. rose 7.4 percent to $287.85 after announcing that it would expand its online video streaming service to 43 countries in Latin America and the Caribbean.
Stocks wavered between slight gains and losses Tuesday after the Dow Jones industrial average had its best week in two years?
A. TRUE
B. FALSE
Southern Union Co. rose 2.9 percent after Energy Transfer Equity LP said it would pay $5.1 billion for the pipeline company. The deal trumped a $4.9 billion bid made in late June by rival Williams Cos?
A. TRUE
B. FALSE
In this July 21, 2011 photo, Donna Ciora, an employment specialist with Express Employment Professionals, right, talks with people attending the Pittsburgh Career Fair, in Pittsburgh. Fewer people sought unemployment benefits last week, though the drop was small and not enough to signal much improvement in the job market. (AP Photo/Keith Srakocic), On Friday July 29, 2011, 12:32 am EDT
WASHINGTON (AP) -- The economy likely grew in the first half of the year at the slowest pace since the recession ended, and the second half isn't looking much better.Weak consumer spending, dismal hiring and cuts in government spending likely held back growth in the April-June quarter. The government will report on second-quarter growth on Friday.
Economists forecast the economy expanded at an annual rate of 1.7 percent, according to a FactSet survey. That follows a 1.9 percent growth rate in the first three months of the year. Those are the slowest back-to-back quarters since the economy began recovering from the recession two years ago.
Even if the economy picks up later this year, growth in 2011 will likely be slower than the 2.9 percent expansion last year. Economists at RBC Capital Markets, for example, forecast growth of 2.3 percent this year.
Complicating an already-weak economy is the debt crisis in Washington. No matter what lawmakers do to resolve that crisis, their decision will likely slow growth in the short term. A deal to raise the borrowing limit would likely include long-term spending cuts, which would withdraw government stimulus at a precarious time. If Congress fails to raise the borrowing limit and the government defaults on its debt, financial markets could fall and interest rates could rise.
Most economists expect growth to pick up slightly in the second half of the year, as the impact of high gas prices and supply disruptions stemming from Japan's March 11 earthquake ease. But growth won't be strong enough to lower the unemployment rate, now 9.2 percent.
"We're starting off the quarter in weaker shape than we thought," said Nigel Gault, an economist at IHS Global Insight. Gault notes that data for June showed little growth in retail sales, factory output and hiring.
Gault said he expects growth of less than 3 percent in the July-September quarter. That's down from his earlier forecast of 3.4 percent. Economists at Goldman Sachs and JPMorgan Chase project third-quarter growth of only 2.5 percent. That's barely enough to keep the unemployment rate from rising.
The economy needs to expand at a 5 percent pace to make a significant dent in unemployment.
Economists cite several reasons for the disappointing growth:
-- Weak consumer spending. Held back by stagnant wages and high unemployment, people simply aren't spending money. Economists forecast that consumer spending grew in the April-June period less than 1 percent, the slowest pace since the recession ended. High gas prices forced consumers to cut back on other discretionary purchases. Sales of furniture, appliances, sporting goods and electronics fell last month for the third straight month, according to the government's June report on retail sales.
-- Cuts in government spending. Governments at all levels -- federal, state and local -- are short on cash and being forced to rein in spending. All told, the cutbacks reduced economic growth 1.2 percentage points in the January-March quarter, the biggest hit to the economy from reduced government spending since the early 1980s. While the impact won't be as large in the April-June period, economists expect lower government spending restrained growth.
-- Dismal hiring. Employers added only 18,000 jobs in June, the second-straight month of weak hiring and much slower than the average of 215,000 jobs added each month from February to April. And even people with jobs aren't getting any raises. Adjusted for inflation, average hourly pay fell 1.5 percent in the past year, the Labor Department said earlier this month.
One wild card for Friday's report on the economy will be how much companies added to their stockpiles. If companies built up more inventory in their warehouses than economists forecast, that would mean factories produced more and the economy grew at a faster pace. But that could also mean slower growth in subsequent months, because consumers aren't spending much and it would take time for companies to reduce their stockpiles. That would slow the production of new goods.
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