Stocks End Volatile Session Higher By Madlen Read, AP Business Writer

NEW YORK (AP) -- Wall Street finished a back-and-forth session higher Monday as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector.Several companies including drug maker Merck & Co. reported decent third-quarter results, but investors were unhappy with rival drug maker Schering Plough Corp.'s results. They were also mindful of the downbeat profit outlooks from several blue chip companies last week.

Still, after an early slide, the market seemed to grow optimistic about Apple Inc.'s earnings, which did top Wall Street's expectations when the company reported after the closing bell. The eager anticipation of the report sent tech stocks higher, and by early afternoon, other stocks were tagging along.

Disappointing earnings and Standard & Poor's downgrade of another series of mortgage-backed securities sent stocks plunging Friday, taking the Dow Jones industrials down 366 points.

"It is not unusual for a big down day to be followed by an up day. I think the bargain hunters are out there," said Brian Gendreau, investment strategist for ING Investment Management. "It seems there's fairly strong demand out there, despite all the bloodletting on Friday."

He noted that while some big-name companies' results have disappointed Wall Street, about two-thirds of earnings so far have beat estimates and outlooks remain upbeat for the technology and health care sectors.

The Dow rose 44.95, or 0.33 percent, to 13,566.97, after falling more than 100 points early in the session.

Broader stock indicators finished higher, with tech stocks leading. The S&P 500 index rose 5.70, or 0.38 percent, to 1,506.33, and the technology-dominated Nasdaq composite index rose 28.77, or 1.06 percent, to 2,753.93.

The Russell 2000 index of smaller companies climbed 11.29, or 1.41 percent, to 810.08.

Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where consolidated volume came to 3.4 billion shares, compared with a heavy 4.05 billion shares traded Friday.

Treasury bonds were little changed after Friday's steep gains. The yield on the 10-year note, which moves inversely to its price, was flat at 4.40 percent.

On Friday -- the 20-year anniversary of the Black Monday crash -- investors sold off stocks and bought up safer assets like U.S. Treasury bonds as the prospect of a thaw in the frozen credit markets grew dimmer.

Though the major U.S. stock indexes showed signs of strength Monday, there are still big worries on Wall Street about how problems in the financial markets might drag on corporate and economic growth -- concerns that make the record highs reached earlier this month by the Dow and the Standard & Poor's 500 index appear unreasonable.

"It may take a little time here, a week or two, of trying to heal," said Steven Goldman, chief market strategist at Weeden & Co.

Overseas markets were unsettled, responding to Friday's drop on Wall Street. In Asian trading, Japan's Nikkei stock average declined 2.24 percent, while Hong Kong's Hang Seng index dropped 3.7 percent. In later European trading, Britain's FTSE 100 fell 1.05 percent, Germany's DAX index fell 1.13 percent, and France's CAC-40 fell 1.38 percent.

Strong tech earnings could give a boost to investor sentiment.

Apple's fiscal fourth-quarter earnings handily topped Wall Street's expectations as the company set a record for quarterly shipments of its Mac computers and sold more than 1 million iPhones. Apple shares, which finished the regular session up $3.94, or 2.3 percent, at $174.36 rose 6 percent in after-hours electronic trading.

Netflix Inc., the online DVD rental service, said its third-quarter earnings rose 23 percent as its subscriber base grew. The company's results topped its expectations. Netflix slipped 23 cents to $23.01 in the regular session but rose 13 percent in after-hours trading.

American Express Co., one of the nation's biggest credit card issuers, said Monday higher spending by cardholders pushed third-quarter profit up 10 percent but that it set aside more money for write-downs. Amex fell 24 cents to $56.87 during the session and rose more than 2 percent in after-hours trading.

Schering-Plough's profit gain, however, fell short of expectations. The drug maker fell $4.37, or 13.4 percent, to $28.34.

Analysts said the upbeat results that arrived Monday won't erase all of investors' concerns.

"People are worried there are more time bombs out there," Gendreau said. He posited that a big reason the market sold off as sharply as it did last week was because fund managers wanted to lock in positive returns for the year before any more bad news hits.

Over the weekend, the world's economic leaders not only said that smoothing the turbulent global financial markets will require vigilance, but they also warned of inflation risks -- which puts central banks like the U.S. Federal Reserve in a tight spot. The Fed lowered interest rates on Sept. 18 to make borrowing cheaper amid a growing credit market crisis, and Wall Street hopes policy makers reduce rates again when they meet next week.

Fed Governor Randall Kroszner at a speech in Washington reaffirmed that the central bank will "act as needed" to calm the financial markets. He also said problems with structured credit products -- which dampened the profits at several banks in the third quarter -- are recovering, but gradually.

Crude oil futures settled down $1.04 to $87.56 a barrel on the New York Mercantile Exchange. Gold also declined, while the dollar rebounded sharply against several major currencies.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

IMF Urges Nations to Focus on Stability By Harry Dunphy, Associated Press Writer

IMF Urges Governments to Try to Ensure Smooth Functioning of Financial Markets WASHINGTON (AP) -- Finance ministers and central bankers should remain vigilant to ensure the smooth functioning of financial markets that have been jarred by a global credit crisis, the International Monetary Fund's policy-making committee said Saturday.
The group also said in a statement that monetary policy of member governments should focus on achieving price stability while keeping a close eye on inflation in the light of rising food and oil prices, among other factors.

Problems in the global economy came to a boil when credit markets froze on Aug. 9 as fear overwhelmed many investors. Troubles that began in the market for subprime mortgages in the U.S. spread to many other kinds of debt on international markets.

In an attempt to soothe jittery markets, the IMF statement urged "continued vigilance to maintain well-functioning financial markets."

The ministers said they would continue "to work together to analyze the nature of the disturbances and consider lessons to be learned and actions needed to prevent further crises."

"The turbulence has revealed a number of problems that may be deeper than the specific episode that triggered the tensions," said Italian Economy Minister Tommaso Padoa-Schioppa, the new head of the IMF's policy-making committee.

The head of the IMF, Spain's Rodrigo de Rato, was optimistic despite the recent concerns about the credit market.

"The global economy is expanding from a solid foundation," he said.

The IMF statement said global economic growth was moderating amid disturbances in financial markets, but financial growth in countries with fast-growing economies and "strong fundamentals" continue to support the world economy.

Ministers said the financial innovation that led to the packaging of securities based on subprime mortgages in the U.S., "while having contributed to enhanced risk diversification and improved market efficiency, have also created some new challenges that need to be properly addressed."

Padoa-Schioppa said some of the institutions involved in the packaging needed to be monitored.

"There is a clear need for supervisory audits even for the great financial institutions that create these instruments, to understand better what their creations are doing out on the market. This is clearly a reason for concern," he said.

The IMF statement recognized the growing importance of sovereign wealth funds -- huge pools of money controlled by governments -- in international financial markets.

"While recognizing their positive role in enhancing market liquidity and financial resource allocation," the statement said, "the committee welcomes the work by the IMF to analyze issues for investors and recipients of such flows, including a dialogue on identifying best practices."

The IMF took up the issue because of growing concern that countries with these funds, ranging from China to Kuwait, might buy up companies, banks and real estate in the West.

The ministers paid tribute to de Rato, who is leaving at the end of the month, and said they looked forward to working with his successor, France's Dominique Strauss-Kahn.

"This is a sad day for the IMF but should be a very satisfying day for you," Padoa-Schioppa told de Rato at a news conference.

Based in Washington, the 185-member organization, which helps out countries in financial crisis and makes loans to poor nations, has been criticized for not allowing countries with fast-growing economies more of a say in IMF decisions.

Under an informal practice dating back to the founding of the IMF and its sister institution the World Bank 63 years ago, an American heads the bank and a European leads the fund, a process critics of the two institutions say is outmoded.

De Rato said the institution needed to update its governance. The ministers said they had made some progress working on a formula to increase the representation of fast-growing economies in IMF decision-making, but advocacy groups said the reform program was "going nowhere."

"The Europeans refuse to give up their stronghold on the institution and the United States is not really interested in the poorest countries having a bigger say at the table," said Elizabeth Stuart, senior policy adviser to Oxfam International, an aid group and frequent IMF critic.

Associated Press writer Desmond Butler contributed to this report.

World Bank: http://www.worldbank.org

International Monetary Fund: http://www.imf.org

Stocks Dip on Bernanke's Sobering Words

By Madlen Read, AP Business Writer Wall Street Retreat After Bernanke Comments Revive Worries About Economy, Earnings NEW YORK (AP) -- Wall Street extended its retreat Tuesday after Federal Reserve Chairman Ben Bernanke said the night before that the slumping housing market remains a "significant drag" on the economy.Bernanke's comments during a speech at the New York Economic Club revived concerns that a recovery from the summer's credit crisis might take longer than expected -- a sobering thought for investors, who are sifting through mixed third-quarter earnings and watching energy costs rise.

The stock market had its biggest drop in more than five weeks Monday after a consortium of banks led by Citigroup Inc., which reported a steep profit decline that day, announced plans to set up a fund to help bail out the credit markets.

On Tuesday, Wells Fargo & Co. shares fell more than 3 percent after the bank said its third-quarter earnings increased by a bit less than analysts anticipated, and that it boosted loan loss reserves in anticipation of further problems in consumer credit. KeyCorp shares also fell more than 3 percent after the Midwest regional bank posted a 33 percent drop in third-quarter profit.

In early trading, the Dow Jones industrial average fell 47.15, or 0.34 percent, to 13,937.65.

Broader indicators also fell. The Standard & Poor's 500 index slipped 6.96, or 0.45 percent, to 1,541.75, and the Nasdaq composite index dipped 14.29, or 0.51 percent, to 2,765.76.

Treasury bond prices rose, pushing down the yield on the 10-year Treasury note to 4.67 percent from 4.68 percent at Monday's close. Prices and yields move in opposite directions.

Bernanke said in his speech that the deepening housing slump probably will be a drag on economic growth. Still, he again pledged to "act as needed" to help financial markets that were sent reeling this summer.

He did say that inflation remains in check. That could be a key factor for policymakers when deciding whether to cut interest rates at their Oct. 30-31 meeting.

But while core inflation -- which excludes volatile food and energy prices -- is mild, oil prices are pushing further into record territory.

Despite expectations of higher inventories in the weekly U.S. supply report released on Wednesday, a barrel of light, sweet crude rose 51 cents to $86.64 on the New York Mercantile Exchange, on fears Turkey will pursue Kurdish rebels into Iraq and disrupt oil supplies in the region.

Investors will get some more economic data on Tuesday with the National Association of Home Builders/Wells Fargo housing market index for October scheduled to be released at 1 p.m. EDT. The report is expected to show a decline from September.

Overseas, Japan's Nikkei stock average closed down 1.27 percent. Britain's FTSE 100 fell 0.42 percent, Germany's DAX index fell 0.36 percent, and France's CAC-40 fell 0.87 percent.

New York Stock Exchange: http://www.nyse.com

Fed members all backed bold rate cut

WASHINGTON (Reuters) - All members of the U.S. Federal Reserve's policy-setting committee agreed a half-percentage point federal funds interest rate cut was necessary to shield the economy from credit disruptions and an intensifying housing slowdown, minutes of their September 18 meeting released on Tuesday showed.In order to help forestall some of the adverse effects on the economy that might otherwise arise, all members agreed that a rate cut of 50 basis points at this meeting was the most prudent course of action," the minutes said.

Members thought sharply lowering benchmark overnight borrowing costs could help offset the effect of tighter financial economic conditions on the economy.

Without such a move, policy-makers were afraid that tightening credit conditions and the deepening housing slump that had been triggered by a spike in mortgage foreclosures would lead to "significant weakness" in business activity and hiring.

Also, the damage to financial markets as credit dried up could get worse and further chill economic activity, members of the U.S. central bank's interest-rate setting Federal Open Market Committee thought.

At that meeting, the Fed slashed its target for benchmark overnight borrowing costs to 4.75 percent, surprising many in financial markets who had been expecting a quarter-percentage point rate cut to 5 percent.

The minutes show that at the time, Fed policy-makers saw the economic situation fraught with a high degree of uncertainty as they considered whether the credit crunch would substantially slow economic growth or not.

They believed risks were tilted toward a slowdown in economic activity, but also noted that the economy had previously weathered periods of financial disruption with only limited broadly adverse effects.

At the same time, the Fed believed that tighter credit would restrain economic growth in the period ahead, and worried that any further disruptions in financial markets could magnify risks to the economy.

The Fed discussed "additional policy options" to address strains in money markets at the meeting, but no decisions were taken at the time, the minutes said.

(Reporting by Mark Felsenthal)

USD Fails to Keep Post-Jobs Gains by Korman Tam

The highly anticipated September labor report triggered a whipsaw reaction in the currency market with the greenback initially rallying sharply following the release. However, upon further analysis of the data, the currency quickly relinquished its gains to fall to fresh session-lows against the euro at 1.4156 and sterling at 2.0442.

The headline non-farm payrolls figure for September was higher than forecast, expanding by 110k compared with an upwardly revised August payrolls at 89k (prev -4k). The unemployment rate, however, crept up higher to 4.7% versus 4.6% from a month earlier – which is the highest level since July 2006. Closer inspection of the report reveals that the August revision was mainly seasonal reflecting higher government employment, specifically in education. The jobs report shifted market sentiment of upcoming Fed policy, with US interest rate futures pricing in approximately at 52% chance of a 25-basis point rate cut in October, compared with a 72% chance prior to the release.

The labor report quelled recessionary fears and tempered expectations for further aggressive easing from the FOMC. Our medium term outlook is for a weaker dollar and view this latest bounce higher to be short-lived. Next week’s US economic calendar is light on data, consisting of the September Federal Budget, August trade balance, weekly jobless claims, PPI, retail sales, business inventories and the University of Michigan consumer sentiment.

EURUSD holds near its session highs, around 1.4140 with initial resistance seen at 1.4180, followed by 1.42 and 1.4250. Support starts at 1.41, backed by 1.4030 and 1.40.

Stocks Slip After Data Released on Consumer Spending, Manufacturing

NEW YORK (AP) -- Stocks dipped Friday, the last trading day of the third quarter, as Wall Street mined mixed economic reports and remained cautious ahead of the upcoming earnings onslaught.

The stock market appeared wary of strong economic news, which could lower the chance of another rate cut. Last week, the Fed helped restore some confidence in the financial markets by reducing the target federal funds rate by a half point.

The Commerce Department said consumer spending increased 0.6 percent in August, the fastest growth in more than two years. Meanwhile, Chicago's National Association of Purchasing Management said business activity in the heavily industrialized Chicago area increased in September by more than analysts expected, and the University of Michigan said consumer sentiment during the month has held steady.

Also weighing on investors Friday was lingering concern that corporate earnings power was lessened in the third quarter. This is the last trading day of one of the most volatile periods in years -- one that pulled stocks sharply lower after the Dow Jones industrial average closed at a record 14,000.41 in mid-July.

Still, though energy and food prices are surging, core inflation appears to be under control, which is keeping rate cut hopes alive. The Commerce Department report showed that a closely watched gauge of core inflation showed a year-over-year rise in August of just 1.8 percent -- the smallest increase since a similar rise in February 2004. The reading is within the Fed's comfort zone of 1 to 2 percent.

"A second Fed cut will go a long way in reassuring the stock market that the worst is over. The focus going forward will be whether the Fed is going to lower rates to shore this up, or decide the risk of inflation is too high," said Janna Sampson, director of portfolio management at Oakbrook Investments.

The Dow shed 15.77, or 0.11 percent, to 13,897.17.

Broader indexes also declined. The Standard & Poor's 500 index fell 4.14, or 0.27 percent, to 1,527.24, and the Nasdaq composite index fell 6.86, or 0.25 percent, to 2,702.73.

Bonds rose, pushing the yield on the 10-year Treasury note down to 4.54 percent from 4.57 percent late Thursday.

The dollar fell against most major currencies as inflation appeared to be easing. The euro surpassed $1.42 for the first time, hitting a record against the U.S. currency for the seventh straight session.

The dollar's weakness has bolstered commodity prices throughout the quarter, and helped lift prices again on Friday. Crude oil prices rose 45 cents to $83.33 on the New York Mercantile Exchange.

"We're going to see crimped corporate profits if they eat those costs, and inflation if they pass those down. Neither of those are good," Sampson said.

In corporate news, shares of 3Com Corp. shot higher after the telecommunications equipment company said it will be sold to affiliates of private equity firm Bain Capital Partners LLC for $2.2 billion in cash. 3Com rose $1.28, or 34.8 percent, to $4.96.

As the tumultuous third quarter draws to a close, investors appear a bit less concerned about the tightening in the credit markets that sent stocks plummeting in late July and August. On Thursday, the Fed said banks slowed their borrowing from central bank this week to the smallest amount in six weeks, after a huge spike last week.

But while most market watchers agree that conditions have improved, the credit markets still don't appear they are back to operating normally. Levels of outstanding asset-backed commercial paper fell about 17 percent in the week ending Wednesday -- not as steep a decline as seen a few weeks ago, but still suggesting that demand isn't meeting supply.

Meanwhile, the bulk of third-quarter earnings start pouring in in mid-October, which should give investors a better idea of how companies weathered the summer's tumult and what they expect in the coming months.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 285.9 million shares.

The Russell 2000 index of smaller companies fell 4.68, or 0.57 percent, to 809.33.

In European trading, Britain's FTSE 100 fell 0.30 percent, Germany's DAX index fell 0.10 percent, and France's CAC-40 fell 0.31 percent.

In Asia earlier, Japan's Nikkei index fell 0.28 percent and Hong Kong's Hang Seng Index rose 0.29 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Be Careful, Someone Wants Your Money

The United States Commodity Futures Trading Commission (“CFTC”) warns consumers to take special care to protect themselves from the many types of commodities fraud being perpetrated in today’s financial markets. The CFTC is the federal agency that regulates commodity futures and options markets in the United States. We have seen a great increase in the number of scams that falsely promise high profits with low risks. Many of these scams are targeted at ethnic communities in their language, from New York to South Florida and from the Southwest to California, among other areas.

The public should be wary of any firm that offers to sell commodities or commodity futures or options. They might be selling precious metals, such as silver or gold, or on foreign currency, such as Euros, Yen or Deutschmarks. They might be selling futures or options on precious metals or foreign currency, or on other commodities such as crude oil, heating oil, unleaded gas, or agricultural products such as corn, soybeans, or cattle. The firm might be offering to manage your money for you to trade in commodity futures or options, or to pool your money with other customers. If a firm offers any of these investments, and promises high profits and low risks, or claims that they have made profits for all of their customers, you should not believe them without proof. The commodities and futures markets are very risky, and you can lose your entire investment very quickly. Anyone who claims otherwise might be breaking the law.

Foreign currency trading scams often attract customers through advertisements in local newspapers, radio promotions or attractive Internet sites. These advertisements may tout high-return, low-risk investment opportunities in foreign currency trading, or even highly-paid currency-trading employment opportunities. The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks, or that employment as a currency trader will make you wealthy quickly. Precious metals scams often work the same way.

Commodity pool operators often solicit investments from friends, neighbors, co-workers and fellow religious or social group members by using their reputations in the community or their personal relationships. In many cases, however, the investment schemes turn out to be fraudulent, and investors lose their entire investment, in many cases as a result of outright theft. Individuals and firms that fraudulently solicit funds from investors for commodity futures and options trading are usually not registered with the CFTC. They may operate “Ponzi” schemes in which little or none of the money sent in by investors is ever invested as promised – in the commodity markets. Instead, the operator of the scam steals the funds, and creates the illusion of a successful business by using some of the money put in by later investors to pay phony “profits" to
earlier investors. This tactic makes it appear to investors that the investment is actually making money, which in turn attracts additional investors. Be wary of such payouts if you do not fully understand the source of any purported profits.

Introducing Brokers often use advertisements on radio and television, as well as infomercials – program-length television commercials – to promote commodity futures and options. These advertisements may claim that seasonal trends in the demand for certain commodities or well-known current events create an opportunity to make big money by trading in commodity futures and options. The advertisements and infomercials promise quick riches – such as turning $5,000 into $20,000 in just a few months – with predetermined risk. The CFTC has brought actions against wrongdoers who lured customers by claims that one could earn large profits with little risk based on predictable seasonal demands, published reports, or well-known current events.