World financial news

Amazon shares plunged 13% in after-hours trading Thursday after the company’s second-quarter earnings came up far short of analyst expectations.

Amazon’s sales are still growing fast: The company had revenue of $6.6 billion in the quarter ended June 30, up 41% from a year ago. Amazon’s profit also rose, increasing 45% to $207 million.

But analysts hoped for better, and are keeping a close eye on Amazon’s bottom line to see if intensifying competitive pressures knock the e-commerce giant off its game.

Forced by Barnes & Noble (BN) into an e-reader price war, Amazon.com slashed the price of its flagship Kindle to $189 last month. It later cut its high-end Kindle DX price tag by more than $100, to $379. Meanwile, Apple’s (AAPL, Fortune 500) popular iPad — which can store thousands of e-books — could obliterate the entire stand-alone e-reader market within the next year or two No teletrack payday loans.

Amazon tried earlier this week to draw attention to its bright spots. The company announced that sales of e-books for its popular Kindle reader now outnumber Amazon’s sales of hardcover books. The company also said Kindle sales have picked up since last month’s price cut, though it once again refused to disclose how many Kindles it has actually sold.

Amazon (AMZN, Fortune 500) said it expects third-quarter revenue to come in between $6.9 billion and $7.63 billion in revenue this quarter, in line with analyst estimates. 

Source

fast cash loan is fast becoming a viable financial option for consumers who need a few extra dollars.

Federal Reserve Chairman Ben Bernanke said Wednesday he has concerns about a signature piece of Senate Democrats’ Wall Street reform package that cracks down on complex financial products.

Bernanke wrote about the consequences from a congressional ban preventing banks from trading the complex financial products, called derivatives, in a letter to key lawmakers.

"Forcing these activities out of insured depository institutions would weaken both financial stability and strong prudential regulation of derivative activities," Bernanke wrote to an author of the measure, Sen. Christopher Dodd, D-Conn.

Dodd worked with Sen. Blanche Lincoln, D-Ark., on the measure, including the swaps ban, which ranks among the top hang-ups that could threaten final passage for the overall Wall Street reform bill.

Progress on the bill has been slow going, and the Senate will continue debating amendments at least through early next week, Dodd said Thursday.

The Fed chair’s concerns about the swaps ban are similar to those raised by other high profile regulators — former Fed chairman Paul Volcker and Federal Deposit Insurance Corp. Chairman Sheila Bair. They all stopped short of blasting the measure.

The tough crackdown in question is the brainchild of Sen. Lincoln, who is facing a contentious Democratic primary in Arkansas on Tuesday in her bid for re-election. The Senate isn’t expected to propose changes to the measure until after Tuesday, congressional aides and lobbyists say.

Congress generally wants to get tougher on derivatives, which are currently traded with no oversight and were a key reason for the taxpayer bailout of American International Group (AIG, Fortune 500). But lawmakers disagree about how much to regulate them.

The measure banning bank swaps goes farther than the so-called Volcker rule, named for the former Fed chief, that would only block some banks from doing such trades for their own purposes and accounts, called "proprietary trading."

The Lincoln proposal blocks banks from all derivatives if the banks want access to cheap emergency loans that the Federal Reserve can make as lender of last resort.

Bernanke said in the letter that banks use derivatives to shed risk that can arise in deals they make over interest rates, currency and other credit risks.

"Use of derivatives by depository institutions to mitigate risks in the banking business also provides important protection to the deposit insurance fund and taxpayers as well as to the financial system more broadly," Bernanke wrote.

A House bill that passed in December would allow all banks to trade derivatives in a more transparent way. However that bill also allows some trades between some banks and certain companies, such as airlines, to continue without regulation.

But Senate Democrats are tougher on derivatives, in the aftermath of fraud charges that the Securities and Exchange Commission levied against Goldman Sachs (GS, Fortune 500) for selling a complex mortgage-related derivative to investors while failing to tell them that a hedge fund was betting against the product.

When asked about negotiations on the derivatives piece on Thursday, Dodd said he understood that discussions were ongoing, but he wasn’t involved in them. 

Source

Rutgers announced Thursday that the new dean at Rutgers School of Business–Camden will be Jaishankar Ganesh.

Ganesh is associate dean for administration and executive education at the University of Central Florida’s College of Business Administration.

He will take over at Rutgers on Aug. 1 for Mitchell Koza, who is stepping down as dean after three years because he wanted to return to the faculty, a college spokesman said.

Rutgers said Ganesh’s “scholarship focuses on issues of marketing management and international marketing strategy, emphasizing such issues as customer satisfaction, retail patronage behavior, and the cross-national diffusion of products easy pay day loans.”

“Dr. Ganesh is an exceptional administrator and scholar, and an energetic visionary,” Rutgers President Richard L. McCormick said. “I am confident that he will help to advance the Rutgers School of Business–Camden to its rightful place as a premier center for education and business development in our region.”

Ganesh, 45, earned a Ph.D. in marketing and international business and an MBA from the University of Houston.

Source

Is it too early to call a GM turnaround?

Less than five months after emerging from bankruptcy protection in July, General Motors Co. last week reported a significant drop in losses, a stronger-than-expected balance sheet at this early stage in its recovery, and that it would start repaying loans received from Washington and Canada next month – five years ahead of schedule.

While it is still losing money in the core North American market, no global automaker is thriving in a U.S. market with a 10.2 per cent jobless rate.

Meanwhile, GM is turning an impressive profit in its Asia-Pacific and Latin American markets. Buick is something of a dead brand in North America, as GM design czar Bob Lutz acknowledged a few years ago. But in China and Japan, Buick is a sought-after status symbol.

GM is solidly entrenched in the rapidly-growing Chinese market, where it sold 478,000 vehicles in the third quarter – more than it sold in North America. And Chevrolet has made significant inroads in Russia, expected to be Europe’s fastest-growing market in the next few years, eclipsing Germany.

In the so-called BRIC nations – Brazil, Russia, India and China – GM has powered itself to a 13 per cent market share. Its volume and revenues are climbing in what collectively will be the planet’s highest-growth market in the decades to come.

GM’s steep losses earlier this decade in continental Europe have narrowed considerably over the summer. GM’s Opel brand benefited greatly from European "Cash for Clunkers" programs.

In an ironic twist, better-engineered GM models with curb appeal for Canada and the U.S. were in the pipeline when GM was hitting the wall last year. The government bailout has made it possible for GM to get those vehicles onto the market.

GM hits with auto critics and buyers include the Chevy Equinox SUV, the Chev Malibu, the Buick LaCrosse full-size sedan and the Chev Camaro retro muscle car assembled in Oshawa. The Chevy Cruze compact, due next fall, is GM’s make-or-break entry in what will be the fastest-growing market segment over the next few years.

Not being forced to sell Opel, which GM has owned since 1929, to a Magna-led consortium has been a blessing.

"It would have made everything a lot harder," said Mark Reuss, GM’s new head of global engineering, of the prospective loss of Opel. "I’m really happy that we’re keeping it."

Opel has been key to many of GM’s most promising current models.

The Buick LaCrosse, the first "agile" quasi-land yacht offered by Buick maybe since David Buick was still drawing breath, is a rebranded Opel Insignia, voted by auto critics the European Car of the Year. The Opel-designed Buick Regal for next fall will be the brand’s first credible sports sedan.

Opel styling and engineering are also behind the bestselling Malibu and the forthcoming Cruise. The dull, ultrasafe GM styling of previous decades has given way in GM’s most successful models to the pleasing angularity of Mercedes, BMW and Audi.

But of course there are lingering problems from the GM of old. Product is everything in GM’s bid for survival. But GM’s product line is spotty payday loans guaranteed no fax. One of the reasons the above models stand out is that too little of GM’s output has been overhauled. By contrast, Ford will have replaced its entire lineup by 2011. GM’s crosstown rival already has a jump on GM’s Cruise, for instance, with an all-new Focus and a critically acclaimed Fiesta coming soon.

The battleground for global automakers next century will be small cars boasting advanced fuel-economy technology. And here GM remains behind the curve, having unduly put most of its chips on an overhyped Chev Volt. The Volt’s technology isn’t proven, and it will bear too steep a sticker price for its small size. It also won’t reach the market until after an abundance of better-value rivals have hit the showrooms, including the Fiat small-car flagship 500 due in Chrysler showrooms next year.

GM needs to use its formidable, post-bankruptcy cash horde of $42.6 billion (U.S.) not on premature loan repayments, but on two things only: developing still more must-have products, and marketing the heck out of them.

To pick an example of sorry GM marketing, GM Oshawa is routinely at or near the top of the North American factory rankings in quality and productivity. GM could shoot a commercial around that. Buick, which commands a pathetic 3 per cent of the North American market, has been running a close second to Lexus in J.D. Power’s quality rankings for several years, with BMW and Porsche languishing in the middle of the pack.

Yet these winning attributes are GM’s little secret. GM, perhaps out of misplaced pride, is averse to sharing its compelling story with the buying public.

But the biggest worry is GM’s continued obsession with market share. Maintaining market share is pointless if, like GM in North America for the past decade, you’ve been losing money on almost every vehicle you make.

In announcing its financial results last Monday, GM bragged about reclaiming market share. What GM needs to do is emulate Ford’s discipline in aiming to make a profit on every single vehicle, even if that means surrendering market share. Apple made more money in the third quarter with 2.5 per cent of the global cellphone market than Nokia did with its 35-per-cent share.

Apple’s iPhone is a must-have product and with high profit margins to match. GM has hit that sweet spot with its Camaro, and must work to achieve that status for everything it puts on the market.

"GM’s old management often seemed eager to blame their problems on just about anything — the economy, exchange rates, gas prices – except the deficiencies in their product lineup," veteran auto observer John Rosevear wrote in response to last Monday’s good news out of Detroit headquarters. "Have they really transcended that mindset?"

A much smaller but assuredly successful new GM was the object of the exercise in Washington’s decision to provide GM a second chance. It’s not clear GM understands that.

Absent the dramatic culture change of which GM critics have always thought "the General" incapable, the firm’s nascent recovery will be short-lived.

Source

Funds specializing in niche assets such as art and wine, long the preserve of ultra-rich hobbyists, are seeing a spike in interest from more mainstream investors seeking an antidote to the complexity of hedge funds.

As economies recover, interest has revived among traditional wealthy clients, but managers also tell of growing interest from institutions who have tended to avoided such illiquid assets.. Some have become confident enough in the trend to launch new funds.

“Attitudes are starting to change and we’re talking to large institutions which have the ability to write some large, meaningful cheques,” said Geordie Manolas, managing director at First State Media Group, which runs a fund that invests in music publishing rights and recently bought the catalog of singer Sheryl Crow.

Solid returns throughout the crisis as other asset classes crashed, and a lengthening track record for some funds, are translating into increased acceptance among investors, though figures are difficult to come by.

Investing in art has precedents for institutions: the British Rail Pension Fund achieved 11 percent annualized returns on art assets from the late 1970s until the late 1990s, but most existing funds are less than 10 years old.

The Fine Art Group, established in 2001, recently bought a work by David Hockney for around $850,000 and has notched up an average annualized return on assets sold at its funds of 30 percent.

On the back of this, institutional investors now make up around 20 percent of the assets and the group is targeting $100 million for a new venture by year-end, according to Philip Hoffman, chief executive payday loan.

“The institutions wanted to see a five-year track record and properly structured teams,” he said, adding that money invested in art funds would be around $350 million by year-end, up from around $200 million at the beginning of the year.

Another relative veteran investing in fine wines, The Wine Investment Fund which dates back to 2003, paid out an annualized return of 13 percent in the five years to August 2009.

Andrew della Casa, director and co-founder of The Wine Investment Fund, said the proportion of institutional investors in the fund is around one-third and rising.

The trend marks a significant shift in attitude. A common perk offered by art funds is to loan paintings, sometimes valued in millions, to investors to hang in their homes - a feature frowned upon by cost-conscious institutions unhappy with additional insurance charges.

HEDGE FUND BACKLASH

The performance of some of the funds contrasts with that of hedge fund industry which suffered its worst year on record in 2008, when the average hedge fund lost 20 percent.

Bernard Duffy, managing director at Emotional Assets Management and Research said the sector is also benefiting from a backlash against hedge funds’ sometimes impenetrable complexity.

“These are tangible assets. You can touch them, you can feel them,” he said. 

Read more

Gold received a lukewarm reception a day after racing to a record high, with consumers in Asia more likely to be cashing in than panic buying.

Profit taking — read selling — replaced gold purchases that in New York and across Europe on Tuesday had swept spot bullion through the March 2008 record to hit $1,043.45 an ounce.

“It is simple, buy low and sell high — I am making a 10 percent profit already so I am selling,” said Nguyen Duc Hung while waiting to sell five taels of gold at a shop on Hanoi’s Ha Trung street. Hung said he bought the gold in early July.

To date, there have been no reports of gold hoarders burying stashes in secret spots as was the case in 1980, when gold zoomed above $800 an ounce for the first time, or about double today’s level when adjusted for inflation.

Gold was last quoted at $1,042.20 an ounce, just shy of Tuesday’s peak.

“Today’s been like any other day,” said David Carr, of KJC Coins Australia in Sydney. “No one’s coming in to sell gold because the price jumped overnight, it’s more wait and see, business as usual.”

The Australian outback gold mining town of Kalgoorlie, home to a nearly Times Square-sized electronic ticker tape broadcasting up-to-the-minute bullion prices, also was quiet.

“There’s nothing going on that’s out of the ordinary,” said John Horner, editor of the Kalgoorlie Miner newspaper.

In Tokyo, gold’s ascent barely caused a flutter.

“Both buyers and sellers are coming to the shop today, they are more or less evenly balanced,” said Osamu Ikeda, general manager at Tanaka Kikinzoku Kogyo, Japan’s biggest bullion retailer.

With Chinese markets closed for a week-long holiday, Japanese investment sentiment was center stage in Asia.

“Importantly, gold does not appear to be finding support from Tokyo, the key region in our time zone,” said Nigel Moffatt, head of treasury for Australia’s Perth Mint.

In India, where consumer demand typically peaks next week for the Dhanteras and Diwali festivals, the strong rupee kept the local price of gold under the psychological level of 16,000 rupees ($342) per 10 grams.

“Buying was very strong in the last couple of weeks, but it has been affected now even though the rupee has given a good cap to local prices,” said Pinakin Vyas, assistant vice president treasury at IndusInd Bank, a private bank in Mumbai that imports gold to sell to local traders and jewelers.

“Investors will not buy at these levels though need-based buying from jewelers will continue. People will wait for some time and then come back to the market.” 

Read more

The end of the government’s popular Cash for Clunkers program and low inventories of vehicles led to a 40% plunge in U.S. auto sales in September compared with August, although year-over-year declines were more modest and generally in line with forecasts.

"The month never felt strong," said Mark LaNeve, vice president of U.S. sales for GM, in a call with analysts. "I think we’re feeling the effects of a post-Clunkers hangover."

Overall industry sales came in at 745,997 vehicles in September according to sales tracker Autodata, down 23% from a year ago. That makes it the worst month since February in what has been a terrible year for auto sales, even with the four-week lift the industry received from the Clunkers program.

Cash for Clunkers, which paid buyers up to $4,500 for their used cars when they purchased more fuel efficient models, spurred strong sales from late July through the end of the program on Aug. 24.

But it likely pulled ahead sales that might have taken place in September and left dealers with limited supplies of vehicles to sell coming into the fall. With low inventories, automakers also scaled back on incentive offers to buyers.

"There were a lot of things working against sales in September, and very little wind at their back," said Jeff Schuster, director of global forecasting for auto consultant J.D. Power & Associates.

Ford Motor (F, Fortune 500) reported the best results of Detroit’s Big Three Thursday. Its sales slipped only 5% from a year earlier, although they were off 37% from the rush it got from Cash for Clunkers program in August.

Still Ford’s results were better than the 10% year-over-year drop forecast by sales tracker Edmunds.com.

Rival General Motors reported a 45% drop in sales compared to a year ago, and a 37% drop from August. Edmunds.com had forecast a 46% decline for the nation’s largest automaker.

Mike DiGiovanni, GM’s head of sales analysis, said that the negative impact from Clunkers on future sales would diminish in the next few months though. He estimated that only about 30,000 vehicle sales would be lost industrywide in the fourth quarter due to the impact of Clunkers.

DiGiovanni added that, despite a growing belief among economists that the recession has ended, it will take a much bigger rebound in the economy before auto sales truly bounce back.

"We’re not going to be completely out of the woods until the job market improves," he said.

Toyota Motor (TM), which had the largest number of Clunkers-related sales, posted a 13% drop in sales compared to a year ago, but that was a 44% plunge from August. Toyota’s sales were a bit worse than Edmunds.com’s forecast of a 10% drop, but Toyota said that it believes sales should be stronger in the fourth quarter.

It did better than Japanese rival Honda Motor (HMC), which reported a 20% drop from a year earlier and a 52% plunge compared to August, more than twice as bad as the 8% drop in year-over-year sales forecast by Edmunds.com.

Nissan (NSANY) reported only a 7% slide in sales compared to a year earlier, but that was worse than Edmunds.com’s prediction of a 1% drop. Nissan’s September sales were also off 47% from August.

The one major automaker to post improved sales in September was Korea’s Hyundai, which reported a 27% gain from a year ago. Still, Hyundai’s sales were 48% lower than August’s levels.

Chrysler’s sales plunged 42% from a year ago, and 33% from August. Chrysler, with a heavier reliance on trucks than other automakers, did not get as much of a sales lift from the Clunkers program. But Edmunds.com had expected an even worse year-over-year drop of 48%.

"We believe the remainder of 2009 will continue to be a challenge for the U.S. automotive market," said Peter Fong, the lead sales executive for the Chrysler Group in a statement. "Credit markets have thawed slightly, but still remain tight, and consumer confidence, as we saw in September, is tenuous."

Ford and other automakers have ramped up production to try to replenish supplies, but inventories remained low throughout September.

George Pipas, director of sales analysis for Ford, said the company had an inventory of about 300,000 vehicles at the end of the month, up about 60,000 from the end of August. But he added that was an historic low and that some of those vehicles are still in transit to dealerships.  

Source

The SEC could use more days like this.

The Securities and Exchange Commission, the government’s regulator of the financial markets, made headlines Thursday, a day after it filed a case against an insider trader that looted $8.6 million illicitly from the high-profile, $3.9 billion Dell (DELL, Fortune 500) and Perot Systems (PER) deal. The SEC caught the culprit quickly, too — the crime went down just three days ago.

But days like this haven’t come often enough in the past year for the 75-year old regulator. Most headlines about the SEC have focused on how it missed Bernie Madoff’s $50 billion Ponzi scheme and let Bank of America (BAC, Fortune 500) off too easily.

As a result, lawmakers have become skeptical of the SEC’s ability to do its job. Congress recently left it off a list of proposed recipients for funding to enhance regulatory reform. And earlier this year, some legislators suggested that the SEC be merged with the Commodity Futures Trading Commission.

But don’t expect the SEC to go down without a fight.

"Lately, the public and Congress have raised questions about the effectiveness of the SEC," said Mike Perlis, partner at Stroock, Stroock & Lavan in Los Angeles and former assistant director at the SEC. "It’s important to the SEC to be perceived as a vigorous enforcement agency, so we’ll start to see an increase in activity from them."

In a speech last month in New York, Robert Khuzami, the SEC’s director of enforcement, said it is responding to criticism by enhancing its efforts to catch criminals and protect consumers. He said that in the first eight months of 2009, compared to the same period a year ago, the SEC has opened 10% more investigations, issued 118% more subpoenas and filed 30% more enforcement actions.

"We listened to the criticism and used it as a learning opportunity," said Khuzami. "We are aggressively pursuing long-term improvements in our structure and processes, while at the same time working hard to continue our vigorous enforcement efforts."

Insiders get more headlines: The SEC is talking a good talk, but experts say the regulator may need to go a step further to gain favor with angry lawmakers.

Perlis said the SEC’s efforts will be shifted toward more insider trading enforcement similar to the kind of charges the regulator filed Wednesday. He argued that insider trading cases will help the commission curry favor with lawmakers and with the public, because they are high profile, quick, easy to investigate and don’t require complex actions such as tracing asset flows.

Experts noted that the SEC will have its hands full in the coming months: With a growing number of deals expected to be done as the recovery sets in, that means more crooks will attempt insider trading schemes.

"The SEC is in an odd place, still wounded from all of the past year’s activity on Wall Street," said Michael Williams, dean of Touro College Graduate School of Business in New York. "With M&A coming out of shadow land, the SEC will position itself to be at the table in these deals, actively involved, so it can resurrect itself and avoid a departmental overhaul."

Focus needed: But not everyone thinks that’s such a great thing. Insider trading is harmful to investors, but the more difficult-to-catch problems such as Ponzi schemes and corporate misinformation are usually much more destructive.

"I hope the SEC doesn’t take that route," said Ellen Podgor, a law professor at Stetson University College of Law in Florida. "When it comes down to what’s important, like making sure another Madoff doesn’t happen, then they’ll have to take the time in their investigations instead of the easy way out."

To prevent another Madoff-sized scheme from falling through the cracks, the SEC may be better off focusing on the effectiveness of their efforts rather than on the public attention that they get, some argue.

"The SEC’s problem is that these things are hard to find," said Randall Filer, professor of economics at Hunter College in New York. "To do a better job, they’ll have to become more efficient. Given the political mood, that idea will gain traction … and the government will spend the resources for more regulation."

Funding: The SEC has already begun its push for more funds. Job cuts have coincided with rising rate of securities violations and trades to regulate.

"We are hopeful that Congress will increase our resources," said Khuzami in his speech. "We have had an approximately 11% reduction in force since 2005. With greater resources we can do even more."

Some in Congress think the SEC needs more help. Earlier this month, Sen. Charles Schumer, D-N.Y., said he plans to introduce a bill that would allow the SEC to keep all of the fees it collects from its cases, so it can better afford to recruit and maintain personnel.

"The SEC’s failure to catch Bernie Madoff shows a level of incompetence unseen since FEMA’s handling of Hurricane Katrina," Schumer said. "Under the current system, the agency’s rank-and-file personnel are struggling to keep up with the more sophisticated actors in the market. We cannot keep starving the SEC’s budget."  

Source

Stocks tumbled Wednesday, retreating from one-year highs, as investors took a sell-the-news reaction to the Fed’s decision to hold interest rates steady and keep its economic outlook relatively unchanged.

The Dow Jones industrial average (INDU) lost 81 points, or 0.8%. The Dow ended the previous session at the highest point since Oct. 6, 2008. The S&P 500 (SPX) index fell 10 points, or 1%, after ending the previous session at the highest level since Oct. 3.

The Nasdaq composite (COMP) fell 14 points, or 0.7%, after finishing the previous session at the highest mark since last Sept. 26.

The major indexes have repeatedly closed at near 1-year highs over the past two weeks. Stocks are likely to keep batting up against those levels until the start of the third-quarter financial reporting period late next month, said Jeff Kleintop, chief market strategist at LPL Financial.

"I think there will be a lot of upside surprises," Kleintop said. "In the second-quarter, we saw better-than-expected earnings mostly on cost cutting and little revenue growth. This time we’ll still see the impact of cost cutting but I think we’ll also see revenue growth."

He said that this fundamental improvement in Corporate America should give the rally another push.

Stocks initially rallied after the Fed announcement Wednesday, but failed to hold gains as investors used the latest nearly one-year milestone for the market as a reason to sell. A milder-than-expected response to a government auction of $40 billion in five-year notes also contributed to the late declines.

There wasn’t much in the statement that had market-moving potential, said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. "The outlook was consistent with the reports we’ve seen recently and with what the Fed has been saying."

Thursday brings the weekly jobless claims report from the Labor Department and the existing home sales report from the National Association of Realtors (NAR).

Also, the G-20 summit in Pittsburgh begins. The Group of 20 leading developed and emerging countries will discuss the ongoing efforts to stabilize economies after the financial market meltdown.

Fed: The Federal Reserve kept the fed funds rate, a key short-term bank lending rate, at a level near zero, as expected. The announcement was made at the end of its two-day policy meeting.

In the statement, the bankers said that "economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased."

But the bankers also noted that consumer spending has remained under pressure due to the rough jobs market and still-tight credit conditions. Last week, Federal Reserve chief Ben Bernanke said the recession was very likely over, but the labor market still has a long way to go.

In light of the continued challenges, the Fed reiterated Wednesday that it was likely to keep the fed funds rate at the historic lows for the foreseeable future.

Investors were also looking for more on how the Fed plans to eventually wind down programs that have pumped as much as $1 trillion into the economy to cushion the blow of the recession.

To that end, the Fed said it will stretch its purchases of $1.25 trillion of mortgage-backed securities from Freddie Mac and Fannie Mae through the end of the first quarter of 2010. Previously, the program was set to end through Dec. 31. The program has so far succeeded in helping to lower mortgage rates.

Shapiro said that this change was the most interesting detail in the statement. "In terms of buying mortgage-backed securities, the Fed is the only game in town and so maybe they hope that in six months, the world will have had enough time to heal so that someone else can jump in."

One-year highs: The major gauges are back near levels not seen since shortly after the collapse of Lehman Bros. last September.

Despite rampant calls for a fall selloff, investors have used any modest pullback this month as an opportunity to get back into stocks at a slightly lower level. Analysts say fears of having missed the boat on the rally have driven the latest spate of gains.

Since bottoming at a 12-year low March 9, the S&P 500 has gained 56.8% and the Dow has gained 48.9%, as of Wednesday’s close. After hitting a six-year low, the Nasdaq has gained 68%.

Stocks have risen during this period on signs that the economy is slowly starting to recover, and on extraordinary amounts of fiscal and monetary stimulus.

Company news: American Airlines and US Airways Group both slipped after announcing plans to raise cash, dragging down the whole airline sector.

American said it has priced its offering of 48.5 million shares of common stock, as well as $400 million in 5-year notes, with both offerings due to close Monday. The two sales should give American about $770.5 million after fees and expenses. American parent AMR (AMR, Fortune 500) fell 7.8%.

US Airways Group (LCC, Fortune 500) said it will sell 26.3 million shares of its common stock to Citigroup, the offering’s underwriter, with the sale due to close Monday. US Airways fell 13.6%.

The NYSE Arca Airline (XAL) index lost 2%.

General Mills (GIS, Fortune 500) reported higher quarterly earnings that topped forecasts and boosted its full-year outlook, due to strong sales of Cheerios, Trix and its other cereal brands. Shares rose over 4%.

Washington: Treasury Secretary Timothy Geithner told a House committee that U.S. economic growth appears to be picking up, but that reforms must be enacted to fix a broken system. He was testifying at a House Financial Services committee hearing on regulatory reform.

At least one million people could be eligible for an additional 13 weeks of unemployment benefits, following a House of Representatives bill approved Tuesday night. The Senate is expected to take up the issue soon, although it faces some questions about how it should be funded.

World markets: Global markets were mostly higher. In Europe, London’s FTSE 100, France’s CAC 40 and Germany’s DAX all ended lower, giving up gains. In Asia, the Hong Kong Hang Seng fell 0.5%, while Japan’s market was closed for a holiday.

Currency and commodities: The dollar held on to gains versus the yen and euro following the Fed announcement. The greenback had touched a fresh one-year low against a basket of currencies in the morning.

The strength in the dollar dragged on dollar-traded oil and gold prices.

U.S. light crude oil for October delivery fell $2.79 to settle at $68.97 a barrel on the New York Mercantile Exchange, dropping after a government report showed a big jump in weekly crude supplies.

COMEX gold for December delivery fell $1.10 to settle at $1,014.40 an ounce. Gold closed at a record high of $1,020.20 last week.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.41% from 3.44% late Tuesday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners narrowly topped losers three to two on volume of 1.32 billion shares. On the Nasdaq, advancers topped decliners eight to five on volume of 2.72 billion shares.  

Source

Top U.S. consumer electronics chain Best Buy Co. reported a lower-than-expected quarterly profit Tuesday as weakness in the entertainment software and appliance categories offset market share gains.

The retailer, which has steadily gained market share after main rival Circuit City closed its doors, said net profit fell to $158 million, or 37 cents a share, in the second quarter that ended on Aug. 29, from $202 million, or 48 cents a share, a year earlier.

Excluding a tax impact, the profit was 40 cents a share, a penny below analysts’ average forecast of 41 cents a share free credit report without a credit card.

Best Buy (BBY, Fortune 500), whose total revenue rose 12% to $11 billion in the quarter, raised its outlook for the fiscal year.

The retailer’s stock was down 3.8% at $38.86 a share in trading before the opening bell. 

Source