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Sears, Kmart closings: Shares slide to new low on Fitch downgrade

Sears
Sears Holding Corp. is ending the year on a bitter note. The company, which earlier this week posted a list of 79 out of the up to 120 Sears and Kmart stores it plans to close and was then downgraded by Fitch Ratings, is now watching its stock bleed out to a new low.

In mid-day trading in New York, the beleaguered retailer’s stock was down to $32.20, heading for its fourth straight daily drop and less than half of the year-earlier price of $74.15.

Fitch Ratings downgraded the company on Thursday to CCC from B, saying that Sears’ liquidity levels next year will likely be “inadequate,” which could potentially banish the retailer into restructuring. 

And Standard & Poor’s said Wednesday that it was putting a watch on Sears’ credit rating as it considers a possible downgrade for the retailer.

Illinois-based Sears said Thursday that it will close 41 Sears stores and 38 Kmart stores – the first thrust of a plan to shut down 100 to 120 locations, including three in California -- following a disappointing holiday season.

Domestic sales tumbled 5.2% in the eight weeks through Christmas Day, the company said Tuesday. That comes after more than four years of sliding sales and projections that fourth-quarter earnings will be less than half the $933 million Sears pulled in during the same period a year earlier.

The company said it will now focus its resources on its strongest stores.

RELATED:

100 to 120 Kmart and Sears stores to close after slow holiday

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-- Tiffany Hsu

Photo: Sonny Hedgecock / AP Photo / The High Point Enterprise

Standard & Poor's positive for 2011 once again

Bull -- spencer platt getty
Is the Standard & Poor's 500 positive or negative for the year?

It depends on the day.

The S&P 500 index on Thursday once again reversed course and rose above the level where it was when 2011 began. The index has bounced in and out of positive territory all week.

The index ended the day up 1.1%, or 13.38 points, to 1,263.02. That is 0.4% above where the index stood when the clock turned on 2010. The Dow Jones industrial average rose 1.1%, or 135.63 points, to end Thursday at 12,287.04.  That is up 6.1% for the year.

Although it was fears about the European economy that sent markets down Wednesday, Thursday it was good news about the U.S. economy that gave investors confidence. An index of business activity showed that activity grew in November. Meanwhile, pending home sales also rose in November. New claims for unemployment benefits rose slightly last week.

The markets are particularly susceptible to sudden movements because of the relatively low volume of trading. The volume of trading of Dow stocks Wednesday was half what it was a week earlier and a quarter of what it was on some of the heavier trading days this month.

If the markets reverse course again Friday it will bring a fitting end to a year that has been marked by volatility and dramatic market swings.

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-- Nathaniel Popper

twitter.com/nathanielpopper

Photo: The bull statue in Lower Manhattan. Credit: Spencer Platt / Getty Images

Standard & Poor's 500 in the red for 2011 . . . again

Ominous nyse spencer platt getty
The Standard & Poor's 500 index is once again in the red for 2011.

A rough day on the markets Wednesday brought the benchmark index into negative territory for the year, just a few days after it passed into the black for the first time in weeks.

The index ended Wednesday down 15.79 points, or 1.3%, to 1,249.64. That is 0.6% below where it began 2011.

The Dow Jones industrial average ended the day 139.94 points, or 1.1%, to 12,151.41. It is still up 5% for the year.

Investors were rattled by news that European banks had borrowed large sums from the European Central Bank without lending most of it out, pointing to the risks still present in the continent's economy.

The European economy will be tested Thursday when Italy sells a batch of 10-year bonds. The ease with which it does so will point to the confidence investors have in one of the continent's most troubled economies.

It was the first down day for the major U.S. indexes after five consecutive trading days of increases. The dip makes it ever more likely that the S&P 500's performance for 2011 will be determined on the final trading day of the year. 

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The stock-market winners and losers of 2011

Small investors still counting on stocks for retirement

Assets of major public pension funds slid 8.5% in third quarter 

-- Nathaniel Popper

twitter.com/nathanielpopper

Photo: The New York Stock Exchange. Credit: Spencer Platt / Getty Images

Small investors still counting on stocks for retirement

NYSE2-Getty Images

Maybe individual investors haven't given up on stocks after all.

That's the thesis of a new study, which says Americans still have faith in the stock market's long-term potential even though they have reduced their equity investments in recent years.

The study analyzed more than 23 million 401(k) retirement accounts nationwide. It was done by the Investment Company Institute, a mutual-fund trade group, and the Employee Benefit Research Institute, a research organization.

The study showed that 62% of 401(k) participants had money in stocks last year (defined as either stock mutual funds or company stock).

Four in 10 people had more than 80% of their 401(k) money in stocks in 2010. That's down from 54.1% of people who had such a large helping of stocks a decade earlier, but it still represents a significant amount.

The percentage of 401(k) investors who are out of the market entirely dropped to 11.8% from 12.7%.

Heavy stock concentration declined markedly among older Americans. The percentage of sixtysomethings with at least four-fifths of their portfolios in equities declined to 21.4% last year from 39.7% in 2010.

But among twentysomethings, the percentage rose to 60.4% from 55.3%, according to the study.

Overall, the reduction in stock holdings illustrates the fear and frustration that many feel toward stocks after a very disappointing decade. But the report nonetheless appears to undermine the notion that Americans are dumping stocks en masse.

That's due in part, the study says, to the popularity of so-called target-date funds, which automatically redistribute assets among stocks, bonds and other investments as participants get older.

“Growing use of target date funds appears to be helping to keep younger 401(k) participants invested in balanced portfolios, with equity exposure to help their assets grow over the long term,” said Sarah Holden, Investment Company Institute senior director of retirement and investor research. “While our surveys and others have shown that investors are less willing to take on stock market risk, 401(k) plan features are countering that trend for plan participants.”

Still, the study underscored the touchy economic straits that many Americans are suffering through. In 2010, 21% of all 401(k) participants who were eligible to borrow money from their accounts had done so, the same as in 2009 and up 18% from 2008.

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-- Walter Hamilton

Photo: The New York Stock Exchange. Credit: Getty Images

 

The stock-market winners and losers of 2011

Although Christmas has come and gone, investors are still waiting to see if Santa comes for a visit -- and the first signs are promising

Although the Standard & Poor's 500 index may end 2011 with the smallest yearly change since the 1970s, many individual stocks will come out of the year in a very different place from where they began it.

Among the biggest movers of 2011 are some very familiar names and some that flew below the radar.

The worst performer on the Dow Jones industrial average to this point has also been the one that received the most attention, Bank of America. The stock tumbled more than 60% thanks to a nearly nonstop barrage of bad news that also helped the company lose its position as the nation's largest bank.

Among the component stocks of the S&P 500, the worst performer was a less familiar name, though one that is in keeping with the trends of the times. In a year in which a big government experiment on solar energy failed, and attention moved back to more traditional fuel sources, First Solar Inc. suffered, dropping a whopping 75% in the year to date. 

The flip side of that same trend was that an oil and natural gas company, Texas-based Cabot Oil & Gas, was the best performer in the S&P 500, jumping over 100%. 

On the Dow, the company that delivered the best return was an old standby for Americans looking for cheaper eating options. McDonald's is up nearly 30% this year.

To see the other big movers head over to Investor Place, which has lists for the Dow and the S&P 500.

When looking at year-end lists like these, it is always wise to keep in mind the old adage that past performance is no guarantee of future results.

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S&P 500 enters positive territory for the year

New year will bring new laws and regulations for small business

-- Nathaniel Popper in New York
twitter.com/nathanielpopper

Photo: On Wall Street. Credit: Michael Nagle / Getty Images

A good start for a Santa Claus rally

Although Christmas has come and gone, investors are still waiting to see if Santa comes for a visit -- and the first signs are promising
Although Christmas has come and gone, investors are still waiting to see if Santa comes for a visit -- and the first signs are promising.

A Santa Claus rally is often used roughly to refer to any stock rally in late December, but it is defined by the Stock Traders Almanac, which first identified the phenomenon, as a rise in stock prices during the last five days of the trading year and the first two days of the new one.

The almanac notes that this has happened in all but 10 years since 1969. It's significance is not just as a overused catch phrase for journalists: It has frequently been a good predictor of the market's performance in January and the year ahead. As the almanac has put it, "If Santa Claus should fail to call, bears may come to Broad and Wall."

This year, the market is off to a good start. Last Friday was the first day of the Santa rally period. The Standard & Poor's 500 index rose 0.9% and entered positive territory for the year.

This morning, stocks have wobbled, with the Dow Jones industrial average and the S&P 500 trading almost unchanged as investors process news that home prices were down in the latest Standard & Poor's/Case-Shiller report, while consumer confidence is up.

The markets' performance this week is likely to determine whether the S&P 500 ends the year in positive or negative territory for the year. Despite all the violent market movement this year, the index is likely to show the smallest yearly change since 1970, according to Bloomberg.

With stock trading expected to be light this week, much attention will likely be focused on the obligatory year-ahead predictions. To get started, here's one look at what the optimists are saying, and one from a commentator who is waiting for the Apocalypse.

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S&P 500 enters positive territory for the year

New year will bring new laws and regulations for small business

-- Nathaniel Popper in New York
twitter.com/nathanielpopper

Photo credit: Michael Nagle / Getty Images

S&P 500 up for the year as stock market rises solidly

NYSE3-AP
The S&P 500 might enjoy a merry Christmas after all.

The blue-chip index turned positive for the year this morning, thanks to a recently steady stream of encouraging economic data and the breaking of the congressional deadlock over the extension of the payroll tax cut.

The index is up about 0.6% today, enough to notch a gain of 0.4% for the year.

It's too soon, of course, to say the stock market has turned any kind of a permanent corner and is headed even higher. Stocks are no doubt getting a boost from light trading volume in the holiday week when the tilt of economic news can have an outsized effect on the direction of the market.

But it's encouraging that stocks appear to be ending the year strongly. The market has historically fared well in the third year of a presidential election cycle, and the S&P's underwhelming performance had raised concerns about its prospects in 2012.

One obstacle the market might have to confront in the new year: the percentage of S&P 500 companies pre-announcing positive fourth-quarter earnings in the past couple of weeks dropped below 60% for the first time since early 2009.

Thus far, just 57% of companies pre-announced better-than-expected fourth-quarter earnings, according to FactSet Research Systems. That's the first time since the 59% mark in the first quarter of 2009 that the percentage has dropped below 60%.

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American dissatisfaction with nation's outlook near record highs

Down stock market in 2011 might continue in 2012

-- Walter Hamilton

Photo: The New York Stock Exchange. / Credit: Associated Press

 

Stocks surge on good economic data from U.S., Europe

Wall sign closeup  michael nagle getty
Stock markets rose around the globe after a handful of surprisingly good reports about the U.S. and European economies.

The Dow Jones industrial average was recently up 269.43 points, or 2.29%, to 12035.69. The broader Standard & Poor's 500 index was up 2.4%, or 29.01 points, to 1234.24 in early trading.

Stock prices were given a boost by a report from the Commerce Department showing that construction firms started building 685,000 homes in November, the biggest number since 2010 and much more than was anticipated by economists. The number of building permits was also up more than expected. Much of the increase was due to a rise in new apartment buildings for the rental market. 

The increase in home-building comes at a time when residential real estate prices have been falling, leading economists to call for care in interpreting the new data.

"Although this is a constructive development, caution still needs to be applied to the potential positive effect this will have on the economy," Mizuho Securities economist Steve Ricchiuto wrote in a note to clients. "Not only has housing become a very small portion of the economy during the last several years of consolidation, but more importantly, the banking industry’s more conservative lending practices strongly suggest growth in this industry will remain muted."

Before the data on U.S. home-building came in, European markets were already rising thanks to a German report showing that business confidence in Europe's largest economy had risen unexpectedly for the second straight month.

Germany's leading stock index was up 2.7%, while a French index was up 2.3% near the market's close there.

The optimism today contrasted with Monday's pessimism, on a day that was dominated by investor concerns about Europe's sovereign debt crisis and new bank regulations. 

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-- Nathaniel Popper

twitter.com/nathanielpopper

Photo credit: Michael Nagle / Getty Images

Down stock market in 2011 might continue in 2012

NYSE2-Getty Images

There are few sure things in the financial world, but a rising stock market in the third year of a presidential election cycle has long been pretty close.

In the last 80 years, the Standard & Poor's 500 index has fallen only twice in Year Three, and hasn't declined at all since 1939. (See chart below.)

Since 1945, the S&P has risen an average 15.9% in Year Three, far outpacing the 6.3%, 5.3% and 5.7% gains in Years One, Two and Four, respectively. The data-crunching comes courtesy of Sam Stovall, chief equity strategist at Standard & Poor's Corp. in New York.

Well, you can probably guess where this is headed.

Barring a late-year rally, the S&P appears headed for its first Year Three downturn of the modern era. The index is off about 3.5% this year, although the Dow Jones industrial average is clinging to a 2% gain.

The logical next question: How does the market do in Year Four after a less-than-stellar Year Three? The answer: Not so well.

Since 1927, there have been six times that the S&P either fell or rose less than 10% in Year Three. On five occasions, the decline continued the following year, according to Stovall.

The reasoning: Stocks typically rise in Year Three as investors anticipate that the sitting president and Congress will try to stimulate the economy in advance of the election.

But if investors don't get excited enough to push up stock prices in Year Three, they're downright gloomy in Year Four.

Investors, of course, can only hope that the precedent doesn't hold in 2012. And Stovall said the market might break with history, thanks to solid corporate earnings growth.

"While history is a great guide, it’s never gospel," Stovall wrote in a report to clients.

 SP-3rdYr

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-- Walter Hamilton

Photo: The New York Stock Exchange. Credit: Getty Images

U.S., European markets up after Kim Jong Il's death

European and U.S. markets are shrugging off the death of North Korean leader Kim Jong Il after Asian markets earlier reacted negatively
European and U.S. markets are shrugging off the death of North Korean leader Kim Jong Il after Asian markets reacted negatively. 

Asian stocks fell swiftly after North Korea announced Kim's death over the weekend. South Korea's Kospi Index ended the day off 3.4%, while leading indexes were down 1.3% in Japan and 2.2% in Taiwan.

Kim's death, and the likely succession of his son, creates the type of uncertainty that typically unnerves investors.

PHOTOS: Kim Jong Il | 1942-2011

European markets opened down, but have risen over the course of the day, putting leading indexes up 0.8% in Germany and 1% in France.

Investors are anticipating a conference call of European leaders later today that is set to iron out details of a recently created agreement aimed at alleviating the continent's financial crisis.

The European deal announced earlier this month, which made more funds available to confront the sovereign debt crisis, ended up disappointing most investors -- the Dow Jones industrial average finished last week down 2.6% -- but today's call could provide more encouraging steps.

The Dow was up 47.53 points or 0.4%  to 11,914.15 in early trading Monday morning. The Nasdaq composite index was up 0.6%, or 15.30 points to 2,570.33.

RELATED:

OBITUARY: Kim Jong Il dies at 69

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-- Nathaniel Popper in New York
twitter.com/nathanielpopper

Photo: Currency traders talk in front of the screens showing the Korea Composite Stock Price Index, left, and foreign exchange rates at the Korea Exchange Bank headquarters in Seoul on Monday.  Credit: Lee Jin-man / Associated Press

Euro falls as concerns about European deal grow

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Investors fled from the euro and Italian bonds as concerns grew about Europe's most recent effort to deal with its debt crisis.

The euro's value against the dollar fell for the third straight day and was recently below $1.30 for the first time since January. The drop plays into fears that the euro itself may not survive the current crisis.

A deal announced at the end of last week by European Union members was supposed to help prop up struggling European economies and the euro itself. This week, though, has been filled with reports from analysts and economists saying that the agreement did not do enough to stop the spread of the ongoing debt crisis to Europe's larger economies.

Italy and Spain have been the major flash points for the latest fears. Last week's agreement was supposed to provide new support for both countries so that they can go out and borrow more money from the public in order to pay off old bonds.

At a sale Wednesday morning of Italian five-year bonds, though, investors showed that they are not confident in Italy's ability to pay back investors. The yield that investors demanded at the bond sale was up significantly since the last sale in November, and the yield on benchmark 10-year Italian bonds is up for the third straight day. Investors will be watching again when Spain conducts its own bond sale Thursday.  

The concerns drove down stock prices across Europe, with leading indexes finishing the day down 3.3% in France and 1.7% in Germany.

U.S. indexes were down less sharply. The Dow Jones industrial average was recently trading down 132.60 points or 1.1% to 11822.57.

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Stocks fall as European optimism fades

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Investors greet European deal with cautious optimism

-- Nathaniel Popper

twitter.com/nathanielpopper

Photo: Outside the headquarters of the European Central Bank. Credit: Kai Pfaffenbach / Reuters

 

 

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