S&P cuts Volkswagen's credit rating after scandal

PARIS, France - The international credit rating agency Standard and Poor's on Monday cut the long-term debt rating of German auto giant Volkswagen in the wake of the pollution-cheating scam involving its diesel vehicles.

S&P said in a statement it was downgrading VW's long-term debt rating by one notch to A- and could cut it "by up to two more notches" again in future in face of the "wide-ranging negative credit consequences following its admission that it installed software designed to manipulate diesel engine exhaust emissions in 11 million vehicles."

"The downgrade reflects our assessment that VW has demonstrated material deficiencies in its management and governance and general risk management framework," the analysts argued.

"We believe that VW's breach of US environmental law and potential other laws outside the US represents a significant reputational and financial risk to VW over the medium term," the statement continued.

Last month, VW became embroiled in the biggest scandal in its history, when US authorities accused it of fitting diesel cars with devices that can switch on pollution controls when they detect the car is undergoing testing.

They then switch off the controls when the car is on the road, allowing it to spew out harmful levels of emissions.

VW has already said it will set aside 6.5 billion euros ($7.4 billion) in provisions in the third quarter, but its new chief executive has said that sum would only cover the costs of repairs, and that much more was needed to meet potential fines and damages arising from any lawsuits.

"The costs of remediation, compensation, litigation, and potential fines could, however, be substantial and well in excess of this level," S&P said.

The analysts acknowledged that the full facts and consequences of the deception "may not be known for months, even years. We expect VW to experience a negative impact on its sales volumes, prices, and margins." — Agence France-Presse

source: gmanetwork.com

Nasdaq tops dotcom high on buoyant data, Greece hopes

The Nasdaq Composite index surpassed the 15-year all-time high it set during the peak of the dotcom bubble as more data on Thursday showed the U.S. economy was gathering steam.

The index hit 5,143.31, topping the previous high of 5,132.52 it touched on March 10, 2000. The S&P and Dow were at their highest levels in about a month.

Brian Fenske, head of sales trading at ITG in New York, said the Nasdaq was on firmer footing and there were no similarities between its rally in 2000 and the surge in recent months.

"The current rally is more durable. It is incredibly tough to go public in this market. We just didn't have this kind of scrutiny back in 2000," said Fenske.

U.S. stocks briefly extended their rally on an unconfirmed report in German daily, Die Zeit, that Greece's aid will be extended until year-end but the IMF would not take part in the financing for the "time being".

Greek Finance Minister Yanis Varoufakis presented new proposals to counterparts in the euro zone meeting in Luxembourg, a Greek government official said.

The Fed said on Wednesday that the U.S. economy was likely strong enough to withstand an interest rate increase later this year but cut its economic growth forecasts for 2015.

Even though a majority of Fed officials continue to see higher rates by the end of 2015, they expect rates to rise slightly less by the end of 2016 and 2017 than they did in their March forecasts.

U.S. consumer prices in May recorded their largest increase in more than two years as gasoline prices surged, while factory activity in the U.S. mid-Atlantic region expanded in June at a faster pace than expected.

Other data showed the labor market tightened as first-time applications for unemployment benefits declined to a near 15-year low last week.

At 13:31 p.m. ET (1731 GMT) the Dow Jones industrial average was up 188.94 points, or 1.05 percent, at 18,124.68, the S&P 500 was up 19.16 points, or 0.91 percent, at 2,119.6 and the Nasdaq Composite was up 63.62 points, or 1.26 percent, at 5,128.50.

All the 10 major S&P 500 sectors were higher with the health index leading with a 1.4 percent rise.

Microsoft's 1.4 percent rise lifted the Nasdaq and the S&P 500, while 3M's 1.9 percent gain was the biggest boost to the Dow. All 30 Dow components were in the black.

Fitbit shares ran up as much as 60 percent to $31.90 in their debut, valuing the maker of popular wearable fitness-tracking devices at $6.5 billion.

Oracle shares fell as much as 8.7 percent to $40.97 - a nearly six-month low - a day after the company forecast a quarterly profit below analysts' estimates.

Advancing issues outnumbered decliners on the NYSE by 2,228 to 775. On the Nasdaq, 1,978 issues rose and 761 fell.

The S&P 500 index showed 40 new 52-week highs and two new lows, while the Nasdaq recorded 144 new highs and 25 new lows.  — Reuters

Wall St advances as Nasdaq touches 5,000 mark

NEW YORK - U.S. stocks advanced on Monday to push the Nasdaq above the 5,000 mark for the first time in fifteen years, as a round of mixed data pointed to a slowly accelerating economy.

The Nasdaq hit a high of 5,000.33 before retreating, the first time above that level since March 27, 2000, at the height of the dot.com bubble.

"Five thousand on the Nasdaq, it's been a long time coming," said Peter Kenny, chief market strategist at Clearpool Group in New York.

"Now that data point, or psychological barrier, has been breached, investors are going to look at the likelihood we will continue to see the move higher in the Nasdaq and the degree to which the Nasdaq will outperform the broader market."

U.S. consumer spending fell for a second month in January, with lower gasoline prices dampening inflation pressure while personal income fell just short of expectations, showing a rise of 0.3 percent.

Separate gauges of manufacturing were conflicting, as financial data firm Markit's final U.S. Manufacturing Purchasing Managers' Index hit a four-month high while a reading from the Institute for Supply Management fell to its lowest in 13 months.

Construction spending also softened, falling at a 1.1 percent annual rate, below expectations calling for a 0.3 percent increase in January.

The Dow Jones industrial average rose 110.97 points, or 0.61 percent, to 18,243.67, the S&P 500 gained 7.1 points, or 0.34 percent, to 2,111.6 and the Nasdaq Composite added 29.90 points, or 0.6 percent, to 4,993.43.

Chip maker NXP Semiconductors NV has agreed to buy smaller peer Freescale Semiconductor Ltd and merge operations in a deal valuing the combined company at over $40 billion. NXP shares jumped 16.5 percent to $98.90 while Freescale advanced 10.9 percent to $40.05.

Lumber Liquidators plunged 23.5 percent to $39.67 after a report by television news program "60 Minutes" said the retailer of hardwood flooring in North America sold flooring with higher levels of formaldehyde than permitted under California's health and safety standards.

Boston Scientific Corp said it will acquire Endo International Plc's American Medical Systems urology portfolio for up to $1.65 billion. Boston Scientific rose 1.6 percent while Endo gained 2.2 percent to $87.50.

Cardinal Health said it would buy Johnson & Johnson's Cordis vascular technology unit for $1.9 billion and the acquisition would boost 2017 earnings by 20 cents per share. Cardinal Health gained 1.4 percent to $89.26 and JNJ added 0.6 percent to $103.15.

Advancing issues outnumbered declining ones on the NYSE by 1,747 to 1,198, for a 1.46-to-1 ratio; on the Nasdaq, 1,750 issues rose and 847 fell, for a 2.07-to-1 ratio favoring advancers.

The S&P 500 posted 42 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 109 new highs and 18 new lows. — Reuters

Standard & Poor's says Swiss rating unaffected by SNB move

ZURICH – Ratings agency Standard & Poors said on Friday the Swiss National Bank's shock decision to scrap its three-year-old cap on the franc had no immediate impact on Switzerland's credit rating.

Standard & Poors said the strong appreciation of the Swiss franc against the euro could dampen Swiss exports over the next two to three years, but expected the country's economy to whether any setbacks.

"Still, we think Switzerland's strong economy and solid public finances will resist this exchange rate shock," the ratings agency, which currently rates Switzerland as AAA, said in a statement.

The Swiss National Bank shocked financial markets on Thursday by scrapping a three-year-old cap on the franc, sending the currency soaring against the euro and stocks plunging on fears for the export-reliant Swiss economy. – Reuters

Dow, S&P end at records in fireworks before the Fourth

NEW YORK - The Dow and the S&P 500 closed at record highs on Tuesday as manufacturing activity picked up in the United States and Asia and increased optimism about the global economy's health.

The blue-chip Dow Jones industrial average came close to the 17,000 milestone in early afternoon trading, rising slightly over 1 percent to 16,998.70. The rally - led by IBM (IBM.N), up 2.8 percent at $186.35, and Visa Inc (V.N), up 1.7 percent at $214.25 - marked the first trading day of both the third quarter and the second half of 2014. The U.S. stock market will be closed on Friday for the Independence Day holiday on the Fourth of July.

Financial data firm Markit said its final US Manufacturing Purchasing Managers Index rose to 57.3 in June, the highest since May 2010, although it was slightly lower than the preliminary read of 57.5.

A report from the Institute for Supply Management showed its index of national factory activity was at 55.3, little changed from May's 55.4 reading.

"The basic message is that it's pretty much the same level as May so that's very positive news for the U.S. manufacturing," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.

The Dow Jones industrial average .DJI rose 129.47 points or 0.77 percent, to end at 16,956.07. The S&P 500 .SPX gained 13.09 points or 0.67 percent, to 1,973.32. The Nasdaq Composite .IXIC shot up 50.47 points or 1.14 percent, to 4,458.65.

Shares of Netflix Inc (NFLX.O) rose 7.4 percent to $473.10 after Goldman Sachs raised its rating on the streaming video company's shares to "buy" from "neutral", according to theflyonthewall.com.

Twitter (TWTR.N) shares jumped 2.6 percent to $42.05 on news that a former Goldman Sachs (GS.N) executive would become the company's new chief financial officer while current CFO Mike Gupta will become senior vice president of strategic investments.

Shares of credit and debit card companies rose after Elvira Nabiullina, the chairwoman of Russia's central bank, said Russia may reduce pledges imposed on MasterCard and Visa if they find local processing partners. MasterCard shares (MA.N) climbed 2.8 percent to $75.53.

Positive data from Asia helped buoy investors' confidence in the strength of the global economy, including China's final reading of the HSBC/Markit purchasing managers' index (PMI) for June, which rose to 50.7 from May's 49.4.

Manufacturing in Japan, the world's third-biggest economy, also picked up in June, fueled by improving demand at home. Growth in the euro zone, however, faltered as Germany, the region's top economy, slowed.

About 5.84 billion shares changed hands on US exchanges, in line with last month's average of about 5.8 billion, according to data from BATS Global Markets.

Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 2 to 1, while on the Nasdaq, nearly three stocks rose for every one that fell.  — Reuters

source: gmanetwork.com

Wall St. edges up on Intel but posts weekly decline

NEW YORK - U.S. stocks edged up on Friday, boosted by bullish news from the tech sector, but major indexes fell for the week as unrest in Iraq kept investors on edge.

Intel Corp (INTC.O) was one of the S&P 500's biggest gainers and one of Nasdaq's most active names, but overall gains were capped as investors kept a close watch on violence in Iraq that drove oil prices CLc1 to their highest since September.

Analysts are worried about the impact a protracted period of high commodity prices could have on economic growth, especially with indexes near record levels.

President Barack Obama said on Friday he needs several days to determine how the United States will help Iraq deal with a militant insurgency, but he ruled out sending U.S. troops back into combat and said any intervention would be contingent on Iraqi leaders becoming more involved.

"The situation in Iraq is another one of these geopolitical flare-ups that have a short-term impact on the market. It will continue to create volatility in the oil market, but I don't think it will spill over that much to equities," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.

The CBOE Volatility index VIX .VIX, Wall Street's so-called fear gauge, fell 3 percent to 12.18 on Friday.

Intel shares jumped nearly 7 percent to $29.87 a day after the Dow component raised its full-year revenue outlook, citing stronger-than-expected demand for personal computers used by businesses.

OpenTable Inc (OPEN.O) popped 48.3 percent to $104.48 in heavy trading after Priceline Group Inc (PCLN.O) said it would buy the company for $2.6 billion. Priceline fell 3 percent to $1,189.30.

Among other Internet names, Yelp Inc (YELP.N) jumped 13.8 percent to $74.92 and GrubHub Inc (GRUB.N) rose 7 percent to $36.00.

The Dow Jones industrial average .DJI rose 41.55 points or 0.25 percent, to 16,775.74, the S&P 500 .SPX gained 6.05 points or 0.31 percent, to 1,936.16, and the Nasdaq Composite .IXIC added 13.02 points or 0.3 percent, to 4,310.65.

For the week, the Dow was down 0.9 percent, the S&P fell 0.7 percent and the Nasdaq was down 0.25 percent.

The week's decline was the first after three weeks of consecutive gains on the S&P 500. For the year, the broad market index is up about 4.8 percent.

Brent crude LCOc1 edged further above $113 a barrel on Friday, up about $4 since the start of the week, on concerns that an insurgency in Iraq could trigger civil war and eventually hit oil exports. [O/R]

In macroeconomic news, U.S. consumer sentiment unexpectedly fell in June as views by consumers with the lowest incomes soured, according to the preliminary June read from the Thomson Reuters/University of Michigan's index.

Finisar Corp (FNSR.O) plunged 21.9 percent to $19.71 a day after forecasting weaker-than-expected earnings, citing higher capital expenditure in China.

Trading volume was at around 5.07 billion shares on U.S. exchanges, below last month's average of about 5.76 billion, according to data from BATS Global Markets.  — Reuters

source: gmanetwork.com

S&P applies revised insurance criteria to Asia Pacific insurers

Standard & Poor's Ratings Services on Wednesday said it kept the credit ratings of 18 insurers in Asia Pacific which underwent review after the debt-watcher changed its criteria for such firms.

In a statement, S&P said it "has reviewed its ratings on 18 life insurance companies, insurance holding companies and some of their related entities in the Asia-Pacific region."














"All ratings are affirmed," it added.

These companies are:

Pacific

    Manchester Unity Friendly Society

    MetLife Insurance Ltd.

    National Wealth Management Holdings Ltd.

    ANZ Wealth Australia Ltd.

    Medical Insurance Society Ltd.

    Medical Life Assurance Society Ltd.

    Medical Securities Ltd.

    Hallmark Life Insurance Co. Ltd.

    Hallmark Life Insurance Co. Ltd. (New Zealand Branch)

    Colonial Holding Co. Ltd.

    Zurich Australia Ltd.


Asia (excluding Japan)


    Hang Seng Insurance Co. Ltd.

    HSBC Insurance (Singapore) Pte. Ltd.

    HSBC Life (International) Ltd.

    Nan Shan Life Insurance Co. Ltd.

    NTUC Income Insurance Co-operative Ltd.

    Thai Life Insurance Public Co. Ltd.

    Taiwan Life Insurance Co. Ltd.

S&P said it will soon publish specific analytic reports for each of the companies. — SOA/VS, GMA News

source: gmanetwork.com