Standard & Poors is warning that if the U.S. defaults on a $30 billion debt payment on August 4, the nation's credit rating will be downgraded severely from its long-held AAA to a D ranking.
S&P managing director John Chambers tells Reuters news agency that, while it's an extremely unlikely outcome, such an unprecedented default on U.S. Treasuries could lead to the complete collapse of global financial markets.
"If the U.S. government misses a payment, it goes to D," Chambers told Reuters. "That would happen right after August 4, when the bills mature, because they don't have a grace period."
Chambers, along with the chiefs of the other two primary international credit ratings agencies, Moody's Investors Service and Fitch Ratings, have expressed increasing concern that the failure of Democrats and Republicans in Congress to reach a compromise and raise the U.S. debt limit may have an adverse affect on global confidence in American securities.
As Reuters notes, however, only the S&P has downgraded the outlook for the U.S. credit rating, with the agency saying there's a one-in-three chance of a downgrade in the coming two years.
Still, Chambers told the news agency he saw the likelihood of a U.S. technical default on a debt payment as "extremely low" - predicting Congress will find a compromise and raise the debt limit before the country is rendered unable to make payments, which Treasury Secretary Timothy Geithner has said would happen on August 2.
However, the trading platform wasn't compromised, people familiar with the matter told WSJ.
Investigators think unlawful financial gain, theft of trade secrets or a national-security threat designed to damage the exchange could be reasons for the penetrations.
"So far, [the perpetrators] appear to have just been looking around," one person involved in the Nasdaq matter told WSJ.
Sources familiar with the matter told WSJ that the Secret Service started investigating the attempts about a year ago.
Authorities have yet to identify any trail, specific individual or country associated with the incidents.
Rather, one of the tech industry shockers of 2010 was Angry Birds developer Rovio announcing that it had been downloaded 42 million times worldwide.
The puzzle video game represents the first crest of a growing wave in the mobile app business, according to a new report from the International Data Corp.
Mobile apps will grow from 10.9 billion downloads this year to 76.9 billion downloads in 2014, ReadWriteWeb said in its coverage of the report. That represents an annual average increase of 60 percent.
By 2014, the mobile application business will generate $35 billion in revenue worldwide, ReadWriteWeb reports.
The IDC report joins a host of other market analyses predicting stunning growth in the mobile app marketplace, ReadWriteWeb reports.
"Mobile app developers will 'appify' just about every interaction you can think of in your physical and digital worlds," said Scott Ellison, vice president, Mobile and Wireless research at IDC. "The extension of mobile apps to every aspect of our personal and business lives will be one of the hallmarks of the new decade with enormous opportunities for virtually every business sector."
The Facebook app was the most used mobile app on iPhones and Blackberrys in 2010, according to the Nielsen Company. Google Maps was the most popular app on Android devices during the same time.
WikiLeak's impresario Julian Assange has stirred up multiple hornet's nests with the release this year of intelligence documents on the Iraq and Afghanistan wars and, most recently, candid diplomatic cables that reveal the raw underbelly of U.S. international relations.
He has been painted as a villain by the U.S. government, and has defied requests to cease his document dumps. The Department of Justice is considering bringing charges against him, and he is becoming a man without a country.
While the revelations from the cables have caused some damage to the U.S. internationally, they are not among the most pressing concerns on Main Street America. Polls show U.S. citizens are far more outraged about the economy, jobs and taxes than body counts in Iraq, the locations of European nukes or U.S. diplomats' impressions of world leaders.
Assange's next act may turn him from nerdy villain to a Robin Hood figure, however, particularly with Main Street.
According to reports, Assange's next target is Wall Street. In a Forbes interview, he stated that WikiLeaks' would unleash data from an existing American bank early next year. (There's a good chance it's Bank of America.) In the interview with Andy Greenberg, Assange stated that the documents "will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume." He continued:
The U.S. stock market is set to open lower this morning as economic slowdown fears continue to outweigh the recent rash of merger activity.
Asian and European markets were down, following a disappointing session in the U.S. Japan's Nikkei average touched a 15-month closing low of 8995, below the psychological 9,000 threshold, and has technically qualified as a bear market, having fallen more than 20 percent from its high point in April.
The Japanese yen hits its highest level against the U.S. dollar in 15 years, a trend that negatively affects exporters and could potentially stymie Japan's economic recovery.
Yesterday, the Dow Jones Industrial Average was down 39 to 10,174, after being up more than ninety points earlier in the session. The NASDAQ dropped .9 percent to 2159 and the S&P 500 was off 0.4 percent to 1067, a five-week low.
Investors are waiting for this week's data before making firm commitments. Today, existing home sales are due at 10 a.m. ET. If the consensus estimate of 4.65 million homes is correct, it would be the weakest reading since March 2009, when 4.61 million existing homes were sold.
That would mean that despite multi-decade low mortgage rates, the housing market will essentially be at the same level that was seen at the crisis low.
In other words, the government's homebuyer tax credit simply delayed the painful process of clearing out excess inventory that occurs after every boom and bust.
The data were consistent with this struggle: the housing sector continues to be weak, consumers are saving more and spending less, and companies are seeing healthy profit margins, low borrowing costs and strong balance sheets.
Instead of increasing payrolls, some companies are using the extra cash for buying sprees (BHP Billiton, Intel, First Niagara Financial), reviving hopes for the beaten-down mergers and acquisition market.
In the end, the bears won out last week, though most traders admitted, "It could've been worse."
In has thus far been a pretty quiet summer week on Wall Street, despite being smack in the middle of earnings season. Volume has been low, indicating that investors aren't willing to wager that the economy is simply slowing, versus headed for a double dip.
The news this morning doesn't clarify the outlook: durable goods - items meant to last longer than three years - tumbled one percent, from -0.8 percent in May. It was the largest drop since August, 2009. Economists also measure durable goods without transportation because that sector is so volatile. Without transportation, the decrease was 0.6 percent from up 1.2 percent in May.
The report begs the question: can the economy recover with weakening manufacturing? The durable goods report, along with yesterday's Richmond Fed survey, paint a picture of slowing growth in the manufacturing sector is slowing. Manufacturing has been touted as one of the leading sectors of the economic recovery.
But there was one bright spot in the durable goods report and that was capital orders. Orders and shipments for non-military capital goods, excluding aircraft climbed 0.6 percent in June, after jumping 4.6 percent in May. This could be a signal that business investment could see improvement over the next two quarters.
Bottom line: with growth slowing at an as-yet undetermined rate, investors are taking the wait and see approach
The announcement came after BP reported a $17.15 billion second quarter loss due to the more than $32 billion in charges related to the spill in the Gulf of Mexico. The company plans to sell about $30 billion in assets to replenish its coffers. Shares of BP are up 0.7% in the premarket.
Investors are beginning to consider that there will be enough growth in the second half of the year to maintain the economic recovery.
Nerves were also soothed when the results of the European bank stress tests were better than anticipated: 7 of 91 banks failed, although the tests appeared to be rigged, or at the very least flawed, because they didn't measure the risk of a sovereign default. How would these banks do if a country like Greece defaulted? That answer will have to wait ...
This morning, there's more evidence that the death of the European economy is overstated. Britain's Office for National Statistics said U.K. GDP rose 1.1 percent in the second quarter, nearly twice the consensus estimates for 0.6 percent growth. The result was nearly four times the pace of 0.3 percent in the first quarter, and the highest in four years. The uptick was due mainly to increases in business services and finance and a dramatic rebound in construction.
Today at noon, the Committee on European Banking Supervisors (CEBS) will release the results of the European bank stress tests, both on an aggregated and on a bank-by-bank basis. Ninety-one banks were poked and prodded to determine whether they had to raise additional money. It's expected that banks in Greece, Spain, Portugal and Germany will need the most money.
Whispers about the death of the European economy appear to have been overstated. This morning, Markit's Eurozone Flash Services Purchasing Managers' Index, increased more than expected in June. It was the first increase in three months. Both manufacturing and services enjoyed gains, though manufacturing continues to lead the upturn, with output showing the third-strongest rise since October 2006. Services posted the second-strongest expansion since August 2007.
The report helped European stocks gain ground, while Asian stocks were mixed after Federal Reserve Chairman Ben Bernanke's semi-annual testimony before the Senate Finance Committee.
In his policy update, the Fed chief Bernanke said that the "economic outlook remains unusually uncertain." While he tried to assure lawmakers that the central bank remains prepared to act and will remain flexible, Bernanke did not say how, leaving investors doubtful that additional economic stimulus would be forthcoming. Without such a boost, some fear that the economy will sputter and potentially fall back into contraction--or the so-called "double-dip".
Stocks sank after Fed Chairman Ben Bernanke's testimony on Capitol Hill. The Dow fell 109 points to 10,120; the NASDAQ lost 1.6 percent to 2187; and the S&P 500 dropped 1.3 percent to 1069.
With a good night's sleep, investors are rethinking their reaction to Bernanke's comments. The Fed still has plenty of ammunition to stimulate the economy and Helicopter Ben is just the guy to do it. (This is a reference to Bernanke's famous 2002 speech when he said that to fight deflation, "the U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost." He was referring to a statement made by economist Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation.)
U.S. stock futures are pointing higher in the premarket.
Disappointing tech earnings after yesterday's close, combined with sluggish results this morning pushed U.S. stock futures lower before the market open.
IBM and Texas Instruments both reported an increase in bottom line earnings, but light revenue growth. Given that corporate America has already reduced expenses throughout the recession, investors are now concerned that companies must sell more goods and services to ensure future profitability.
Days after Goldman Sachs agreed to settle with the SEC, the bank holding company reported second-quarter earnings of $2.75 per share, excluding one-time items, down from $4.93 a share this time last year. The downshift in sales was also dramatic, from $13.76 billion in Q2 2009 to $8.84 last quarter. Investment banking and trading revenue were down by over a third from last year. Shares of Goldman fell over 3 percent in the premarket.
Johnson and Johnson also weighed in on the quarter, reducing its full-year forecast due to recalls and foreign currency exchange rates. Shares are down 1.8 percent in premarket trading.
The Census Bureau said that Continue »
It bears noting that double-dips are rare: there have only been two since the Great Depression-- one in the 1970s, caused by the oil shock and rising interest rates and a second in the early 1980s, which was caused by a rise in interest rates that helped curtail runaway inflation.
The U.S. economy doesn't have to actually show negative GDP growth to feel bad. A pull-back from 3 percent growth to a slower, 1 - 1.5 percent level will feel pretty rotten and would severely impact the already-rotten labor market. Jobs remain the key to the recovery process.
This week investor attention will turn to second-quarter earnings season, with more than one-third of Dow components set to report, including financial giants Goldman Sachs, Morgan Stanley, Wells Fargo and Bank of America.
Also on tap will be a slew of data on the housing market, which likely declined in June. Mid-week, Federal Reserve Chairman Ben Bernanke will testify before the Senate Banking and the House Financial Services Committees to provide a mid-year update on the economy. President Obama is scheduled to sign historic financial-reform legislation Wednesday.
This morning, Asian stocks fell after Friday's dismal day in the U.S. markets. There was one exception: Chinese stocks popped by over two percent. European shares traded lower earlier this morning after Moody's downgraded Ireland's sovereign bond rating. The ratings giant cited below-trend growth as the reason behind the cut. Markets recovered and are now holding steady,
There will be more focus on Europe Friday, when the Committee of European Banking Supervisors (CEBS) will release the results of Euro-zone Banks Stress Tests. Like the U.S. bank stress tests that were conducted last year, the tests are intended to examine the ability of 91 European banks (two-thirds of the sector) to withstand losses on sovereign-debt holdings. The test will assume a 3 percent decline in EU GDP over the next 2 years, compared to forecasts of 1 percent growth this year and a bit more than that in 2011.
U.S. stock futures are pointing slightly higher, but the day is young! Here's where we start the week:
DJIA: 10,097, down 1 percent on week, down 3.2 percent YTD
S&P 500: 1064, down 1.2 percent on week, down 4.5 percent YTD
NASDAQ: 2179, down 0.8 percent on week, down 4 percent YTD
August Crude Oil: $76.01
August Gold: $1,188.20
Total bank failures for 2010 = 96 (six new bank failures over weekend).
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Too bad, because coming into the session, investors were seeking to add to the continuation of the stock market's six-day winning streak, which left the S&P 500 down less than one percent for the year. Funny how losing less is starting to feel like a win.
After the close, Intel delivered better-than-expected results. The world's number one chipmaker saw a 34 percent increase in revenue, leading to a quarterly profit of $2.89 billion, or 51 cents a share, compared to a 7 cent loss a year ago. Intel shares rose 5 percent to over $22 a share after hours.
News from Asia helped those markets advance. City-state Singapore said second quarter GDP increased 26 percent from the previous quarter and upped its 2010 GDP growth forecast to 13 percent to 15 percent.
That's all history now--U.S. stock futures have turned lower, so prepare for a negative opening.
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