Obama plan helps lift global stock market gloom

Obama stimulus plan helps lift some global stock market gloom amid grim US retail news

LONDON (AP) -- World stock markets ended mixed on Thursday after President-elect Barack Obama made an urgent pitch to Congress to back his plan to resuscitate the U.S. economy.

While Asian and European markets ended in negative territory, broad U.S. stock indexes posted gains, as did most markets in Latin America.
Though Obama warned that the economic situation would likely get worse before it gets better, he said his plan to cut taxes and pump billions into the U.S. economy would help limit the depth and length of the recession. It was his highest-profile pitch for the plan, which is expected to total nearly $800 million.

"The message is just going down well (in the markets)," said Howard Wheeldon, senior strategist at BGC Partners in London.
"There is a belief that there's something about this man and something about this plan," he added.
Those hopes helped European markets erase most of their earlier losses, which had been generated by mounting concerns about global economic growth as leading U.S. retailers revealed poor sales figures.
The FTSE 100 index of leading British shares closed down only 2.14 points at 4,505.37 while Germany's DAX slipped 57.56 points, or 1.2 percent, to 4,879.91, also off its session lows. The CAC-40 in France was 21.76, or 0.7 percent, down at 3,324.33.
U.S. stocks ended mostly higher, also boosted by an announced deal that would help prevent more mortgage foreclosures. Democratic lawmakers reached an agreement with Citigroup Inc. on a plan to let bankruptcy judges alter home loans in an effort to prevent foreclosures.
The Dow Jones industrial average fell 27.24 points, or 0.31 percent, to 8,742.46, but broader stock indicators advanced. The Standard & Poor's 500 index rose 3.08, or 0.34 percent, to 909.73, and the Nasdaq composite index rose 17.95, or 1.12 percent, to 1,617.01.
Nevertheless, stocks remain on the defensive following a healthy rally in the run-up to the 2008 year-end and the early sessions of 2009, as investors grapple with grim economic news.

Bad news was the story of the day earlier Thursday following a raft of dismal retail sales reports in the U.S. Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc., Gap Inc., and Abercrombie & Fitch Co. But the biggest surprise came from Wal-Mart, the world's largest retailer, which posted a smaller sales gain than had been expected by Wall Street and cut its fourth-quarter earnings outlook.
In Latin America, Brazil's Ibovespa index resumed its 2009 rally, ending up 2.9 percent at 41,991. On Wednesday the Sao Paulo market dropped 3.5 percent, snapping a six-session winning streak.
Elsewhere in the region, Argentina's Merval added 2.2 percent to end at 1,192 and Chile's IPSA finished up 0.3 percent at 2,486. In Mexico, where the economy is closely bound to the U.S., the IPC index lost 0.7 percent to 21,955.

Earlier, every major market in Asia fell, marking an end to a New Year's rally.
Stock market analysts said there's been a noticeable change in market sentiment over the last 24 hours or so as investors took heed of the warnings and the likelihood that Friday's closely watched U.S. non-farm payrolls data for December may be particularly grim.

Neil Mackinnon, chief economist at ECU Group, said the reaction to Friday's jobs data will be key to see if the markets can soldier on.
"If it's a bad report and equities finish on a positive tone, that will be a very encouraging sign for markets, but if it's really bad and equity markets slump, it will be challenging for markets for the rest of the quarter," he said.
Earlier in Asia, Tokyo's Nikkei 225 stock average lost 362.82, or 3.9 percent, to 8,876.42, snapping a seven-day winning streak as the yen traded higher. Hong Kong's Hang Seng Index fell 571.55 points, or 3.8 percent, to 14,415.91.

South Korea's Kospi shed 1.8 percent, while Australia's benchmark dropped 2.3 percent and Taiwan's key index lost 5.3 percent. India's market, which plunged Wednesday after the chairman of major outsourcing company Satyam Computer admitted doctoring the firm's accounts for several years, was closed for a holiday.
In the oil market, light, sweet crude for February delivery fell 93 cents to settle at $41.70 a barrel on the New York Mercantile Exchange, a second day of declines after the U.S. government released more disheartening economic data and another inventory report suggested further erosion in energy demand. On Wednesday, prices tumbled more than 12 percent in the largest single-day percentage decline since September 2001.
The dollar, meanwhile, fell across the board after the Bank of England cut its key interest rate to a record low, but not as low as some traders expected. The British central bank cut its rate by half a percentage point to 1.5 percent, the lowest level in the bank's 315-year history. The British economy has been battered by a housing crisis and a string of failed retailers.
The euro rose to $1.3725 in late afternoon trading in New York from $1.3614 late Wednesday, while the British pound climbed to $1.5228 from $1.5132. The dollar also fell to 91.40 Japanese yen from 92.65 late Wednesday, and dropped to 1.0930 Swiss francs from 1.1026.


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Finding a new job becomes harder as layoffs mount

Finding a new job becomes harder as layoffs mount; unemployment expected to rise further

WASHINGTON (AP) -- The number of laid-off workers who are continuing to draw unemployment checks jumped more than expected to 4.6 million at the end of December and is likely to keep climbing this year -- fresh evidence that people are finding it increasingly difficult to get a new job amid a deepening recession.
The Labor Department's report Thursday also said first-time applications for jobless benefits dropped to 467,000 last week. But economists largely described that decline as a distortion, reflecting the government's difficulty in making seasonal adjustments over the holiday period. Even with the dip, the figure still signaled trouble in the labor market. A year ago, initial claims stood at 330,000.
Persistent economic woes -- housing, credit and financial crises -- along with a flurry of layoffs announcements in the opening days of 2009 all point to another terrible year for jobseekers, economists said.
Job hunter Barbara Slavin of Los Angeles knows that frustration.
"Many of the jobs I applied for I was qualified for and didn't get them," laments Slavin, 67, who was laid off last month as an executive assistant for a local Girl Scouts chapter. "I got a lot of energy. I like to work, and I don't know anybody who can live on Social Security alone."
She has worked a variety of places over the years, including a catering kitchen, a corporate newsletter and a software company.
The government's report showed that the number of people continuing to collect unemployment benefits rose by a sharp 101,000 to 4.6 million for the week ending Dec. 27, the most recent period for which that information is available. It was worse than the 4.5 million level of claims that economists had expected.
That increase left continued claims at the highest since November 1982, when the country was emerging from a deep recession, though the labor force has grown by about half since then. A year ago, this figure stood at nearly 2.7 million. The increase underscored the painful deterioration that has occurred in the jobs market.

"Workers getting laid off are not going to get hired any time soon," said John Silvia, chief economist at Wachovia.

Some economists believe the number of people drawing unemployment benefits could rise as high as 5.5 million this year -- even if a new government stimulus package is enacted.
President-elect Barack Obama called for a bold approach to revive the moribund economy.
"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," he said Thursday, the fourth straight day he talked about the economy, the No. 1 concern of most Americans.
"If nothing is done, this recession could linger," Obama warned. "The unemployment rate could reach double digits."
With employers throttling back hiring, the unemployment rate is expected to jump from 6.7 percent in November to 7 percent in December, which would be the highest in 15 1/2 years. The government releases that report Friday.
Obama, who takes over Jan. 20, is championing a massive package of tax cuts and government spending that could total $775 billion over two years. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.
With jobs disappearing, shoppers held tight to their wallets and pocketbooks at the end of 2008. The Federal Reserve said Thursday that consumers cut back on their borrowing on credit cards, and for such things as auto loans, at an annual rate of $7.94 billion in November, the biggest decline in 65 years of record keeping.

And retailers on Thursday reported dismal sales figures for December. Even Wal-Mart Stores Inc. finally buckled under the pressure of the sinking economy, with its sales rising less than analysts had expected. Among the many retailers that reported steep sales declines were Sears Holdings Corp., which operates Kmart and Sears stores, luxury retailer Saks Inc. and Gap Inc.
Consumers and companies are folding under the forces of the collapsed housing market, a global credit crunch and the worst financial crisis since the 1930s. The recession, which started in December 2007, already is the longest in a quarter-century.

"Only government can break the vicious cycles that are crippling our economy -- where a lack of spending leads to lost jobs, which leads to even less spending," Obama said.
This week alone, drugstore operator Walgreen Co., managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp. and computer products maker Logitech International all announced major layoffs to cope with a recession that has just entered its second year.
Pink slips are piling higher as companies scramble to cut costs even deeper. Electronic unemployment filing systems have crashed in at least three states in recent days due to the crush of Americans seeking jobless benefits.
For all of 2008, employers likely slashed payrolls by more than 2.4 million. That's based on economists' forecasts for a net loss of 550,000 additional jobs in December, as well as the job losses already reported every month last year by the government. Some, however, think the number of jobs cut last month will be higher -- around 600,000 or 700,000. That information also will be out Friday.
If the conservative 2.4 million estimate of net payroll reductions for 2008 proves correct, it would mark the first annual job loss since the previous recession in 2001. It also would be the worst year of job losses since 1945, when employers slashed nearly 2.8 million jobs, though the number of jobs in the U.S. has more than tripled since then.
On a more upbeat note Thursday, rates on 30-year mortgages this week fell to a new record low of 5.01 percent, a dose of good news for prospective home buyers -- if they can manage to get a home loan.

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