Stocks edged up today in another day of choppy trading as industrials led indexes higher. GE rose 2 percent to lead 30 stocks in the Dow.
Italy held talks with China's sovereign wealth fund amid reports it asked it to buy its bonds
Nearly 1 in 6 Americans are in poverty the Census says. US poverty rate rose to 15.1 percent and the number of uninsured hits high of 49.9 million
Here are the top financial stories of the day:
1) Dow Struggles for Direction-From The Wall Street Journal
Stocks bobbed between positive and negative territory, as investors kept an eye on the latest developments regarding Europe's debt woes.
The Dow Jones Industrial Average was up 29 points, or 0.3%, to 11090, in early Tuesday afternoon trading, with the index swinging about 150 points from its session lows to highs. Leading the blue chips higher were General Electric's 2.2% gain and Intel's 1.8% rise.
The Standard & Poor's 500-stock index rose seven points, or 0.6%, to 1169. Industrial and material stocks were the biggest gainers. The technology-oriented Nasdaq Composite gained 25 points, or 1%, to 2520.
The action follows Monday's session in which the Dow erased an intraday loss of as much as 167 points and finished up 69 points amid reports that China and Italy were in talks about bond purchases.
But on Tuesday, Italy said it didn't ask China to help it calm markets by buying its bonds. "We have not asked China for any aid in particular," said Antonio Gentile, a junior finance minister. "Demand for state-issued bonds remains good."
"It's just a hyper sensitive market," said Quincy Krosby, market strategist at Prudential Financial. "The question becomes at what point do you see conviction buyers coming into the market and taking positions.
It'll happen, but it could get sloppy beforehand."
In corporate news, Best Buy's fiscal second-quarter profit fell 30% as the consumer-electronics retailer continues to battle a weak economy and competition from online marketplaces. Shares tumbled 8.5%.
Aetna expects full-year operating results to exceed the company's prior target, citing a strong current-quarter performance and favorable underwriting margin. The stock rose 4%.
Cracker Barrel Old Country Store reported fiscal fourth-quarter revenue that fell shy of estimates, but raised its quarterly dividend 14% and approved a $65 million stock buyback program. Shares erased earlier losses and were up 2.7%.
Intersil lowered its fiscal third-quarter revenue forecast, but Chief Executive Dave Bell said inventory appears to be stabilizing. The semiconductor company's shares rose 3.4%.
Cummins expects annual sales to increase more than 60% in coming years, reaching $30 billion in 2015. Shares jumped 6.8%.
Meanwhile, import prices fell last month, indicating inflation pressures are benign and providing U.S. policy makers with room to give the economy additional stimulus.
Additionally, the National Federation of Independent Business said its small business optimism index fell in August for a sixth consecutive month, with most businesses surveyed saying sales remained the largest problem.
Meanwhile, a net 5% said they planned to create new jobs, a three-percentage-point increase from a month earlier.
2) Italy confirms China talks amid bond help reports-From the AP
Italy confirmed it held talks with Chinese officials amid speculation Rome is looking to persuade Beijing to buy its bonds or invest in its companies, while premier Silvio Berlusconi flew to Brussels Tuesday to discuss the market turmoil.
The eurozone's third-largest economy is trying to convince investors that it can manage its debt load, find buyers for its bonds and avoid becoming the next victim of Europe's debt crisis.
News of the talks with China sent the Milan stock market higher on the open, following market tensions across Europe. But the rebound was shaky, with stocks fluctuating.
Bond prices likewise received little support from the news especially after the country had to pay a euro-era high interest rate in a five-year bond auction.
Though the Italian Treasury raised euro3.86 billion ($5.27 billion) from the sale of five-year bonds, it had to pay an interest rate of 5.6 percent. That was the highest rate it has had to pay since the euro was established in 1999 and marked a fairly hefty rise from the previous auction's equivalent of 4.9 percent.
UniCredit bank gave a mixed review to the auction.
"While in terms of pricing we regard the auction as disappointing, demand was fine in our view, considering the current market environment and the high amount sold," said Chiara Cremonesi, a fixed-income strategist at UniCredit.
In Brussels, Berlusconi discussed the government's austerity package with European Union President Herman Van Rompuy, ahead of a key vote in the Italian parliament.
The austerity measures seek to slash spending by more than euro54 billion ($70 billion) over three years. They will be put to a vote of confidence in the lower house of parliament for final approval Wednesday, Berlusconi said. The Senate has already cleared them.
The European Central Bank has bought Italian bonds in the open market to keep down their yields, which indicate the rates at which the country would be able to borrow on the market.
But Rome appears to be looking farther away, too.
A spokesman for Finance Minister Giulio Tremonti confirmed the meeting with the chairman of China Investment Corp., Lou Jiwei, but declined further comment.
The Wall Street Journal and the Financial Times said the meeting took place last week in Rome, without citing sources. Reports said the meeting also included officials of China's foreign currency regulator and the Cassa Depositi e Prestiti, an Italian government investment vehicle.
CIC was created in 2007 to invest a portion of Beijing's $3.2 trillion in foreign reserves, the bulk of which are held in safe but low-earning assets such as U.S. Treasury debt. The fund says it has assets of $409.6 billion, which includes stocks in a wide array of major Western companies.
"Europe will continue to be one of China's main investment markets," said Foreign Ministry spokeswoman Jiang Yu at a regular news briefing. "We will also expand financial and economic cooperation and investment cooperation with European countries to jointly address the financial crisis."
Beijing hopes eurozone countries will "take effective measures to ensure the safety of China's investments," Jiang said.
Fiat and Chrysler CEO Sergio Marchionne, speaking from the Frankfurt Auto Show, said the possible involvement of China could be read in two ways: on the one hand, were Beijing to absorb some of Italy's debt, it would be a vote of confidence in Italy; on the other, the fact that Rome "had to go there, in and of itself is not a good sign."
Analyst Romeo Orlandi, an expert on China, echoed that assessment, saying the development was positive for Italy, but not without dangers.
"In principle it's a win-win situation: Italy needs money, China has the world's largest reserves. But this means that we must sell pieces of Italy to China," Orlandi said, adding that the talks may be an indication of how serious Italy's financial troubles are.
Orlandi said Beijing is usually cautious in its investment, and that the solution to Italy's woes does not lie in China. "But we are in a situation where even a little crutch can be helpful," he said.
3) Number of poor hit record 46 million in 2010-From Reuters
The number of Americans living below the poverty line rose to a record 46 million last year, the government said on Tuesday, underscoring the challenges facing President Barack Obama and Congress as they try to tackle high unemployment and a moribund economy.
The Census Bureau's annual report on income, poverty and health insurance coverage said the national poverty rate climbed for a third consecutive year to 15.1 percent in 2010 as the economy struggled to recover from the recession that began in December 2007 and ended in June 2009.
That marked a 0.8 percent increase from 2009, when there were 43.6 million Americans living in poverty.
The number of poor Americans in 2010 was the largest in the 52 years that the Census Bureau has been publishing poverty estimates, the report said, while the poverty rate was the highest since 1993.
The specter of economic deterioration also afflicted working Americans who saw their median income decline 2.3 percent to an annual $49,445.
About 1.5 million fewer Americans were covered by employer-sponsored health insurance plans, while the number of people covered by government health insurance increased by nearly 2 million.
All told, the number of Americans with no health insurance hovered at 49.9 million, up slightly from 49 million in 2010.
The economic deterioration depicted by the figures is likely to have continued into 2011 as economic growth diminished, unemployment remained stuck above 9 percent and fears grew of a possible double-dip recession.
The report of rising poverty coincides with Obama's push for a $450 billion job creation package, and deliberations by a congressional "super committee" tasked with cutting at least $1.2 trillion from the budget deficit over 10 years.
Faced with deteriorating job approval ratings, the president is trying to convince Republicans in Congress to support his package.
Analysts said poverty-related issues have relatively little hold on politicians in Washington but hoped the new figures would encourage the bipartisan super committee to avoid deficit cuts that would hurt the poor.
The United States has long had one of the highest poverty rates in the developed world. Among 34 countries tracked by the Paris-based Organization for Economic Cooperation and Development, only Chile, Israel and Mexico have higher rates of poverty.
Quote of the Day from Dave Ramsey.com:
The Lord gave us two ends—one to sit on and the other to think with. Success depends on which one we use the most. — Ann Landers
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