It's official. The recession started 6 months ago.<g>
GLOBAL MARKETS-Stocks climb, bonds fall; US in recession
(UPDATE: Recasts, updates to late afternoon)
By Ross Finley
NEW YORK, Nov 26 (Reuters) - U.S. stocks edged higher on Monday while Treasury prices fell as upbeat investors shrugged off news from the official arbiter on U.S. recessions that the world's largest economy has been in decline since March.
The dollar slipped from 3-1/2-month highs set last week against the euro and yen as dealers booked profits from a recent rally in the currency that was spurred by hopes for a swift economic recovery by early next year.
Oil prices tumbled after news of Saudi Arabia's disappointment over Russia's tepid response to demands from the Organization of Petroleum Exporting Countries for a supply cut next year. But they bounced off their session lows after U.S. President George W. Bush urged Iraq to let United Nations weapons inspectors back in the country.
Stocks in Europe barely budged as a weak oil sector took the shine off buoyant technology shares. The Nikkei 225 ended up 3.4 percent, lifted in part on hopes that Japanese banks were moving more swiftly toward long-awaited restructuring of bad loans.
The National Bureau of Economic Research said the U.S. economy slipped into recession in March, snapping a record 10-year expansion. NBER added that the recession deepened after the Sept. 11 attacks, and one economist on the NBER panel predicted an economic recovery was likely by July 2002.
``The negative news in the recession story is that it dampens the psychology near-term. But it's telling us what has already happened. It's not a predictive measure,'' said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
Treasury Secretary Paul O'Neill, who over the weekend said he was encouraged by holiday retail sales so far, said the economy has begun to mend after the shock of the Sept. 11 attacks. There was no mention of a recession in his remarks, offered in response to the NBER announcement.
CHIP STOCKS UP, BONDS DOWN
On Wall Street, chip stocks rallied as investors bet a recovery would revive the battered sector. But oil stocks slumped on the slide in crude oil prices and Home Depot Inc. (NYSE:HD - news) dropped on concern of sluggish growth.
Hopes for an economic turnaround next year have pulled stocks well off their Sept. 21 lows in the wake of the attacks on the World Trade Center and the Pentagon.
The technology-packed Nasdaq Composite Index (^IXIC - news) unofficially closed up 38 points, or 2 percent, at 1,941. The blue-chip Dow Jones industrial average (^DJI - news) rose 23 points, or 0.2 percent, at 9,982, inching closer to the psychologically important 10,000-point level. The broader Standard & Poor's 500 Index (^SPX - news) gained 7 points, or 0.6 percent, to 1,157.
Enron Corp. (NYSE:ENE - news) was again the most active issue on the New York Stock Exchange and fell more than 15 percent on fear its proposed acquisition by rival Dynegy Inc. (NYSE:DYN - news) could be in jeopardy. Dynegy's ability to bargain a lower price or walk away from its deal with Enron is being watched as the energy trader's stock continues to plummet.
The Treasury market extended a two-week sell-off stemming from investor bets that improved prospects for an economic recovery had diminished the chance of another interest rate cut from the Federal Reserve. Treasuries have fallen for 10 of the past 11 trading sessions.
Two-year notes were down 1/32 at 99-6/32, yielding 3.19 percent. Benchmark 10-year notes were off 4/32 at 99-25/32, yielding 5.03 percent. Thirty-year bonds were off 1/32 at 99-29/32, yielding 5.38 percent.
In the foreign-exchange markets, the dollar eased from 3-1/2-month highs struck against the euro last week.
``It's really more of a consolidation than a correction, and it's relatively shallow. Sentiment is still positive for the dollar,'' said Marc Chandler, currency strategist at HSBC.
The yen clawed back from losses against the dollar after Japanese government officials dampened speculation the country's central bank may weaken the currency by buying foreign bonds to help boost the struggling economy's exports.
Japan's currency also shrugged off a debt downgrade from credit ratings agency Fitch and a warning by another ratings agency, Standard & Poor's, of a possible deep two-notch credit rating cut after its last downgrade in February.
The yen traded near 124 yen against the dollar, down from a New York close of 124.26 yen on Friday. Against the dollar, the euro traded near 88 cents, up about 0.25 percent from 87.79 cents on Friday.
OVERSEAS SHARES MIXED
Britain's FTSE-100 index (^FTSE - news) ended slightly higher on Monday, with merger talk lifting Standard Chartered (quote from Yahoo! UK & Ireland: STAN.L) and telecom giant Vodafone (quote from Yahoo! UK & Ireland: VOD.L) advancing, while weak crude oil prices depressed the oil sector.
The blue-chip FTSE-100 index rose 9.3 points or 0.2 percent to 5,302.5, with oil shares knocking 18 points off the FTSE. The price of crude oil slumped after non-OPEC oil producer Russia offered a smaller-than-expected production cut.
The FTSE Eurotop 300 index , meanwhile, was off 0.04 percent, while the narrower DJ Euro Stoxx 50 index fell 0.21 percent.
In Tokyo, the Nikkei 225 average finished at 11,064.30, after soaring 367.48 points, or 3.44 percent.
Crude oil futures skidded after a senior Saudi official expressed disappointment over Russia's contribution to OPEC's attempt to cut production and lift prices. An adviser to the Saudi oil minister said Russia's offer to trim oil supplies by 50,000 barrels per day was too small.
Benchmark Brent crude for January delivery slid 92 cents to $18.36 a barrel.
But on the New York Mercantile Exchange, oil futures recovered a big part of their losses, prompted by comments from President George W. Bush urging Saddam Hussein to let United Nations weapons inspectors back into Iraq, traders said.
NYMEX January crude fell 27 cents to $18.69 a barrel. |
