With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Nasdaq, S&P 500 Pass Key Milestones; BofA Settles with Government Over Merrill Bonuses; U.S. PMI Closer to Growth; Treasuries Fall on Manufacturing, Construction Data; Oil Eclipses $70; Google CEO Resigns From Apple Board; HSBC Profit Halved
The Standard & Poor's 500 Index broke 1,000 and the Nasdaq Composite Index climbed past 2,000 as stocks were boosted from positive news on U.S. manufacturing and auto sales. The S&P 500 closed at 1,002.63, up 15.15 points or 1.5%, and the Nasdaq saw an increase of 30.11, or 1.5% to close at 2,008.61. While it didn't hit a key milestone, The Dow Jones Industrial Average also increased, gaining 114.95 points, or 1.3% to close ate 9,287.
Bank of America Corp. (NYSE: BAC) yesterday (Monday) settled charges filed by the Securities and Exchange Commission (SEC) pay a penalty of $33 million. The SEC accused the bank of misleading investors about billions of dollars in bonuses that paid to Merrill Lynch & Co. executives when it was the target of a Bank of America takeover last year. "Companies must give shareholders all material information about corporate transactions they are asked to approve," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today's settlement."
While the U.S. manufacturing sector continues to contract, erosion of the Purchasing Manager's Index (PMI) slowed in July, as the index registered 48.9, up from 44.8 in June. A reading above 50 represents expansion. "The decline in manufacturing was slower in July when compared to June, as the more leading components of the PMI - the New Orders and Production Indexes - rose significantly above 50%, thus setting an expectation for future growth in the sector," said Norbert J. Ore, chairman of the Institute for Supply Management. New orders crossed the 50 threshold, up to 55.3, while the production index was up to 57.9.
U.S. Treasuries fell after positive manufacturing reports and construction spending exceeded forecasts and a rally in stocks lured investors to more risky assets, Bloomberg News reported. The yield on the benchmark 10-year note rose 15 basis points, or 0.15% to 3.63%, according to BGCantor Market Data. The 30-year bond yield rose 10 basis points to 4.40%. "We're seeing a catatonic economy showing some signs of not falling off further," John Brynjolfsson, chief investment officer at investment firm Armored Wolf LLC told Bloomberg.
Light, sweet crude for September delivery rose sharply yesterday (Monday) after further weakening of the dollar and positive manufacturing data. Benchmark crude rose $2.13, or 3%, to $71.58 a barrel on the New York Mercantile Exchange (NYMEX).
Google Inc. (Nasdaq: GOOG) Chief Executive Officer (CEO) Eric Schmidt has resigned from Apple Inc.'s (Nasdaq: AAPL) board of directors. Schmidt's role on Apple's board increasingly came into question as Google's Android mobile operating system (OS) competed with Apple's iPhone, as well as the announcement last month of Chrome OS, which will compete with Apple's Mac OS in the latter part of next year. The decision for the resignation was mutual, according to Apple Chief Executive Officer Steve Jobs.
HSBC Holdings PLC (NYSE ADR: HBC) saw its profit halved by rising bad debts in the United States, Europe and Asia. The lender reported a pretax profit of $5.02 billion for the quarter ended June 30, down from $10.2 billion in the same period last year. Analysts polled by Reuters were expecting a slightly lower profit of $4.9 billion. "It may be that we have passed, or are about to pass, the bottom of the cycle in the financial markets," Chairman Stephen Green said. "Nontheless, the timing, shape and scale of any recovery in the wider economy remains highly uncertain."