Novas medidas do Governo pressionam contas em 0,6% do PIB

[Figas]

CBS MarketWatch
U.S. stocks slip after Greenspan remarks
Tuesday July 15, 2:02 pm ET
By Julie Rannazzisi


NEW YORK (CBS.MW) -- U.S. stocks headed south Tuesday as a court setback for Altria Group and news that Boeing would take a charge against second-quarter earnings tripped blue chips, upstaging soothing remarks on the economy from the nation's top central banker.
Testifying on Capitol Hill, Federal Reserve Chief Alan Greenspan made clear that interest rates would remain low for the foreseeable future to promote "satisfactory economic growth."

Treasury yields soared to fresh two-month highs following Greenspan's recovery remarks, underscoring the Fed chief's difficult task in attempting to balance investor reactions in the equity and bond markets.

Anthony Chan, chief economist at Banc One Investment Advisors, said Greenspan's comments offered encouragement to equity

markets by signaling the Fed was prepared to go "all out" in supporting economic growth.

The Dow Jones Industrial Average (CBOT^DJINews) eased 47 points, or 0.5 percent, to 9,129 after rising as much as 61 points in morning action.

Early in the session, three of the Dow's 30 components -- Citigroup, J.P. Morgan Chase and Walt Disney -- hit new 52-week highs.

The Nasdaq Composite (NasdaqSC^IXICNews) gave up earlier gains and fell 2 points, or 0.2 percent, to 1,752 while the Nasdaq 100 Index of larger capitalization stocks (NasdaqSC^NDXNews) was little changed at 1,294.

The Standard & Poor's 500 Index (CBOE^SPXNews) edged down 0.4 percent while the Russell 2000 Index (CBOE^RUTNews) of small-capitalization stocks shaved 0.6 percent.

An upbeat profit report from Merrill Lynch kept the brokerage sector positive while most other areas of the market dripped in red ink. Investors shunned networking, airline and gold stocks as the precious metal plunged in the futures markets.

Volume came in at 929 million on the NYSE and at 1.27 billion on the Nasdaq Stock Market. Losers outpaced winners by 21 to 11 on the NYSE and by 18 to 12 on the Nasdaq.

Global fund managers upbeat on growth, earnings
Global fund managers are extremely sanguine on companies' earnings prospects and are bulking up their holdings of cyclical assets to reflect that optimism.

"Fund managers are getting out of staples and utilities and are taking positions in technology, media and other cyclical assets," said David Bowers, chief investment strategist at Merrill Lynch.

Merrill's July fund manager survey also revealed that world economic growth and company profit expectations are at their highest levels since the first half of 2002. Additionally, July saw the largest shift out of bonds and into equities since the second quarter of 2002.

Retail sales climb; FOMC sees growth pickup
June retail sales rose by an as-expected 0.5 percent and climbed by 0.7 percent when excluding autos, besting the 0.3 percent increase that had been expected by economists.

Economists hailed the news.

"Consumers are spending and there appears to be a noticeable uptrend in spending following the [conclusion of the] war in Iraq. These numbers should be viewed very positively as they provide some early evidence that consumer spending has begun to broaden outside of the interest rate sensitive sectors," opined May Johnson, economist at Quantit Economic Group.

Adding to the positive news for retailers, sales at U.S. chain stores rose a healthy 0.9 percent in the latest week, according to the Bank of Tokyo-Mitsubishi and UBS index.

The Federal Open Market Committee unfurled optimistic growth projections for the U.S. economy on Tuesday.

The monetary policy-setting group forecast that gross domestic product would grow at a 2.5 percent to 2.75 percent range on a fourth quarter over fourth quarter basis, lower compared with estimates released in February. For 2004, the FOMC projects the economy to grow at a 3.75 percent to 4.75 percent rate.

Further, the FOMC expects prices to fall further this year and then remain steady throughout 2004.

Altria, Boeing hobble Dow
Steep losses in Altria Group and Boeing put substantial pressure on the Dow Industrials.

Altria Group (NYSEMONews) , the parent of Philip Morris, took a 3.2-percent hit following an unfavorable court ruling. An Illinois appeals court, in fact, said a trial judge exceeded authority when reducing the bond Altria needed to post to appeal a $10.1 billion class-action judgment.

And Boeing (NYSEBANews) lost 3.4 percent after announcing that it would register a second-quarter charge of $1.1 billion as it moves to halt its flagship commercial rocket program.

But blue chipper IBM (NYSEIBMNews) was a bright spot, firming 1.3 percent after announcing late Monday that it scored an $801 million contract to build a computer system for the California Department of Child Support Services.

And AT&T (NYSETNews) added 0.1 percent, shrugging off a Fitch debt rating downgrade that cited ongoing sluggishness in business enterprise spending.

Slew of earnings news unfurled
Dow component Johnson & Johnson (NYSEJNJNews) gave up 1 percent, erasing early gains that came after the drug titan checked in with a second-quarter profit from operations that narrowly topped analysts' expectations. See story.

Brokerage powerhouse Merrill Lynch (NYSEMERNews) tacked on 4.4 percent after registering a second-quarter profit that blew past Wall Street's expectations thanks to a stellar performance in its fixed-income division and the improved tone in the equity market.

In the banking sector, FleetBoston Financial (NYSEFBFNews) tallied a second-quarter profit that slightly topped the Wall Street consensus estimate, riding on the coattails of better-than-expected results from Citigroup and Bank of America on Monday. Still, shares fell 2.5 percent.

Amid generally upbeat news in the financial arena, Fannie Mae (NYSEFNMNews) posted a second-quarter profit that narrowly missed analysts' expectations due to losses in its derivatives operations. The stock shed 2.7 percent in recent exchanges. Late Monday, Fannie upped its quarterly dividend by 15 percent.

Drug shares (AMEX^DRGNews) eked out a loss as Forest Labs tumbled over 10 percent. The company (NYSEFRXNews) posted a fiscal first-quarter profit that was in line with expectations but cautioned that future profit growth may suffer from a slowdown in the overall growth of prescriptions. SG Cowen said the second quarter will be tougher for specialty pharmaceuticals compared with the first quarter due to a slowdown in new generic drug approvals.

In the tech sector, investors were readying for Intel's (NasdaqNMINTCNews) second-quarter profit report, due out after the close of trade. Analysts surveyed by Thomson First Call are anticipating the chip titan to post earnings of 13 cents a share. Intel rose 0.5 percent in recent trades.

Elsewhere in the semiconductor sector, Rambus (NasdaqNMRMBSNews) put on over 7 percent after posting late Monday second-quarter earnings that were in line with expectations while its revenue surpassed the consensus estimate. For the third-quarter, the chip firm expects to post revenue that's higher compared with Wall Street's forecast.

In the media sector, New York Times (NYSENYTNews) and Dow Jones (NYSEDJNews) climbed 1.2 percent and 1.7 percent, respectively, after posting second-quarter earnings that bested analysts' expectations. Read Movers & Shakers for the latest individual stock action.

In the energy patch, Mirant shares (NYSEMIRNews) were halted after filing for Chapter 11 bankruptcy protection on a failed debt refinancing.

Dynegy (NYSEDYNNews) rallied 3.4 percent after unveiling a host of refinancing and restructuring transactions.

Brutal losses for Treasurys after Greenspan remarks
Government bonds plunged as Greenspan upbeat remarks on the economy spooked investors.

The 10-year Treasury note took a nosedive of 1 24/32 to yield (CBOE^TNXNews) 3.94 percent while the 30-year government bond cratered 2 25/32 to yield (CBOE^TYXNews) 4.945 percent.

In the currency sector, the U.S. dollar swelled against its major counterparts, rising 0.2 percent to 117.87 yen while the euro tumbled 1 percent to $1.1166.

But the U.S. dollar surged against the Canadian currency, tacking on 1.5 percent to 1.3940, after the Bank of Canada lowered its overnight lending target by 25 basis points to 3 percent in a move that caught the market off guard.