Business Blog Posts

This has been a choppy week for equities, with steep losses early offset by a rally in the past two days. The S&P 500 is down 0.6 percent for the week. Trading volume could be anemic on Friday ahead of Monday's Memorial Day holiday.

The losses early in the week came on worries about euro-zone sovereign debt, as well as concerns that global demand was slowing. While there are few catalysts seen for strong positive advances, technical support suggests there is a floor for stocks.

The Group of Eight leaders agreed on Friday that the global economic recovery was becoming more "self-sustained," though higher commodity prices were hampering further growth.

"Stocks are sitting on a well-balanced seesaw right now and there's not much that will make us go one way or the other," said Christian Wagner, chief executive officer at Longview Capital Management in Wilmington, Delaware.

"The G8 news was good, and we're sitting on major support levels, but people are always cautious going into a long weekend."

April pending home sales will be released at 10 a.m. (1400 GMT). Economists see a 1 percent decline compared with a 5.1 percent increase in the previous month. The final May Thomson Reuters/University of Michigan Surveys of Consumers is seen essentially holding steady from the preliminary May level.

Personal income and consumption data will be released earlier on Friday.

S&P 500 futures rose 0.8 point and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 4 points and Nasdaq 100 futures rose 0.5 point.

EBay (EBAY.O) and its online payment unit, PayPal Inc, on Thursday sued Google Inc (GOOG.O) and two executives, claiming they stole trade secrets.

Google, MasterCard (MA.N), Citigroup (C.N), Sprint (S.N) and transaction processing company First Data unveiled a system that will allow shoppers to use mobile phones to pay for items at the checkout counter.

Macau casino operator MGM China raised $1.5 billion from its Hong Kong initial public offering after pricing it at the top of its indicated range. The firm is co-owned by MGM Resorts International (MGM.N), shares of which rose 1 percent to $15.88 in light premarket trading.

The $7.1 billion merger of coal miners Massey Energy Co (MEE.N) and Alpha Natural Resources Inc (ANR.N) should be blocked or Massey's board will avoid responsibility for their reckless management, a shareholder attorney told a court late Thursday.

(Editing by Kenneth Barry)

(This article has been modified to correct the reference to the previous sentiment figure in paragraph 7)

Noting the chunky gains in Asian stocks, European stock index futures pointed to early gains while the S&P e-mini futures rose 0.1 percent, suggesting a higher start on Wall Street later in the day. .N

While the euro enjoyed a brief respite versus the U.S. dollar due to thinning yield differentials, it plumbed to a record low against the Swiss franc in a sign that traders remain focused on the rapidly escalating situation in the euro zone.

Jean-Claude Juncker, the head of euro zone finance ministers rattled markets when he said the International Monetary Fund could withhold the next slice of aid to Greece due next month, raising the specter of default, though his spokesman later softened some of his comments.

While markets have been under pressure in recent weeks due to a steady stream of bad news from the euro zone, Asian stocks and bonds have held up fairly well as recent data prints and positioning comforted investors on the region's growth outlook.

Korea .KS11 was among the top gainers as foreign investors trooped back, snapping a long selling streak. Solid current account surplus numbers in April too played its part.

Stocks outside Japan were up 0.7 percent on Friday even though the index is set for a fifth consecutive week of losses -- its longest string of losses since October 2008.

"Downside risks for large caps are capped by its increasingly attractive valuations," said Wang Aochao, an analyst with UOB Kay Hian in Shanghai. "So with small caps looking overvalued, it looks like investors will continue to switch out of them and into large caps in the near term."

Japanese shares were among the exceptions to the gainers, with the benchmark Nikkei average .N225 down 0.42 percent and the Topix index .TOPX down 0.3 percent on the day.

While concerns of a Greek restructuring kept investors cautious about adding big positions in stocks, they had no such qualms toward fixed-income assets as Asian policymakers stepped up their battle to fight inflation by tightening policy.

Latest data from Thomson Reuters Lipper showed net inflows of $94 million into high yield funds and a $1 billion inflow into corporate investment grade funds in the week of May 25.

DESPERATELY SEEKING CONFIDENCE

In currency markets, the euro turned higher after its drop this week stalled right near its 100-day moving average and also the bottom of the cloud on daily Ichimoku charts, a form of Japanese technical analysis popular among market players.

Still, it is expected to stay within recent established trading ranges until confidence is restored on the Greek debt crisis and the market refocuses on the outlook for euro zone interest rates, which would be supportive for the single currency, Brown Brothers Harriman strategists said in a note.

For now though, the double whammy of weak U.S. economic data and falling U.S. Treasury yields offered support to the euro.

In another sign that the U.S. economy has hit a soft patch, jobless claims for last week unexpectedly rose while annual GDP growth came in lower than analysts had expected.

The weak data took the wind out of commodity markets, particularly oil, which dropped more than 1 percent overnight, but recovered to hold above the $100 per barrel line.

In bond markets, U.S. Treasuries rallied and benchmark yields fell to new six-month lows with ten-year note yields breaking below their 200-day moving average. They were last at 3.06 percent, their lowest level since early December.

Other safe-haven assets like gold and silver received a boost from the Greece situation. Silver recovered after falling in the previous session while gold inched higher.

In a communique to be issued at the end of a two-day summit in France, a copy of which was obtained by Reuters, European nations, the United States and Japan all agreed to ensure their public finances were sustainable.

"The global recovery is gaining strength and is becoming more self-sustained. However, downside risks remain, and internal and external imbalances are still a concern," the communique said.

"The sharp increase in commodity prices and their excessive volatility pose a significant headwind to the recovery. In this context, we agreed to remain focused on the action required to enhance the sustainability of public finances, to strengthen the recovery and foster employment, to reduce risks and ensure strong, sustainable and balanced growth, including through structural reforms.

"Europe has adopted a broad package of measures to deal with the sovereign debt crisis faced by a few countries, and it will continue to address the situation with determination and to pursue rigorous fiscal consolidation alongside structural reforms to support growth.

"The United States will put in place a clear and credible medium-term fiscal consolidation framework, consistent with considerations of job creation and economic growth.

"In Japan, while providing resources for the reconstruction after the disaster, the authorities will also address the issue of sustainability of public finances."

(Reporting by Luke Baker, editing by Alastair Macdonald)

Signs of the economy's struggle to regain speed were highlighted by an unexpected rise in the number of Americans applying for unemployment benefits last week.

"There is no doubt the economy has slowed. We will call the first half of 2011 as a soft patch," said Robert Dye, a senior economist at PNC Financial Services in Pittsburgh. "We should see growth accelerate in the second half in the 3.0 percent to 3.5 percent area."

After-tax corporate profits fell at a rate of 0.9 percent, the Commerce Department said, after rising at a 3.3 percent pace in the fourth quarter.

In its second estimate of the economy, the department said gross domestic product growth was unrevised at annual rate of 1.8 percent, below economists' expectations for a 2.1 percent pace.

The drop in profits, the first since the fourth quarter of 2008, likely reflected a slowdown in productivity growth as businesses stepped up hiring. Economists had expected corporate profits to grow at a 2.3 percent pace.

However, the rise in initial claims last week suggested the pace of hiring might be slowing. Initial claims for state unemployment benefits climbed to 424,000 from 414,000 the prior week, a separate report from the Labor Department showed.

Economists had forecast claims slipping to 400,000. Last week marked the seventh straight week in which claims topped the 400,000 level.

Stock index futures remained unchanged while bond prices shed losses and turned positive. The dollar extended losses versus yen.