The bad news on the housing front continues with another negative report issued today of previously occupied home sales declining in June.
Food inflation will continue as Coke will raise their products by 3%-4% during the second half of 2011.
The financial headlines for today are:
1) Stocks dip after biggest day in a year-From the AP
A rally over hopes for a debt-limit deal turned into a waiting game for investors.
One day after the Dow Jones industrial average had its best day this year, the stock market edged lower on Wednesday. Analysts say concerns about lifting the U.S. debt limit outweighed strong earnings from Apple and a slew of new corporate deals.
"In this environment, stringing together a few days like yesterday is going to be tough," said Brad Sorensen, director of market analysis at Charles Schwab.
Apparent progress on raising the U.S. debt limit launched a stock market rally Tuesday. The Dow jumped 202 points, its best day this year. But investors woke up Wednesday to find Washington still at a stalemate. And with less than two weeks before the government risks defaulting on its debt, they are finding it hard to continue the celebration.
The Dow Jones industrial average fell 15.51 points, or 0.1 percent, to close at 12,571.91.
The S&P 500 index dropped 0.89 point to 1,325.84. The Nasdaq fell 12.29 points, or 0.4 percent, to 2,814.23.
Apple Inc. rose 2.7 percent after the company's income doubled last quarter. Sales of Apple's iPhones quadrupled in Asia.
The stock of Zillow, a real estate website, jumped 79 percent in its first day of trading to $35.77. Zillow's initial public offering of stock priced at $20 late Tuesday.
2) Home Resales Dip Again-From The Wall Street Journal
Sales of previously occupied homes in the U.S. dipped in June to the lowest level in seven months amid weakness in the job market and overall economy.
Existing-home sales decreased 0.8% from a month earlier to a seasonally adjusted annual rate of 4.77 million, the National Association of Realtors said Wednesday. It was the third-straight monthly drop. May's sales pace was unrevised at 4.81 million per year.
The results were worse than forecast. Economists surveyed by Dow Jones Newswires had expected home sales to rise by 1.9% to an annual rate of 4.90 million.
Lawrence Yun, NAR's chief economist, attributed the poor results to "a very weak economy leading to weak sales." He also said 16% of buyers who signed contracts for properties wound up canceling them in June -- up from a typical level of 10%. The reason for the high level of cancellations remains a mystery, he said.
The median sales price was $184,300, up 0.8% from $182,900 a year earlier.
The inventory of previously owned homes listed for sale, meanwhile, grew at the end of June to 3.8 million.
That represented a 9.5-month supply at the current sales pace, compared a healthy level of about six months.
The struggling housing market is one of several key burdens on the slowing economy.
Though construction of single-family homes and overall home construction were up from a month earlier last month, it was still the second-worst June for single-family construction on records dating back to 1959, the Commerce Department said Tuesday.
Demand for apartments has been strong of late as more families opt to rent rather than buy. But the market for previously occupied homes has been far softer amid an oversupply of foreclosed properties. About 2.2 million properties have been foreclosed but have yet to go up for sale, according to Lender Processing Services Inc.
Government incentives, such as a tax credit that mainly benefited first-time home buyers helped home sales last year. But the housing market has faltered since it expired.
The housing sector faces even more trouble this fall when the maximum size of loans that can be backed by government controlled mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration goes down.
Economists say stronger income and job growth are needed to spur more families to buy homes and work through the massive inventory of foreclosures.
The Realtors' report said home sales fell last month compared with a month earlier in two out of four regions. Sales were down 5.2% in the Northeast and 1.7% in the West. They were up 0.5% in the South and 1.0% in the Midwest.
3) Coca-Cola Is Looking Like a Cereal Killer-From The Wall Street Journal
When it comes to pricing power in the grocery aisle, Coke is it.
Even with consumers looking weak, Coca-Cola said Tuesday it plans to raise prices by 3% to 4% in its North America division during the second half. It has already negotiated many of the price increases with retailers.
Other food manufacturers are unlikely to have the same clout. After all, Coca-Cola and rival PepsiCo are among the strongest brands in the world, with very little private-label competition. So if PepsiCo also raises prices, consumers might simply allocate more of their budgets to soft drinks.
With little growth in disposable income likely, consumers would be hungry for deals elsewhere. Take cereals, where the likes of Kellogg, General Mills, and Post face higher costs for wheat and corn. At the start of the year, Kellogg, maker of Frosted Flakes and Cocoa Krispies, said it expected companywide pricing and product mix to increase revenue by 3% to 4% in 2011.
Unfortunately, the cereal business looks especially competitive. Post, a unit of Ralcorp Holdings, has gradually been losing market share for the past few years. In turn, it has spent heavily on promotions to stem the bleeding. Kellogg could also feel compelled to sacrifice margins to keep share. Thilo Wrede, of Jefferies & Co., says Kellogg's cereal promotions in the past few months have resulted in market-share gains. Kellogg usually reduces such offers around the end of the first half but could be tempted to extend them.
Of course, the cereal market has less private-label competition than other categories, such as milk. But with consumers squeezed and already growing accustomed to promotions, cereal companies should prepare for a crunch.
Inspirational Quotes Twitter @Inspire_Us
Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured. -Mark Twain
Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured. -Mark Twain
No comments:
Post a Comment