(CBS News) WASHINGTON -- President Obama is halfway through a two-day fundraising swing through California.
His trip underlines the importance of money in the 2012 campaign.
It's also being criticized by Republicans who say the president is spending too much time with celebrity Democrats.
The money-raising trip took him to San Francisco and Los Angeles, two towns where he hasn't been a stranger in recent weeks and months, spending plenty of time with the wealthy and famous in the entertainment and tech communities.
But his campaign tweeted Thursday that 98 percent of its donations in May were less than $250.
Either way, it's all about the money.
Mr. Obama got a warm welcome from campaign donors in the Los Angeles gay community Wednesday night, a group he considers crucial to his re-election prospects.
"I could not be prouder of the work we've done on behalf of the LGBT community," Mr. Obama said.
During his speech, he ticked off accomplishments under his watch, such as ending the war in Iraq.
But he also warned the audience about what's ahead during the campaign, and why their donations matter, saying, "You're going to see hundreds of millions of dollars in negative ads, because the other side's not offering anything new."
To build a war chest that would enable him to counter those ads and run his campaign, Mr. Obama is spending two days on the West Coast to raise an expected $5 million.
He will have done 153 fundraisers since formally declaring his candidacy for re-election a little over a year ago - nearly double the number President Bush had done at the same point in 2004.
With the majority of outside super PAC dollars going to Republicans, raising money will be crucially important for Democrats in this election cycle.
In the Wisconsin recall election, unions spearheaded the effort to unseat Gov. Scott Walker after he successfully limited their power. But the union effort to get out the vote was overcome by the GOP advantage in money and TV advertising. Walker raised $30 million. His challenger, Milwaukee Mayor Tom Barrett, raised only $4 million.
Rep. Steve Israel, D-N.Y., chair of the Democrats' campaign committee, warned that the Wisconsin results should be "a wake-up call" that the party needs money for TV ads to compete with the super PACs.
A California political power broker once put it this way: "Money is the mothers' milk of politics."
Four years ago, candidate Obama outspent his Republican opponent, Sen. John McCain by more than two-to-one - $730 million to $333 million.
To see Bill Plante's report, click on the video in the player above.
State audit: Allocate more money to classrooms - Kitsap Sun
SEATTLE (AP) — Washington state school districts could do a better job getting more of the $12 billion spent each year on education into classrooms, where it will make the most difference, a new state audit said.
The performance audit released Wednesday included detailed comparisons among school districts of similar size, as well as suggestions about how some are spending more money in the classroom than others.
The audit noted that moving just one percent of school spending from administrative offices to the classroom would be enough to pay for more than 1,000 teachers statewide.
Among the cost-saving suggestions were: Buy fuel for school buses in bulk, use more USDA surplus food in the lunchroom, and look at having some services provided by the private sector.
It also suggests cutting staffing dollars by making such changes as hiring licensed practical nurses instead of registered nurses for school infirmaries, sharing costs with neighboring districts, and contracting with the state or education service districts for some things.
Although many of the cost differences among districts involve choices, some are out of their control, such as how many special education students they serve.
The state auditor decided to do this performance review because taking a closer look at education spending has been repeatedly identified by citizens and lawmakers as a high priority, said department spokeswoman Mindy Chambers. About 43 percent of the state budget is spent on K-12 education.
Auditor Brian Sonntag wanted the report to be practical for school districts and informative for lawmakers, while not trying to offer a one-size-fits-all approach, Chambers said.
The audit dings state school officials for overstating how much money is spent on classroom instruction by adding in a second number called teaching support.
The approach implies Washington spends 70 percent of school dollars in the classroom, which would be more than any other state in the nation. The federal government paints a different picture.
Washington and 11 other states spent about 60 percent of school dollars in classrooms, according to a 2009 comparison by the National Center for Education Statistics. Another 18 states spent more and 20 spent less. Washington's numbers have improved slightly since then, but no more recent national comparisons are available.
The rest of the money goes to transportation, food, nursing, counseling, outside help for special education students, administration and a variety of central district office functions.
The audit recommends the Office of the Superintendent of Public Instruction improve its transparency by taking the federal approach and use just the dollars that pay for teaching when it reports expenditures for classroom instruction.
Superintendent of Public Instruction Randy Dorn responded to that section of the audit by saying the office was already doing this on some reports and would look into the possibility of changing others.
The audit also urged the office to maintain the database the auditor's office created for the purpose of the study, saying it would help districts save more money if they could continue to see their operations compared to their peers.
Dorn said he would discuss the idea with his department's data management committee and see if they think it would be worthwhile to find the money to keep track of this information in the future.
School reform advocate Liv Finne commended the auditor's report for its wealth of information and practical advice for school districts.
Digging a little deeper and reading between the pages can reveal a lot about the choices individual school districts are making, said Finne, director of the Center for Education at the Washington Policy Center.
For example, she found it particularly interesting that Seattle Public Schools spends 59.7 percent on teaching, while many neighboring districts push a lot higher percentage of their money toward the classroom.
The Bellevue School District, for example, puts 65.6 percent of its dollars into teaching and Lake Washington directs 65.5 percent toward learning.
"That instruction number is very important," Finne said. "It reflects who is influencing allocation decisions in the district and what the priorities are in the district. Clearly they're not making instruction the priority."
She notes that most private schools and public charter schools do an even better job at this, because they do not have much of a central office staff to support and private schools do not have to pay for transportation.
The union that represents most of the school workers outside of the classroom, plus teacher's aides, found the auditor's report troubling.
"The auditor's report goes in a completely opposite direction than what the courts and the Legislature have all been saying over the past few months, that we need more investment in education rather than less," said Rick Chisa, spokesman for Public School Employees of Washington.
He noted that for every teacher laid off since 2008, 12 other school workers have lost their jobs as custodians, or secretaries or cafeteria workers, etc.
Instead of finding 1 percent more money for teachers, Chisa would spend those dollars on teacher's aides and add 3,000 more adults helping kids in the classroom.
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Contact Donna Blankinship through Twitter at https://twitter.com/dgblankinship
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Online:
Auditor's Report: http://www.sao.wa.gov/AuditReports/AuditReportFiles/ar1007826.pdf
Stocks gain as China stimulates economy - Click2Houston.com
U.S. stocks ended mixed Thursday, trimming gains from earlier in the day, as comments from Ben Bernanke tempered hopes for immediate stimulus by the Federal Reserve.
The Dow Jones industrial average rose 46 points, or 0.4%, to end at 12,461. The S&P 500 closed little changed at 1,315. The Nasdaq fell 14 points, or 0.5%, to 2,831.
Rangold Resources was the biggest drag on the Nasdaq as gold prices sank 2.8% to below $1,600 an ounce.
United Technologies and Procter & Gamble were the best performing stocks on the Dow, while Bank of America and Hewelett Packard weighed on the index.
Stocks opened sharply higher after China's central bank cut its range of lending and deposit rates by a quarter percentage point in an effort to address the slowdown in the nation's manufacturing sector.
But the indexes pulled back after Fed chairman Ben Bernanke told Congress that the central bank stands ready to act, but gave no indication that additional easing is imminent.
"There has been a lot of speculation in the market about a coordinated central bank intervention," said Ryan Larson, a senior equity trader at RBC Global Asset Management. However, he said the optimism has faded "now that it has become apparent that the Fed is ready to act, but is holding off for the time being."
Bernanke's testimony came after other Fed officials, including Vice Chair Janet Yellen and San Francisco Fed president John Williams, indicated that more stimulus by the central bank might be necessary to boost the sputtering U.S. economy.
Investors have been hopeful that the Fed will extend Operation Twist -- its program of swapping short-term bonds for ones with longer duration to help keep 10-year and 30-year bond yields low -- or launch a third round of asset purchases known as quantitative easing.
Meanwhile, the Spanish government held a successful bond auction Thursday, two days after its Treasury minister warned the country was at risk of being shut out of financial markets.
But in a sign of the nation's ongoing banking and economic problems, ratings agency Fitch downgraded Spain's credit rating to "BBB" from "A."
The debt crisis in Europe "poses significant risks to the U.S. financial system and economy, and must be monitored closely," said Bernanke.
U.S. stocks rallied Wednesday, with the Dow and S&P 500 logging their best gains of the year, as investors grew hopeful that more stimulus for the global economy is around the corner.
Economy: First-time claims for unemployment insurance totaled 377,000 in the week ended June 2, the Labor Department said. That's 2,000 more than the consensus forecast, but 12,000 below the prior week.
The net worth of households rose a collective $2.8 trillion in the first three months of 2012, according to data from the Federal Reserve.
Companies: Yoga clothing retailer Lululemon Athletic plunged after releasing a weak outlook along with its first-quarter results.
Best Buy shares sank after the retailer's founder and largest shareholder, Richard Schulze, announced plans to resign as chairman and a director.
Food producer J.P. Smucker reported that operating earnings per share rose 10 cents to $1.10, better than the drop of 1 cent per share forecast by analysts.
Nasdaq OX Group, which operates the Nasdaq stock exchange, announced its plans to spend $40 million to compensate trading firms for losses caused by glitches that delayed Facebook's debut. On Wednesday, Nasdaq CEO Bob Reified apologized for the problems but said affected investors should talk to their brokers.
Korean electronics-maker Samsung named a new chief executive Thursday. The Wall Street Journal reported that the company also intends to launch its new smartphone as planned, despite Apple seeking an injunction against its sales as part of a patent infringement lawsuit.
Shares of Apple edged higher, while Samsung shares closed up 5% in trading in South Korea.
World markets: European stocks closed higher. France's CAC 40 surged 3.1% following the China rate cut, the DAX in Germany rallied 3%, and Britain's FTSE 100 added 1.1%.
The Bank of England made no changes to its monetary policy, despite a deteriorating economic outlook.
Asian markets ended mixed. The Shanghai Composite eased 0.7%, but the Hang Seng in Hong Kong gained 0.7% and Japan's Nikkei finished 1.2% higher.
Currencies and commodities: The dollar rose against the yen, but slipped against the euro and British pound.
World stocks rise on hopes for EU, US stimulus - Lompoc Record
World stock markets rose Thursday, boosted by hopes that Europe is preparing to take action to tackle the region's financial crisis and that the Federal Reserve will consider additional support for the U.S. economy.
Traders will be closely watching Fed Chairman Ben Bernanke's testimony before a congressional committee Thursday for any hints that the U.S. central bank is considering more monetary stimulus.
Such hopes helped push up European stocks in early trading. Britain's FTSE 100 rose 0.4 percent to 5,404.65. Germany's DAX added 0.5 percent to 6,125.05 and France's CAC-40 rose 0.6 percent to 3,075.05.
Wall Street was set to open a little higher. Dow Jones industrial futures rose 0.1 percent to 12,431 and S&P 500 futures added 0.2 percent to 1,317.80.
Hopes for strong action by the U.S. central bank were lifted by comments from Atlanta Federal Reserve President Dennis Lockhart, who said Wednesday that sustained weakness in job creation could justify more action to support the economic recovery.
The Fed is believed to be considering a third round of "quantitative easing," or purchases of Treasury bonds to try to lower long-term interest rates and encourage borrowing. Traders have speculated that a third round, QE3, is under consideration.
The Fed could also continue its "Operation Twist" program, under which it sells shorter-term securities and buys longer-term bonds to keep their rates down. The current Operation Twist is set to expire at the end of this month.
"Investors will try to get a hint from him whether Bernanke is going to roll out QE3 or just extend Operation Twist or some other kind of hybrid policy," said Jackson Wong, vice president at Tanrich Securities in Hong Kong. "But there will be something. If he hints at nothing, the markets might take it negatively."
Benchmarks across Asia rose. Japan's Nikkei 225 index added 1.2 percent to close at 8,639.72. Hong Kong's Hang Seng gained 0.9 percent to 18,678.29. South Korea's Kospi index jumped 2.6 percent to 1,847.95.
Australia's S&P/ASX 200 climbed 1.3 percent to 4,108.60. Benchmarks in New Zealand, Taiwan and Indonesia also rose, but those in mainland China and Singapore fell.
Speculation about new Fed moves helped traders overlook the disappointment that the European Central Bank offered no new monetary stimulus on Wednesday. Its chief Mario Draghi said it was the turn of governments to restore confidence in the 17 nations that use the euro common currency.
Draghi, however, has left himself some room to maneuver, saying that "we'll monitor closely all the developments and we'll stand ready to act" if necessary. He also said some members of the 23-member ECB council advocated a rate cut.
"This implies that rates cuts are in the pipeline very soon but any more action will require European politicians to act first," analysts at Credit Agricole CIB in Hong Kong said in a market commentary.
Japan's export shares rose as the yen softened against the dollar, which helps to make the cost of Japanese products more competitive in global markets. Mazda Motor Corp. jumped 4.1 percent. Panasonic Corp. added 4.2 percent.
South Korean blue chips posted hefty gains, including Samsung Electronics, up 5.2 percent. LG Electronics Inc. jumped 3.4 percent and Hyundai Heavy Industries climbed 3.8 percent.
Benchmark oil for July delivery was down 31 cents to $84.71 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 73 cents to settle at $85.02 in New York on Wednesday.
In currencies, the euro rose to $1.2557 from $1.2546 late Wednesday in New York. The dollar rose to 79.37 yen from 79.18 yen.
Money market fund assets fall to $2.564 trillion - Yahoo Finance
NEW YORK (AP) -- Total U.S. money market mutual fund assets fell by $8.04 billion to $2.564 trillion for the week that ended Wednesday, the Investment Company Institute said Thursday.
Assets of the nation's retail money market mutual funds rose by $2.88 billion to $890.35 billion, the Washington-based mutual fund trade group said. Assets of taxable money market funds in the retail category grew by $1.6 billion to $703.59 billion. Tax-exempt retail fund assets rose by $1.28 billion to $186.77 billion.
Meanwhile, assets of institutional money market funds fell $10.92 billion to $1.674 trillion. Among institutional funds, taxable money market fund assets fell $10.97 billion to $1.588 trillion; assets of tax-exempt funds rose $50 million to $86.41 billion.
The seven-day average yield on money market mutual funds was 0.03 percent in the week that ended Tuesday, unchanged from the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westborough, Mass.
The 30-day average yield was also unchanged from last week at 0.03 percent. The seven-day compounded yield was flat at 0.03 percent. The 30-day compounded yield was unchanged at 0.03 percent, Money Fund Report said.
The average maturity of portfolios held by money market mutual funds was the same as the previous week at 45 days.
The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts was unchanged from last week at 0.13 percent.
The North Palm Beach, Fla.-based unit of Bankrate Inc. said the annual percentage yield available on interest-bearing checking accounts was unchanged from the week before at 0.06 percent.
Bankrate.com said the annual percentage yield on six-month certificates of deposit was also unchanged from the previous week at 0.21 percent. The yield on one-year CDs fell to 0.32 percent from 0.33 percent. It fell to 0.51 percent from 0.52 percent on two-and-a-half-year CDs. It was flat at 1.12 percent on five-year CDs.
World stocks euro trim gains on Bernanke - MoneyControl.com
World stocks and the euro pared gains on Thursday after Federal Reserve chairman Ben Bernanke said the US central bank was ready to shield the economy if financial troubles mount but offered few hints that further monetary stimulus was imminent.
Bernanke told a committee of Congress the Fed was monitoring "significant risks" to the US recovery from Europe's debt and banking crisis closely.
Earlier, global stocks had rallied to their highest in more than a week and the euro advanced above USD 1.26 versus the dollar after China surprisingly cut interest rates to shore up slackening economic growth, fuelling hopes other major central banks may follow suit.
MSCI world equity index rose 1% to 3 02.04 points, off an earlier high of 303.89.
Bernanke's testimony comes after Janet Yellen, the Fed's second-highest official, on Wednesday laid out the case for the US central bank to provide more support to a fragile economy as financial turmoil in Europe mounts.
"We're selling off because Bernanke didn't reiterate the earlier comments from Janet Yellen, which really takes (a third round of quantitative easing) off the table in the immediate term," said Adam Sarhan, chief executive of Sarhan Capital in New York.
US stocks pared gains. The Dow Jones industrial average was up 93.05 points, or 0.75%, at 12,507.84. The Standard & Poor's 500 Index was up 7.16 points, or 0.54%, at 1,322.29. The Nasdaq Composite Index was up 9.27 points, or 0.33%, at 2,853.99.
The euro last traded flat at USD 1.2574 after earlier rising as high as USD 1.2625. US treasuries prices erased losses and edged higher after Bernanke's comments. The benchmark 10-year US treasury note was up 1/32, with the yield at 1.6575%.
NASDAQ to set aside $40million in 'mea culpa money' to compensate brokers in botched Facebook IPO - Daily Mail
- Nasdaq to offer $40m to brokers and investors after technical glitch marred trading during Facebook's IPO
- $14million given in cash and the remainder in credit
- Company usually caps reimbursement due to technical glitches at $3m
By Reuters Reporter and Associated Press
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Nasdaq said Wednesday afternoon that it would hand out $40million in cash and credit to reimburse investment firms that lost money on Facebook's opening day because of computer glitches at the exchange.
Nasdaq's chief rival, the New York Stock Exchange, fired off a statement condemning the move, saying Nasdaq was giving itself an unfair advantage and rewarding itself for its own mistakes.
One broker, Knight Capital, said the planned reimbursements weren't nearly enough, encapsulating the complaints that other brokers and investment firms were making privately.
Compensation: Nasdaq said Wednesday afternoon that it would hand out $40million in cash and credit to reimburse investment firms that lost money on Facebook's opening day because of computer glitches at the exchange
Nasdaq OMX's compensation for mishandling Facebook Inc's public offering is 'too limited', though the exchange deserves praise for tackling the issue, former Securities and Exchange Commission chief Harvey Pitt said.
The harm caused by Nasdaq's failures easily exceed the $40 million the exchange has set aside, Mr Pitt said on Wednesday, responding to a query by e-mail.
Not enough: Harvey Pitt, the former Securities and Exchange Commission chief, said the compensation wasn't enough
He also said there does not seem to be any rationale for how the number was arrived at or why it is fair.
Nasdaq 'deserves kudos for taking the bull by the horns, and not waiting for the SEC to finish its review,' Mr Pitt said. 'But I think the steps it has taken — while positive — are too limited. The dollar estimates for harm caused by Nasdaq's failures easily exceed — several times over — the $40 million it has set aside.'
Mr Pitt said Nasdaq would be better served by an independent internal review of all that occurred on May 18, when traders were left in the dark for hours as to whether their orders for Facebook shares had been executed.
Facebook went public May 18 amid great fanfare, but computer glitches at the Nasdaq threw the day into chaos.
The opening was delayed by half an hour. Technical problems kept many investors from buying shares in the morning, selling them later in the day, or even from knowing whether their orders went through. Some investors complained that they were left holding shares they didn't want.
Nasdaq will pay about $14 million in cash to investment companies that bought or sold shares, or tried to, at certain levels. The rest will be given as credit, meaning the firms won't have to pay as much in the usual fees required for trading on the Nasdaq.
Nasdaq predicted that those benefits could last as long as six months.
The credit for trading fees riled the NYSE. It said the move gave investors a strong incentive to move more of their trading to the Nasdaq, allowing Nasdaq 'to reap a benefit from market share gains they would not have otherwise received.'
'This is tantamount to forcing the industry to subsidize Nasdaq's missteps and would establish a harmful precedent that could have far reaching implications for the markets, investors and the public interest,' the NYSE said in a statement.
Dislike: Facebook went public May 18 amid great fanfare, but computer glitches at the Nasdaq threw the day into chaos
The war of words underscores the constant battle that Nasdaq and the NYSE are locked in.
The NYSE, with roots dating to the 18th century and its familiar neoclassic headquarters on Wall Street, bills itself as reliable and well-known. Nasdaq, which started in 1971, promotes itself as a high-tech exchange favored by high-tech companies including Apple and Google.
The $40 million amount is far more than usual: Nasdaq has traditionally imposed a $3million cap for reimbursing customers who lost money because of technical problems.
It's hard to imagine that the amount could cover all the claims. Knight Capital alone has estimated that it lost as much as $35 million because of Nasdaq's glitches.
Knight Capital said it was disappointed that the reimbursement pool 'does not come close to covering reported losses' connected to the technical glitches.
'Their proposed solution to this problem is simply unacceptable,' the company said in a statement.
Large amount: The $40 million amount is far more than usual: Nasdaq has traditionally imposed a $3 million cap for reimbursing customers who lost money because of technical problems
It isn't clear what will happen next. Nasdaq still has to get approval from the Securities and Exchange Commission for its plan. The NYSE said it would 'strongly press our views' but didn't give details. Knight Capital said it is 'evaluating all remedies available under law,' which could mean it plans to sue.
Facebook's stock originally priced at $38 and closed that first day at $38.23, a disappointment to speculators who had hoped for a first-day pop. Nasdaq has said it was embarrassed by the glitches, but that they didn't contribute to the underwhelming returns.
Nasdaq says it will reimburse investment firms that tried to sell shares at $42 or less but either couldn't sell or sold at a lower price than they intended.
It will also reimburse investment firms that bought at $42 but in trades that weren't immediately confirmed. FINRA, the financial industry's self-regulatory group, will review the claims for compensation. Facebook's shares went as high as $45 on the first day.
The shares rose after the Nasdaq announcement and closed up 94 cents, nearly 4 per cent, at $26.81. That's still down nearly 30 per cent from the initial pricing.
The Facebook offering has left a bad taste for many investors, though they don't blame Nasdaq alone.
Many also think that Facebook as well as Morgan Stanley, the main bank that underwrote the deal, overestimated demand, pricing the shares too high and issuing too many.
Nasdaq says the problems have been fixed and that it has hired IBM to review its operating systems.
CANADA STOCKS-TSX flat as Fed comments offset China rate cut - Reuters UK
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Stocks Climb for Third Day as China Cuts Interest Rates - Bloomberg
Most U.S. stocks fell as a late-day slump in banks and technology shares wiped out an early rally triggered by China’s first interest-rate cut since 2008. Oil slid, while Treasuries rose and the dollar was little changed.
About three stocks dropped for every two that gained on U.S. exchanges and the Standard & Poor’s 500 Index erased a rally of as much as 1.1 percent to close down less than 0.1 percent at 4 p.m. in New York. Bank of America Corp. and Oracle Corp. paced losses in lenders and computer companies. Oil, which surged as much as 2.4 percent this morning, slipped 0.2 percent to $84.82 a barrel in the regular session and extended declines to as much as 1.9 percent in after-hours trading. The 10-year U.S. note yield lost two basis points to 1.64 percent.
Equities began paring gains at 10 a.m. New York time, while Treasuries turned higher and commodities slid, as Federal Reserve Chairman Ben S. Bernanke said the central bank will need to assess conditions before deciding if more measures are needed to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts. The S&P 500 lost its entire gain by the final 15 minutes of trading as the Associated Press reported that a municipal strike threatens to derail a June 17 Greek election that could determine the nation’s future in the euro.
“It’s disappointing that the markets were not able to sustain the momentum established by the Chinese action,” said Peter Jankovskis, who helps manage about $2.8 billion at Oakbrook Investments in Lisle, Illinois. “Bernanke’s comments weren’t indicative of a Fed that will take aggressive action in the near future. They didn’t match to expectations. There’s also concern about the upcoming Greek election. We’ll have to wait and see how all that plays out.”
Early Rally
Stocks rallied earlier as the People’s Bank of China said it will lower its benchmark lending and deposit rates effective tomorrow.
The S&P 500 (SPX) retreated after staging its biggest advance of the year yesterday, a 2.3 percent surge triggered by speculation global policy makers will act to spur growth. The index has rebounded almost 3 percent from a five-month low on June 1, recouping its losses from a report last week showing U.S. jobs growth in May was the weakest in a year.
Bank of America Corp. (BAC) and Hewlett-Packard Co. dropped at least 1.3 percent for the biggest declines in the Dow Jones Industrial Average, which trimmed a rally of as much as 140 points to 46 points by the close. Newmont Mining Corp. slumped 2 percent as gold tumbled the most in two months after Bernanke reduced speculation of more quantitative easing.
‘Christmas Gifts’
“Sometimes investors look for their Christmas gifts in June,” said Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “China’s action helps to calm some of the investors’ fears. Yet Bernanke is throwing some cold water on expectations for QE3. Maybe the Fed will deliver that ahead of December, but I think we’d need to see a lot more deterioration in the economy before that happens.”
Bernanke on June 19-20 will lead the Federal Open Market Committee in a policy-setting meeting confronting the slowest employment growth in a year and a worsening debt crisis in Europe. The U.S. added 69,000 jobs last month, the fewest in a year, even as the Fed maintained record stimulus. Bernanke today also warned lawmakers that “a severe tightening of fiscal policy at the beginning of next year that is built into current law -- the so-called fiscal cliff -- would, if allowed to occur, pose a significant threat to the recovery.”
Fed Watch
In his prepared comments, Fed chairman didn’t call for consideration of additional stimulus, a contrast with speeches yesterday in which Vice Chairman Janet Yellen said the economy “remains vulnerable to setbacks” and may warrant more accommodation.
First-time claims for jobless benefits fell by 12,000 to 377,000 in the week ended June 2 from a revised 389,000 the prior week that was higher than initially estimated, the Labor Department said today. The median estimate of 49 economists surveyed by Bloomberg News called for 378,000 claims.
Shares of smaller U.S. companies foreshadowed this week’s gains in stocks as they did when the worst bear market since the Great Depression ended, according to Andrew Wilkinson, a Miller Tabak & Co. strategist.
Dividend Yields
The Russell 2000 Index (RTY)’s dividend yield, based on companies’ payouts during the past 12 months, was 30 basis points higher than the rate on 10-year Treasury notes at the end of last week. The gap was the widest since March 9, 2009, the day that the gauge bottomed out after a 59 percent plunge in 17 months.
Four shares rose for every one that declined in the Stoxx 600. Sweden’s OMX Index jumped 3.2 percent, the most since November, as the market reopened after a public holiday. A European gauge of banks rose 2 percent.
Johnson Matthey Plc (JMAT) climbed 4.9 percent after the maker of a third of all autocatalysts reported a 74 percent jump in full- year profit and said that it will pay a special dividend. Tullow Oil Plc added 2.1 percent after saying it discovered crude at its offshore Ivory Coast well.
The Spanish 10-year bond yield slid 19 basis points to 6.09 percent after the nation sold 2.07 billion euros ($2.6 billion) of bonds, more than its maximum target of 2 billion euros. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments decreased four basis points.
The extra yield investors demand to hold Spanish 10-year bonds instead of benchmark German bunds declined 23 basis points to 471 basis points, or 4.71 percentage points. The 10-year Italian yield rose four basis points to 5.71 percent, while the similar-maturity Swedish yield jumped 31 basis points to 1.45 percent.
Spain Ratings
After European markets closed, Fitch Ratings lowered Spain’s debt to BBB from A, leaving it two notches from junk with a negative outlook. The ratings firm cited the cost of recapitalization the nation’s banks and a lengthening recession.
France’s 10-year bond yield rose 16 basis points to 2.57 percent even as borrowing costs fell at an auction. The country issued 3.48 billion euros of the benchmark bond at an average yield of 2.46 percent, lower than the 2.96 percent at the last sale on May 3.
The euro was stronger versus eight of 16 major peers and swung between gains and losses below $1.26 against the dollar.
Emerging Markets
The S&P GSCI gauge of 24 commodities lost 0.2 percent, erasing a rally of as much as 1.6 percent after Bernanke’s remarks. Cotton, soybeans and nickel rallied at least 3 percent for the biggest gains, while natural gas and silver fell more than 3 percent. Gold for August delivery fell 2.8 percent to settle at $1,588 an ounce in New York, the biggest decline for a most-active contract since April 4.
The MSCI Emerging Markets Index (MXEF) rose 1.2 percent and rose 3.5 percent in three days, its biggest rally since February. India’s Sensex Index jumped 1.2 percent after Prime Minister Manmohan Singh pledged yesterday to revive growth through infrastructure spending. South Korea’s Kospi index rallied 2.6 percent as the market re-opened after a holiday yesterday. Benchmark gauges in Russia, the Czech Republic and the Philippines gained more than 1 percent.
Analysts are favoring stocks in developed countries over their emerging market rivals by the most since 2009, betting their global reach will provide a cushion during a weakening recovery.
Securities firms have boosted average rankings in the 24- country MSCI World Index of advanced nations during the second quarter after cutting recommendations worldwide for seven months, according to data compiled by Bloomberg from more than 62,000 ratings. They lowered developing countries during the period, in which $6.3 trillion was erased from global equities.
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Michael P. Regan in New York at mregan12@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
Stocks Rise
Scott Eells/Bloomberg
Traders work at the New York Stock Exchange (NYSE) in New York.
Traders work at the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg
June 7 (Bloomberg) -- Bloomberg’s Trish Regan, Matt Miller and Alix Steel report on today’s ten most important stocks including Best Buy, Baidu and the iShares FTSE China 25 Index Fund. (Source: Bloomberg)
June 7 (Bloomberg) -- Bloomberg's Ellen Braitman reports on the performance of the U.S. equity market today. Most U.S. stocks declined as a late-day slump in financial and technology shares erased an advance driven by China’s first interest-rate cut since 2008. (Source: Bloomberg)
June 7 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom & Doom report, talks about his strategy for global stocks, bonds, commodities and currencies. Faber speaks with Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
June 7 (Bloomberg) -- Stephen Green, head of greater China research at Standard Chartered Bank Plc in Hong Kong, talks about China's decision to cut interest rates for the first time since 2008. He speaks with Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
June 7 (Bloomberg) -- Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, talks about the outlook for additional stimulus measures by the European Central Bank and Federal Reserve, and its implications for global stocks. He speaks with Susan Li on Bloomberg Television's "First Up." (Excerpt. Source: Bloomberg)
June 7 (Bloomberg) -- Aaron Boesky, chief executive officer of Marco Polo Pure Asset Management in Hong Kong, talks about the outlook for China's stock market and economy, and his investment strategy. Boesky also discusses Chinese Communist Party leadership. He speaks with Rishaad Salamat, Susan Li, Zeb Eckert and David Ingles on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
June 7 (Bloomberg) -- Sean Darby, chief global equity strategist at Jefferies Group Inc. in Hong Kong, talks about global stock and bond markets. Darby also discusses Europe's sovereign debt crisis and China's economy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
June 7 (Bloomberg) -- Paul Hickey, co-founder of Bespoke Investment Group, talks about the impact of Federal Reserve stimulus actions on the financial markets and Treasuries. Hickey, speaking with Erik Schatzker, Stephanie Ruhle, Sara Eisen and Scarlet Fu on Bloomberg Television's "InsideTrack," also discusses the European debt crisis and outlook for corporate earnings. (Source: Bloomberg)
June 7 (Bloomberg) -- Robert Hagstrom, a portfolio manager at Legg Mason Capital Management, talks about U.S. financial markets, Federal Reserve policy and investment strategy. Hagstrom speaks with Betty Liu, Sheila Dharmarajan and Joshua Lipton on Bloomberg Television's “In the Loop.” (Source: Bloomberg)
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