South Africa
The bulls weren’t bullish enough.
The stock market just had its best first quarter in 14 years. The surge has sent Wall Street analysts, some of whose forecasts seemed too sunny three months ago, scrambling to raise their estimates for the year.
“That it’s up isn’t surprising. It’s the magnitude,” says Robert Doll, the chief equity investment manager at BlackRock, the world’s biggest money manager.
Doll says stocks could rise 10 percent more before the end of the year. That would be enough to push the Dow Jones industrial average to an all-time high and the Standard & Poor’s 500 close to a record.
For the first three months of the year, the Dow was up 8 percent and the S&P 12 percent, in each case the best start since the great bull market of the 1990s. The Nasdaq composite index, made up of technology stocks, has had an even more remarkable run _ up 19 percent for the year, its best start since 1991.
“I don’t think anyone could have predicted this,” says Chip Cobb, a senior vice president at Bryn Mawr Trust Asset Management. For these gains, he says, “I thought it would take all year.”
The jump gives money managers like Cobb hope that ordinary folks burned by two deep bear markets in a decade will start buying again, propelling the indexes even higher.
In a remarkable act of self-restraint _ or foolishness, depending on your view _ they have mostly stayed out of the market. One reason they may jump in now is that fear of looming disasters, like a full-blown debt crisis in Europe or a second recession in the United States, has faded.
Bulls say investors will turn their attention to the only thing that really matters for stock prices in the long run _ corporate profits.
Another hopeful sign for gains is that those who have been buying stocks appear to be taking bigger risks than before, suggesting growing confidence.
Last year, investors put much of their money into so-called defensive stocks, such as utilities and health care companies, which make money in bad times as well as good. This year, it’s the risky fare that’s being scooped up.
Financial stocks are up 22 percent, the best among the 10 industry groups within the S&P. Technology companies are up 21 percent. Consumer discretionary stocks, like hotels and cable companies, are up 16 percent.
Utilities are down 3 percent for the quarter, the only group in the red.
Standard & Poor’s Capital IQ, a research firm, predicted at the beginning of the year that the S&P would hit 1,400 by the end of the year. By March 15, it had hit 1,403, and on Friday it was at 1,408.
“We were originally accused of being too optimistic,” says Sam Stovall, chief equity strategist at S&P Capital IQ. “It doesn’t mean we can’t have a 10 percent correction, but it’s unlikely we will.”
The Dow is less than 1,000 points away blow its all-time high of 14,164.53, set Oct. 9, 2007. The S&P is about 150 points from its record close of 1,565.15, set the same day.
The first day of the year set the tone. On Jan. 3, the Dow rose 180 points. Later that month, the Federal Reserve said it would probably keep benchmark interest rates near zero for almost three more years. That sent stocks to their highest levels since May 2011.
It was the best January for stocks since 1997. Skeptics pointed out that profits at U.S. companies, after jumping by double-digit percentages for eight quarters in a row, seemed to be growing much more slowly. They also worried that the number of shares of stock traded each day was low, which suggested a lack of conviction by buyers.
Stocks kept climbing anyway, passing two milestones in quick succession.
On Feb. 28, the Dow rose above 13,000 for the first time since May 2008, four months before the financial crisis hit that September payday loan lenders. Two weeks later, it was the Nasdaq’s turn. It crossed 3,000 for the first time since the dot-com frenzy a dozen years earlier.
Even a few duds got caught in the upswing. The stocks of Microsoft and Cisco have barely budged this century. This year, they have have risen 24 percent and 17 percent, respectively. Dell, which has languished for years, is up 13 percent.
Some of the big winners of 2012 are perhaps less surprising: Apple has risen 48 percent. Lions Gate Entertainment, the company behind the hit movies “The Hunger Games” and “Twilight,” is up 67 percent.
As if the surge weren’t enough, the markets impressed long-time stock investors with the way it climbed _ slowly and steadily, without the wild swings of bravado and panic that characterized the market much of last year.
The gap between the daily high and low for the S&P has averaged about 0.9 percentage points. It was three times that early last fall, when the market was obsessed with debt problems in Europe and at home, among other fears.
Investor attention turns next to corporate earnings announcements, which begin when aluminum maker Alcoa, one of the 30 stocks that make up the Dow, reports April 10.
Companies in the S&P 500 are making more money than ever, an impressive feat in a tepid economic recovery.
Those who are bullish on stocks note that the S&P 500 trades at 12.9 times expected earnings this year, somewhat cheap compared with its 10-year average of 14.6.
The so-called forward earnings multiple is generally higher than the long-term average during bull markets. If it rose to 16 or 18 this year, stocks would be significantly higher than they are now, even if corporate earnings failed to grow at all.
Some investors say the bulls are fooling themselves if they think big profits this year are assured. Indeed, first-quarter profits for the S&P 500 are expected to fall 0.1 percent from a year earlier, according to a survey of analysts by FactSet, a provider of financial data.
That would be the first time in more than two years that earnings will not have grown. For the full year, analysts are expecting profits will rise a healthy 9 percent, but those predictions depend on a surge of 16 percent in the last three months.
“The idea that we’re going to have a huge rebound at the end of the year is unrealistic,” says Barry Knapp, head U.S. equity strategist at Barclays Capital.
Knapp says he’s bullish on technology stocks but the rest of the market has “overshot the fundamentals.” He says he’s sticking with his target for the S&P this year: 1,330, which would be a drop of about 6 percent from Friday’s close.
Other skeptics of the surge point to the role of central banks around the world in lifting markets by printing money, lending at near-zero rates and buying bonds and other securities.
The fear is that once that support is removed, stock prices could fall, and all the talk about profits could prove beside the point.
The same day the Nasdaq broke through 3,000 earlier this month, Michael Hartnett, chief global equity strategist at Bank of America, published a report with a curious chart showing how stocks reacted to programs by the Federal Reserve to buy bonds, or big announcements about lending rates.
In every case since the market hit a 12-year low in March 2009, prices jumped on the Fed moves, then fell when the programs ended. A question above the chart asked whether it was time to move more money into stocks.
Hartnett’s answer was no. The bank expects the S&P to end the year at 1,400, almost exactly where it is now.
World stock markets fell Thursday as signs of weakness in the world’s two biggest economies kept investors at bay.
Benchmark oil lingered near $105 a barrel. The dollar fell against the euro and the yen.
Caution in markets stemmed from U.S. Commerce Department data that showed orders for durable goods rose 2.2 percent in February. While that compared favorably to a steep drop in January, analysts had expected orders to increase 2.7 percent.
“U.S. data shows weakness in the economic recovery. That really confirms what the Fed Chairman, Bernanke, said last week that the Federal Reserve has to continue loose monetary policy in order to aid economic recovery and employment,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
Investors are also concerned that China’s slowdown is accelerating. China is a huge importer of raw materials, so a slowing economy there can weigh on prices for raw materials.
European stocks were muted in early trading. Britain’s FTSE 100 was 0.4 percent lower at 5,787.75. Germany’s DAX lost 0.4 percent to 6,971.46 and France’s CAC-40 slipped 0.1 percent to 3,425.29.
Wall Street futures headed lower as traders awaited weekly jobless claims later in the day. Dow Jones industrial futures fell slightly to 13,049 while S&P 500 futures lost less than 0.1 percent to 1,399.50.
Japan’s Nikkei 225 index retreated for a second day after reaching a one-year high, falling 0.7 percent to 10,114.79.
Hong Kong’s Hang Seng tumbled 1.3 percent to 20,609.39 and South Korea’s Kospi dropped 0.9 percent to 2,014.41. Australia’s S&P/ASX 200 dipped 0.1 percent to 4,337.90.
The prospect of slowing growth from the world’s two biggest economies pummeled industrial, energy and materials stocks payday loans.
Hong Kong-listed Aluminum Corp. of China shed 1.3 percent. CNOOC Ltd., China’s main offshore oil and gas producer, tumbled 3.3 percent despite reporting that its 2011 profit rose 29.1 percent on higher oil and gas sales. Hyundai Heavy Industries Co., South Korea’s leading shipbuilder, fell 3 percent.
Leighton Holdings plummeted 6.7 percent in Sydney after the Australian construction company cut its full year profit forecast because of losses in several major infrastructure projects.
Mainland Chinese shares spiraled downward amid dwindling hopes for a looser monetary policy, analysts said.
The benchmark Shanghai Composite Index lost 1.4 percent to 2,252.16 and the Shenzhen Composite Index lost 1.6 percent to 895.07. Shares in nonferrous metals, engineering and materials weakened.
Analysts said investors are also holding back as they await news later this week on Europe’s progress in resolving its debt crisis.
Benchmark crude oil was up 1 cent to $105.42 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.92 to end at $105.41 per barrel on the Nymex on Wednesday. Oil prices declined after France’s government said it is considering a release of emergency stockpiles as part of a U.S.-led effort to ease the recent climb in prices.
In currencies, the euro rose to $1.3326 from $1.3324 late Wednesday in New York. The dollar fell to 82.41 yen from 82.79 yen.
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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson
Mostafa Farahmand, who oversees sales at a car dealer in Tehran, hasn
Let your tax return be a lesson to you.
Next year at tax time, there may be no need to end up the way you did on taxes this year. Many people can improve the outcome with a little advance thought.
You might be able to put more money into your pocket from each paycheck during the year or ensure that you write a smaller check to the IRS, or no check at all, when you sign your tax return at this time next year.
For example, if you receive a big tax refund this year, you probably sent too much each payday to Uncle Sam. You can fix that and have more spending money during the year. Simply go to your benefits office now and change the withholding form.
See the effect on take-home pay by completing the questionnaire at http://www.tinyurl.com/irsquestionaire.
Or if you missed a great tax credit on your tax return this year because your income was too high, you might be able to adjust so you get credits worth thousands on your 2012 tax return. For example, if you are raising a child, there’s a credit worth $1,000. If you are going to college or sending a child to college, there’s another, up to $2,500. If you want to capture the credits for 2012, look for ways to cut your taxable income.
Accountants have many ideas, such as deciding what year a person should receive a big bonus or adjusting what a small-business owner takes out of a business each year. But individuals have a lot of control, even if they simply rely on a basic paycheck. The easiest way to slice income for tax purposes is to contribute more of it to a 401(k)-type retirement plan at work or an IRA outside of work. If you set this up so a little money comes automatically out of each paycheck, it can feel painless.
Anything you save will reduce the income that gets taxed, and the tax reductions help you save more without digging deep into your pocket. Say, for example, you are in the 25 percent tax bracket and contribute $100 a pay period to your 401(k). You won’t really be taking $100 out of your pocket, because the deduction you get on your taxes means your take-home pay goes down just $75.
To see the impact, visit http://www.tinyurl.com/takehomepaycalculator.
Still, cutting income to take advantage of favorite tax credits could end up being futile after the 2012 tax year. Many of the best credits families enjoy, such as the child tax credit or college credit, may be reduced after this year if Congress doesn’t extend the so-called Bush tax credits that were enacted in the early 2000s pay day loans. About $450 billion is at stake.
Given the uncertainty, financial advisers and accountants are having their clients make contingency plans, strategies they will put into action or abort depending on which way the politics takes the tax issue this year.
For the very wealthy, tax advisers are getting clients to get ready to give $5 million to heirs this year because they think a lifetime exemption on gifts might decrease to only $1 million in future years, said Anita Sarafa, a wealth adviser at JPMorgan Private Bank.
Certified public accountant Robert Keebler is suggesting that individuals consider selling before the end of the year stocks or funds that have appreciated significantly since purchased. This will allow taxpayers to take advantage of today’s zero to 15 percent capital gains rates rather than the 20 percent rate, plus a 3.8 percent surtax on high-income earners, for next year. The 3.8 percent Medicare surtax is being challenged. The 20 percent capital gains rate will depend on Congress.
Keebler is encouraging affluent retirees to look ahead at spending needs and possibly pull money out of IRAs for 2013 needs in November or December of 2012, if they see higher taxes coming. That way they can pay federal taxes at today’s 35 percent rate rather than a potential 39.6 percent next year.
With taxable accounts, selling stocks, bonds, real estate or mutual funds at a 15 percent capital gains rate now might make sense if the money will be needed for a big expense such as college tuition in 2013, Keebler said.
Another popular idea is to convert regular IRAs to Roth IRAs so taxpayers won’t have to pay taxes on earnings withdrawn for retirement, and so they can pass Roths tax-free to heirs, Sarafa said.
Even timing charitable contributions becomes tricky, she said. If the highest-income taxpayers will have to pay 43.4 percent next year (personal income tax plus Medicare), waiting until then to make a charitable contribution could provide a more valuable deduction than doing it this year.
Yet, Sarafa notes, “there is talk in Washington to make charitable deductions worth only 28 percent,” so waiting might not make sense.
JPMorgan Chase & Co. is being sued by a trader who says he accepted a contract from the investment bank because a typographical error made him believe he would be paid 10 times what was actually offered.
Kai Herbert, a Switzerland-based currency trader, is suing JPMorgan for about 580,000 pounds ($920,000), his lawyers said at a trial in London this week. The original contract said Herbert
Searchers on Thursday found three more bodies in the wreck of the Costa Concordia cruise ship that capsized off the Italian coast, an official said, raising the number discovered to 28 and leaving four still missing.
Civil Protection agency chief Franco Gabrielli did not give details on the sex or ages of the victims, and it was not immediately clear where the bodies were spotted. The remaining missing are presumed dead.
The ship hit a rocky reef, took on water and turned over just outside the port of the tiny island of Giglio off Tuscany on Jan. 13. Divers and searchers have been combing the half-submerged ship, from passenger cabins to elevators to the decks where many of the 4,200 passengers and crew gathered during the delayed and frantic evacuation.
Even before the latest bodies were found, eight discovered in recent weeks were awaiting official identification. Weeks in the water badly decomposed the remains, and forensic authorities have used DNA sampling to try to identify them.
Among those listed missing or unidentified are a crew member from India and several passengers, including an elderly U.S. couple and others from Italy and Germany.
The Concordia capsized in a protected sea sanctuary, and salvage teams have been removing fuel since Feb. 12 in hopes of sparing the pristine waters from pollution. Costa Crociere SpA., the Italian cruise company, and Italian officials said fuel removal was expected to be completed by Friday evening.
Occasional bad weather and choppy seas have at times forced suspension of both the search for bodies and the fuel removal.
The operation to remove the wrecked Concordia itself could take as long as 12 months. Bids for the job are being evaluated.
The Concordia’s Italian captain is under house arrest near Naples. Capt. Francesco Schettino is under investigation for alleged manslaughter, causing a shipwreck and abandoning ship during the evacuation. Schettino has denied wrongdoing and claimed that the reef wasn’t marked on charts.
Investigators are probing allegations that Schettino deliberately came too close to the island as part of a publicity stunt for the cruise line. Costa Crociere officials have distanced themselves from Schettino.
Bank of England Chief Economist Spencer Dale said U.K. inflation may not slow as fast this year as the central bank has forecast as tensions in the Middle East push up oil prices.
The Monetary Policy Committee
Stock futures headed lower Monday as last week’s rally, bolstered by healthy job data, appeared to lose some steam.
Even the Nasdaq futures, which had been trading higher Monday, dipped after Apple Inc. announced a dividend and $10 billion share buyback program.
In premarket trading Dow Jones industrial average futures fell 21 points to 13,142 and the broader Standard & Poor’s 500 futures fell 2.50 points to 1,396. Nasdaq 100 futures fell 2.75 points to 2,706.25.
European markets were lower in midday trading there after Asian markets finished narrowly mixed.
Apple said Monday it would pay a quarterly dividend of $2.65 per share and that its board had authorized a three-year share buyback program that will begin later this year.
Apple is sitting on $97.6 billion in cash and securities. For years, it has resisted calls to reward shareholders with some of that money. Since the death of CEO Steve Jobs, management had signaled that it’s been considering options for the money.
Shares broke $600 in early premarket trading, but gave up some ground after the announcement. Shares rose $3.94 to $589.51 30 minutes ahead of the opening guaranteed cash advance.
There is also some macroeconomic data that investors will be watching Monday. The National Association of Home Builders is scheduled to release its March housing market index, which measures homebuilder confidence.
In February, the index rose to 29, the highest level since May 2007. The index has been rising since September as builders are more hopeful about the potential for sales this year. Still, readings below 50 indicate negative sentiment about the new-home market. The index hasn’t hit that level since 2006, during the housing boom.
In Europe, the CAC-40 in France fell 0.7 percent to 3,568, while Germany’s DAX was down the same rate to 7,109. The FTSE index of leading British shares pulled back 0.4 percent to 5,940.
Hong Kong’s Hang Seng Index fell 1 percent to 21,115.29. Benchmarks in Singapore, Taiwan and Indonesia fell.
Other Asian indexes finished slightly up. Japan’s benchmark Nikkei 225 closed 0.1 percent higher at 10,141.99.
MADISON, Wis. — Apple’s latest iPad drew the customary lines of die-hard fans looking to be first, and entrepreneurs looking to make a quick profit.
Many buyers lined up for hours, and in some cases overnight, as the tablet computer went on sale in the U.S. and nine other countries. They did so even though Apple started accepting online orders a week ago.
The new model comes with a faster processor, a much sharper screen and an improved camera, though the changes aren’t as big as the upgrade from the original model to the iPad 2.
As with the previous models, prices start at $499 in the U.S.
“I don’t think it’s worth the price, but I guess I’m a victim of society,” Athena May, 21, said in Paris.
Dan Krolikowski, 34, was first in line at a mall in Madison, Wis. He arrived 14 hours before the store’s opening and was buying an extra one to sell on the “gray market.”
“Last year I sold one on eBay and made over $500 in profit,” Krolikowski said, leaning back in a reclining lawn chair he brought. “I’m hoping to do that again this year.”
Those who ordered iPads online started getting them delivered Friday. However, Apple now says there’s a two- to three-week shipping delay for online orders. There’s also demand in countries where the new iPad isn’t available yet.
In Hong Kong, a steady stream of buyers picked up their new devices at preset times at the city’s sole Apple store after entering an online lottery.
The system, which required buyers to have local ID cards, helped thwart visitors from mainland China, Apple’s fastest growing market. A release date in China has not yet been announced. Apple will begin selling the iPad in 25 additional countries next Friday, mostly in Europe.
At the flagship Apple Store on New York’s Fifth Avenue, the composition of the line, and the way many customers were paying for two iPads each with wads of cash, suggested that many of the tablets were destined to be resold abroad.
About 450 people lined up outside Apple’s Ginza store in downtown Tokyo. Some had spent the night sleeping outside the store.
Dipak Varsani, 21, got in line in London at 1 a.m. Thursday and said he was drawn by the new device’s better screen.
“You’ve got clearer movies and clearer games,” he said. “I use it as a multimedia device.”
Despite competition from cheaper tablet computers such as Amazon.com Inc.’s Kindle Fire, the iPad remains the most popular tablet computer. Apple Inc. has sold more than 55 million iPads since its debut in 2010.
Apple says the iPad is propelling us into a “post-PC era,” with computers that work very differently from the traditional laptops and desktops.
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