WASHINGTON (AP) -- Inflation at the wholesale level plunged by the largest amount in nearly three years in February as the price of food and energy products including gasoline fell sharply. The Labor Department reported that its Producer Price Index, which measures inflation before it reaches the consumer, fell by 1.4 percent last month after having risen by 0.3 percent in January.

http://biz.yahoo.com/ap/060321/economy.html?.v=6

March 22 (Bloomberg) -- Microsoft Corp.'s delay in the next version of Windows software sent shares of computer makers lower on concern a January release will wipe out demand during the holiday shopping season.

PC makers were relying on a November release of Windows Vista to revive demand and bolster holiday sales that account for about 30 percent of purchases. Redmond, Washington-based Microsoft, the world's largest software maker, was already two years late on the project and hasn't released a new Windows since 2001.

``Few things could have done more damage to the 2006 PC market than the slip of Windows Vista,'' Rob Enderle, president of San Jose, California-based researcher Enderle Group, said in an interview. ``This will have an adverse impact on a broad cross-section of components and platform PC suppliers.''

Shares of Microsoft, PC makers and chip manufacturers fell. Microsoft gets about 31 percent of its revenue from Windows and was depending on Vista to revive sales growth. The PC industry will lose more than $4 billion in sales this year from the delay, Gartner Inc. analyst Charles Smulders said.

Microsoft plans a management shakeup at its Windows group, the Wall Street Journal reported, citing people familiar with the situation. The company will name Steven Sinofsky, a 40 year- old senior vice president, as head of the division this week, the newspaper said.

http://www.bloomberg.com/apps/news?pid=10000103&sid=adSo6E9bLWck&refer=us

Last Updated Wed, 22 Mar 2006 11:48:46 EST
CBC News
The U.S. economy is likely headed for a slowdown later in the year that will spill over into Canada, economists at TD Bank said Wednesday.

In a quarterly forecast, TD economists said U.S. economic growth is expected to slow to an average annual rate of 2.3 per cent in the last half of 2006 and the first half of 2007.

It is about one percentage point below the U.S. economy's long-term potential pace, they said.

The Canadian economy is expected to "marginally slip" below its longer-term trend rate of 2.8 per cent, the forecast said.

"Last summer, we noted that housing market strength and household indebtedness in the U.S. was simply unsustainable, and that it would give way to an economic slowdown in the second half of 2006," said Don Drummond, a senior vice president and chief economist at the bank.

"Evidence is mounting in support of this view."

Slowing sales of new and resale houses will eventually dampen construction and consumer spending in the United States, TD said its forecast.

"There is no two ways about it, the U.S. slowdown will be a drag on economic growth north of the 49th parallel," said Drummond. "But, since Canada has neither the same degree of housing imbalances, nor as much tightness in monetary settings, it should fare slightly better than its U.S. counterpart."

http://www.cbc.ca/story/business/national/2006/03/22/tdforecast-060322.html

March 26 (Bloomberg) -- Consumer confidence didn't improve much this month and spending stalled in February, adding to evidence of a slowdown in U.S. growth that may make the Federal Reserve's interest rate increase this week one of the last for a while, economists said.

Two measures of March consumer confidence to be released this week barely rose from three-month lows, according to the median forecasts of economists surveyed by Bloomberg News. Consumer spending, which accounts for about 70 percent of the economy, was unchanged in February, the weakest performance in six months, economists forecast a separate report will show.

Coming after reports last week that showed new home sales and business investment weakened in February, the data will strengthen the view that the economy is slowing, economists said. Fed policy makers, meeting for the first time under the leadership of Ben S. Bernanke, will pause after raising the target interest rate this week and again in May, said economist Brian Bethune.

``The Federal Reserve is converging on a more appropriate level'' for the target rate, said Bethune, an economist at Global Insight in Lexington, Massachusetts. After its May meeting, ``the Fed will then pause to assess the breadth and depth of the slowdown.''

Confidence as measured by an index from the New York-based Conference Board rose to 102 this month from 101.7 in February, according to the median estimate of economists surveyed by Bloomberg News ahead of March 28 report. Confidence slumped last month as Americans worried about prospects for job and income growth.
http://quote.bloomberg.com/apps/news?pid=10000006&sid=ajw.Kq6cYeW4&refer=home

March 27 (Bloomberg) -- The Federal Reserve will push its interest-rate target above the yield on 10-year Treasury notes by mid-year, a potential prelude to a slowdown in economic growth, according to Wall Street's biggest bond trading firms.

Central bank policy makers will raise their benchmark to 5 percent by July, starting with a quarter-point increase tomorrow to 4.75 percent, according to the median estimate of economists at the 22 primary dealers of U.S. government securities surveyed by Bloomberg News last week. The 10-year note's yield will remain at about 4.75 percent, the economists forecast.

Bond dealers point out that the central bank lifted its target above the 10-year note's yield six times since 1971. A recession followed five of the occurrences.

``A slowdown in growth and a deceleration of inflation will both contribute to the feeling that maybe the Fed went too far,'' Brian Fabbri, chief economist at BNP Paribas in New York, said in an interview.

The yield on the Treasury's benchmark 4.5 percent note due February, 2016 ended last week at 4.67 percent, 17 basis points higher than the Fed's target rate for overnight loans between banks. The gap was about 320 basis points, or 3.2 percentage points, when the Fed began raising borrowing costs in June 2004 from 1 percent, and averaged 132 basis points the past decade.

Seventeen of the dealers expect 10-year notes to yield less than the federal funds rate by July. Three say they will be even, and two expect the yield to remain above the central bank's target.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=aFywpeWWiUw4&refer=home

NEW YORK (AP) -- Americans' optimism in the economy rebounded in March, sending a widely followed barometer of consumer sentiment to a near four-year high, a private research group said Tuesday.
The Conference Board said that its consumer index shot up 4.5 points to 107.2, the highest level since May 2002, when the reading was 110.3. Analysts had expected a reading of 102.

http://biz.yahoo.com/ap/060328/economy.html?.v=5

NEW YORK (AP) -- Wall Street rallied back Wednesday as investors scared off by the Federal Reserve's assessment of the economy in the previous session regained their confidence and bid stocks higher. The Nasdaq composite index reached a five-year high as investors focused on technology and smaller company stocks.

"What we're seeing here is a market that's just waiting to assess economic data later in the week and, of course, moving into the earnings season," said Peter Cardillo, chief market analyst at S.W. Bach & Co.

In the longer term, Cardillo said, investors are wondering how long the economy and earnings can sustain their momentum if interest rates continue to rise.

But in the short run, many mutual funds and other institutional investors close their books for the quarter at week's end. With the decline in stocks Tuesday, some large investors likely returned to the market Wednesday to adjust their portfolios and helping propel stocks higher, Cardillo said.

The rebound in stocks came despite another boost in crude oil prices, which rose 38 cents to settle at $66.45 a barrel on the New York Mercantile Exchange.

"The market continues to raise the level of tolerance it has for high energy prices," Hogan said. But "I think if we spend more time here at this level, energy prices will become an issue."

The market's tolerance for General Motors waned after the struggling automaker said late Tuesday it would again restate its financial reports, this time for the financing unit it is trying to sell.

In addition to restating its financial results from 2000 to 2004 Tuesday, GM said it is restating financial results for General Motors Acceptance Corp. from 2003 through the third quarter of 2005, said it was uncertain if it would complete the sale of a majority stake in the unit. Shares of GM fell 60 cents, or 2.6 percent, to $22.15.

http://biz.yahoo.com/ap/060329/wall_street.html?.v=22

WASHINGTON (AP) -- The price of oil topped $67 a barrel Thursday amid persistent supply disruptions in the Gulf of Mexico and Nigeria, a U.N. standoff with Iran over its nuclear program and growing demand in the U.S. despite rising energy costs.

Light sweet crude for May delivery rose 70 cents to settle at $67.15 a barrel -- a two-month high on the New York Mercantile Exchange. Crude futures are 24 percent higher than a year ago.

Brent crude for May gained 50 cents to $66.05 a barrel on London's ICE Futures exchange.

Gasoline prices rose 4.15 cents to finish at $1.9957 a gallon (3.8 liters), while heating oil futures gained 3.23 cents to end at $1.8843 gallon. Natural gas futures climbed 3.1 cents to settle at $7.487 per 1,000 cubic feet.
http://biz.yahoo.com/ap/060330/oil_prices.html?.v=12

ATLANTA (AP) -- Almost 275 Delta Air Lines Inc. pilots marched through the world's busiest airport Thursday to vent their anger over the company's effort to throw out their contract so it can impose up to $325 million in long-term pay and benefit cuts.

http://biz.yahoo.com/ap/060330/delta_pilots.html?.v=5

April 3 (Bloomberg) -- U.S. stocks failed to sustain most of an initial rally as signs of worsening inflation sent prices tumbling in the last half-hour of trading.

``Buying enthusiasm dried up as the day progressed,'' said Michael Sheldon, chief market strategist at Spencer Clarke LLC in New York. ``Lingering worries over rising energy prices and higher bond yields may have finally caught up with the market.''

Confidence in the profit outlook and takeover speculation, fueled by Alcatel SA's $13.4 billion bid for Lucent Technologies Inc., sent stocks higher through the morning.

Phelps Dodge Corp. led an advance among raw-material producers as the price of copper climbed to a record. Higher commodity prices and an unexpected rise in an index of prices paid by manufacturers hurt the market by pointing toward higher interest rates from the Federal Reserve.

The Standard & Poor's 500 Index, which rose 3.7 percent in the first quarter, added 2.98, or 0.2 percent, to 1297.81. The Dow Jones Industrial Average gained 35.62, or 0.3 percent, to 11,144.94. The Nasdaq Composite Index lost 3.05, or 0.1 percent, to 2336.74.

Stock indexes were earlier headed for their highest close since 2001 before paring gains in the last hour of trading. Almost 10 stocks fell for every nine that rose on the New York Stock Exchange. Some 1.7 billion shares changed hands on the Big Board, in line with the three-month average.

http://www.bloomberg.com/apps/news?pid=10000103&sid=aL8zNlQTnSCc&refer=us

April 4 (Bloomberg) -- A rally in U.S. stocks propelled the Nasdaq Composite Index to a five-year high after oil prices fell and two Federal Reserve officials said inflation is under control.

``If people are comfortable with where inflation is, they feel comfortable with investing, and it does drive the market,'' said Andrew Seibert, who helps manage $1.3 billion at S&T Wealth Management Group in Indiana, Pennsylvania.

Takeover speculation contributed to the advance as the Fed allowed Citigroup Inc. to make large acquisitions after a one- year ban. Computer Sciences Corp. climbed after the provider of computer services put itself up for sale. Biomet Inc. rose on a report that the maker of artificial hips may follow suit.

Google Inc. led the Nasdaq higher. Caris & Co. analyst Mark Stahlman suggested the most-used Internet search engine may add a music-download service, challenging Apple Computer Inc.'s iTunes online store.

The Nasdaq advanced 8.62, or 0.4 percent, to 2345.36, its highest close since February 2001. The Standard & Poor's 500 Index rose 8.12, or 0.6 percent, to 1305.93. The Dow Jones Industrial Average gained 58.91, or 0.5 percent, to 11,203.85.

The S&P 500 had retreated in four of the last five weeks on speculation that the Fed would keep raising interest rates to combat inflation. The central bank on March 28 pushed the benchmark rate a quarter-point higher for a 15th straight time and signaled that further increases may be ahead.
http://www.bloomberg.com/apps/news?pid=10000103&sid=aC55KGF661Ck&refer=us

NEW YORK (AP) -- The services sector of the nation's economy expanded in March at a faster rate than in the previous month, a private research group said Wednesday. The growth outpaced analysts' forecasts.

The Institute for Supply Management said that its index for non-manufacturing business activity stood at 60.5 in March, up from 60.1 in February. The reading was higher than the 59.0 that analysts had been expecting.

A reading above 50 indicates the sector is expanding; below 50 indicates activity is contracting. The index is based on a survey of business executives.

The report was the latest sign of strength in the economy and suggests that interest rates could continue to rise. Last month the Federal Reserve disappointed investors by indicating that its credit-tightening could continue further than some had forecast, with at least one and perhaps two more increases in its benchmark short-term interest rate.

Ralph G. Kauffman, chairman of the ISM's survey committee, said that the latest report showed increases in 13 of the 17 non-manufacturing sectors of the economy, up from 10 that reported increases in February.
http://biz.yahoo.com/ap/060405/economy.html?.v=5

NEW YORK (AP) -- Cooler temperatures and a later Easter gave consumers little incentive to shop last month and left retailers with tepid sales for the second month in a row.

As the nation's merchants began reporting their monthly results early Thursday, Limited Brands, furniture retailer Bombay Co. and Sharper Image Corp. were among the disappointments. A bright spot was wholesale club operator Costco Wholesale Corp., which reported sales results that beat Wall Street expectations.

So far, it looks like consumers didn't shop in the month of March," said Jharonne Martis, an analyst at Thomson Financial. "Basically, the results were mixed to disappointing."

Martis noted that based on 32 merchants that had reported results so far, 34 percent beat estimates, while 66 percent missed expectations.

The tempered sales reports followed a disappointing February and a robust January as consumers, armed with gift cards, shopped with gusto.

While temporary factors like Easter's late arrival and cool weather helped to limit spending, analysts also said consumers are contending with higher interest rates, which makes financing debt more expensive, and higher gasoline prices. One positive factor has been solid gains in the job market, which helped consumer confidence rebound in March to a near four-year high.

http://biz.yahoo.com/ap/060406/retail_sales.html?.v=4

WASHINGTON (AP) -- Employers boosted payrolls by a sizable 211,000 in March in a springtime hiring burst that pushed the unemployment rate down to 4.7 percent.

The latest snapshot of the U.S. job market, released by the Labor Department Friday, suggested that an accelerating economic expansion is putting companies in the hiring mood, brightening prospects for those seeking work.
http://biz.yahoo.com/ap/060407/economy.html?.v=17

WASHINGTON (AP) -- Americans increased their borrowing at the slowest pace in three months in February as retail sales retreated after a weather-induced surge in January. The Federal Reserve reported that consumer borrowing rose at an annual rate of 1.8 percent in February, down from a 3.4 percent rate of increase in January.

http://biz.yahoo.com/ap/060407/consumer_credit.html?.v=4

April 12 (Bloomberg) -- The U.S. trade deficit shrank more in February than economists expected, to $65.7 billion, led by a decline in Chinese imports that may be temporary and do little to ease demands for sanctions.

The gap narrowed by 4.1 percent from a record $68.6 billion in January, the Commerce Department said today in Washington. Imports fell 2.3 percent and exports dropped 1.2 percent. The deficit with China was the smallest in almost a year and may reflect business shutdowns during the lunar New Year holiday.

A jump in oil costs to near-record highs and growing demand for Chinese goods suggest U.S. imports will again head higher and cause the deficit to swell. The dollar jumped against the euro before surrendering some of its gains as traders concluded the reduction in the deficit will probably be temporary. The gap is still the third largest on record.

The shortfall ``is going to remain very large and perhaps get bigger this year,'' said Jay Bryson, a global economist at Wachovia Corp. in Charlotte, North Carolina. ``Part of that increase has got to come from China. This year, our deficit with China is probably going to be bigger than last year.''

Chinese President Hu Jintao will meet President George W. Bush next week amid congressional efforts to penalize the Chinese for not letting the yuan appreciate faster. Some lawmakers say the currency is being kept artificially low, helping to widen the trade gap.

Economists expected the shortfall to narrow to $67.5 billion, compared with a previously reported $68.5 billion in January, according to the median estimate of forecasts in a Bloomberg News survey. Estimates ranged from $65.5 billion to $72 billion.

`Red Flags'

Imports fell to $178.7 billion in February, reflecting lower demand for motor vehicles and aircraft. Even with the decline, both imports and exports were the second-highest ever.

``We can luxuriate in this report for a month, but there are several red flags out there,'' said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. ``The deficit with China is going to widen quite sharply in March, and there's been a surge in energy costs'' which will lift import figures, he said.

The deficit subtracted 0.9 percentage point from growth in the first quarter and will lower growth for the year by 0.5 percentage point, according to a forecast from economists at Lehman Brothers Holdings Inc.

China Factor

The shortfall with China narrowed to $13.8 billion in February, the smallest since March 2005, from $17.9 billion in January. In the first two months of the year, the gap reached $31.8 billion, compared with $29.1 billion a year ago.

The Chinese export juggernaut returned in force last month after the New Year holiday. China's trade surplus widened to $11.2 billion in March, the second-highest on record, according to figures released yesterday. Trade with the U.S. accounted for almost all of gap. China's surplus with the U.S. widened 39 percent last month to $11 billion from $7.9 billion, China's customs bureau said today.

China made several concessions to U.S. demands yesterday, agreeing to start the process to lift its ban on U.S. beef imports, open up its mobile phone and medical devices market and crack down on software and music piracy.

``We believe that the way to address the deficit is by encouraging our exports, and not by creating barriers that will impact imports,'' U.S. Commerce Secretary Carlos Gutierrez said yesterday.
http://quote.bloomberg.com/apps/news?pid=10000103&sid=an1TfGv.1h48&refer=news_index

WASHINGTON (AP) -- U.S. industry headed into the spring with a full head of steam: Production at factories, mines and utilities rose by 0.6 percent in March in the latest encouraging sign for the economy.

The snapshot of industrial activity, released by the Federal Reserve on Friday, comes on the heels of other positive economic barometers.

Consumers -- a key ingredient of the country's economic health -- are keeping cash registers busy, and businesses are ramping up hiring, according to recent government reports.

The solid increase in industrial production in March came after a 0.5 percent advance in February and was the largest since December. The showing was better than economists were expecting.

"The economy is becoming a well oiled machine," said Joel Naroff, president of Naroff Economic Advisors.

Industrial strength in March was broad-based. Machinery, clothing, consumer appliances, furniture and carpeting, and business equipment all posted production gains. Even the struggling automotive sector saw some improvement. That swamped some weakness in home electronics, textiles and elsewhere.

Economists believe economic growth for the January-March quarter will clock in at a brisk pace of 4.5 percent or higher. The government will release first-quarter figures at the end of the month.
http://biz.yahoo.com/ap/060414/economy.html?.v=8

April 18 (Bloomberg) -- U.S. Treasuries may rise for a second day on speculation an increase in oil prices to near a record will damp consumer spending and slow growth in the world's largest economy.

Ten-year notes may extend gains from yesterday when a larger-than-expected drop in a gauge of manufacturing in New York state added to doubts the Federal Reserve will raise its interest-rate target two more times this year. Investors may also buy Treasuries as the 10-year note yields more than 5 percent, after rising above that level last week for the first time since 2002.

http://www.bloomberg.com/news/markets/bonds.html

NEW YORK (AP) -- Stocks soared Tuesday on news that Federal Reserve policymakers believed their run of interest rate hikes is likely nearing an end, propelling the Dow Jones industrials up nearly 200 points. The report helped offset the effects of oil prices that passed $71 a barrel.

Wall Street was already climbing in mid-afternoon when the Fed released minutes of the Federal Open Market Committee's March 27-28 meeting that showed most of the panel's members "thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy."

But the release of the minutes was just what an interest rate-weary market wanted to hear. The Fed has raised rates 15 times in a row since June 2004, putting the nation's benchmark rate at 4.75 percent.

"When it appears as though the governors of the Federal Reserve believe that the end of the rate increases is near, that's very good news for investors," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors in Albany, N.Y. "A lack of ambiguity from the Federal Reserve is always a little bit of a shocker."

The Dow Jones industrial average gained 194.99, or 1.76 percent, to 11,268.77.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 22.32, or 1.74 percent, to 1,307.65, and the Nasdaq composite index rose 44.98, or 1.95 percent, to 2,356.14.

Traders had already gotten some comfort Tuesday from the Labor Department's report that core wholesale inflation, which excludes volatile energy and food prices, rose just 0.1 percent last month. Overall inflation rose 0.5 percent, the fastest pace in three months, after a 1.4 percent drop in February. However, the core number indicated that the effects of higher oil are not making their way throughout the economy.

Any sign of rising inflation has sent stock prices falling, as fighting inflation has been the Fed's primary concern. However, while the economy has been expanding, inflation has been under control.

With some reassurance from the Fed, investors are likely to focus more on earnings, which are cascading in this week and next. If company results show they've managed to weather higher prices for energy and other commodities, Wall Street could have the incentive to continue a rally started in March but put on hold in recent weeks.
http://biz.yahoo.com/ap/060418/wall_street.html?.v=26

WASHINGTON (AP) -- Improving information collected on communities that have fallen on economic hard times is crucial to efforts to revive these areas, Federal Reserve Chairman Ben Bernanke said Thursday."The development of more and better data on economically distressed communities, together with sophisticated tools for analyzing those data, is essential for continued progress in community economic development," Bernanke said in prepared remarks delivered via satellite to an economic development summit in Los Angeles.

http://biz.yahoo.com/ap/060420/fed_bernanke.html?.v=4

DEARBORN, Mich. (AP) -- Ford Motor Co. said Friday it lost $1.2 billion in the first quarter, its worst performance in more than four years, as revenues fell and the nation's second-biggest automaker started a massive and costly North American restructuring effort.

The loss of 64 cents per share for the January-March period compares to a profit of $1.2 billion, or 60 cents per share, a year earlier. Sales fell 9 percent to $41.1 billion from $45.1 billion a year ago.

Ford said its results included a pretax charge of $1.7 billion, or 61 cents per share, for costs associated with its Way Forward restructuring plan, which calls for cutting up to 30,000 jobs and closing 14 facilities by 2012. The charge includes the costs of layoffs and buyouts and pay for hourly workers whose plants have been idled.

Excluding one-time special items such as restructuring charges, Ford said it earned $458 million, or 24 cents per share.

It was Ford's worst quarterly performance since the fourth quarter of 2001, when the company posted a $5.07 billion loss due to $4.1 billion in costs for a previous restructuring plan. In the first quarter of 2002, Ford posted a $1.1 billion loss.

Ford's North American automotive unit, which has been struggling with declining sales and high fixed costs, reported a pretax loss of $2.9 billion in the first quarter, including one-time items. Ford said that was primarily due to lower sales, increased incentives, acceleration of charges related to plant closings and losses at former Visteon Corp. plants now under the control of a Ford-managed entity.

Worldwide, Ford's automotive operations lost $2.7 billion before taxes, compared with a profit of $473 million a year ago. That included $2.5 billion in one-time special items such as restructuring charges. Ford sold 1.7 million vehicles worldwide, up 3 percent from a year ago.

Ford's financial arm, Ford Motor Credit Co., earned $479 million for the quarter, down 33 percent from $710 million a year ago. The division said higher borrowing costs due to Ford's junk credit rating was partly to blame.

"While we are not satisfied with our performance, particularly a loss in North America automotive, we are encouraged by the success in our global operations and at the Ford Motor Credit Company," Chairman and Chief Executive Bill Ford said in a statement. "We have said we intend to restore automotive profitability in North America by no later than 2008 and we remain committed to deliver on our promise."
http://biz.yahoo.com/ap/060421/earns_ford.html?.v=11

NEW YORK (AP) -- Investors will likely enjoy another round of solid earnings reports this week, but those numbers could be easily ignored as the market shifts its focus back to the economy.Wall Street has so far been impressed by first-quarter earnings, most of which have managed to beat analysts' lofty expectations. If this week's earnings data are anything like the last, the market will certainly have reason to continue celebrating a successful start to the year.

But the market nonetheless has some obstacles to overcome. Investors' optimism over a possible end to the Federal Reserve's interest rate hikes was quickly spoiled last Wednesday by a bigger-than-forecast jump in consumer prices. This week, strong readings on labor costs and first-quarter gross domestic product could feed inflation fears and send the market sliding.

And crude oil that surged past a record $75 per barrel and gold prices standing at a 25-year high also pose a threat. Analysts say those growing inflationary pressures are all the more reason for the Fed to keep raising rates, which could drive down bond prices and cause investors to lose interest in stocks.

And so continues Wall Street's uncertainty about the pace of economic growth and inflation. More skittish trading is expected as data-sensitive investors mull this week's raft of earnings reports and anticipate what the Fed will say at its May 10 meeting.

Signals from the Fed that it is almost done raising interest rates helped the market rally last week, with upbeat earnings reports bolstering stocks' gains. The Dow Jones industrial average rose 1.88 percent, while the Standard & Poor's 500 index rose 1.72 percent and the Nasdaq composite index gained 0.72 percent.

ECONOMIC DATA

Among this week's closely watched reports will be the Commerce Department's preliminary reading of the first-quarter gross domestic product on Friday. Inflation-weary investors have been looking for signs of a moderating economy; however, economists expect GDP growth to rebound to 5 percent from 1.7 percent in the fourth quarter.

Another critical datapoint will be the Labor Department's employment cost index for the first quarter, which is forecast to gain 0.9 percent after rising 0.8 percent in the prior period. Wage inflation is considered a major driver of increasing prices throughout the economy.

The Commerce Department on Wednesday reports new home sales for March, which gives Wall Street an assessment of whether rising mortgage rates have affected housing demand. Analysts currently predict new home sales will total 1.1 million, up slightly from 1.08 million the month before.

Elsewhere, both the Conference Board's and University of Michigan's consumer sentiment measures are expected to be nearly unchanged. Investors could also see another drop in weekly unemployment claims as hiring improves and the job market tightens.

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April 25 (Bloomberg) -- U.S. stocks fell the most in two weeks after reports on consumer confidence and housing raised inflation concerns and overshadowed earnings that topped analysts' expectations.

Shares of utilities including Duke Energy Corp. led the selloff on speculation the Federal Reserve will keep lifting interest rates. Consumer confidence jumped to levels not seen in four years and sales of existing homes unexpectedly increased, sending benchmark Treasury note yields to the highest since 2002.

``The interpretation from the statistics today appears to be that the Fed is not going to stop,'' said Kurt Brunner, who helps manage $1.8 billion for Swarthmore Group in West Chester, Pennsylvania.

The market declined even as Yum! Brands Inc., owner of restaurant chains including Taco Bell, boosted its 2006 profit forecasts and insurer Chubb Corp. posted first-quarter profit that exceeded Wall Street projections.

The Standard & Poor's 500 Index declined 6.82, or 0.5 percent, to 1301.29 at 12:02 p.m. in New York, its biggest drop since April 11. The Dow Jones Industrial Average lost 63.14, or 0.6 percent, to 11,273.18. The Nasdaq Composite Index fell 10.70, or 0.5 percent, to 2322.68.

Crude oil dropped on speculation gasoline supplies will increase. President George W. Bush said he would allow the Environmental Protection Agency to waive requirements for gasoline to be blended with ethanol. Bush also called for expanding the use of ethanol and hydrogen technology, giving ethanol producers a boost.

Higher-than-expected earnings from companies including Google Inc. and 3M Co. this month had helped outweigh concerns that record oil prices and rising interest rates will eat into future profits.

http://www.bloomberg.com/apps/news?pid=10000103&refer=news_index&sid=aOn0PI8hb3fs

WASHINGTON (AP) -- A jump in demand for commercial aircraft pushed orders for big-ticket manufactured goods higher in March while sales of new homes shot up at the fastest pace in 13 years, reflecting a rebound from bad weather in February.Both reports depicted an economy continuing to expand at a healthy pace, a view supported by a new survey of business conditions around the country released Wednesday by the Federal Reserve.

The Fed's 12 regional banks used words such as "solid," and "steady" to describe the economy's performance in March and early April. The Fed did note that "higher energy prices were at the forefront of most districts' mention of cost pressures" and that was before crude oil soared to a new record of $75.17 per barrel last Friday.

Some analysts said the strong growth plus rising inflation pressures will mean the central bank's rate-setting Federal Open Market Committee will not only raise rates for a 16th time at its next meeting in May but will keep going after that.

"The U.S. economy is firing on all cylinders right now and there is little to no slack left," said Sherry Cooper, chief economist at Harris Bank in Chicago. "This makes it increasingly unlikely that the Fed will pause after the May 10 FOMC meeting."

More on the Fed's thinking may be known after Fed Chairman Ben Bernanke testifies on the economic outlook Thursday before Congress' Joint Economic Committee.

On Wall Street, the Dow Jones industrial average rose 71.24 points to close at 11,354.49, reflecting upbeat earnings reports and positive analyst comments on the restructuring of General Motors Corp.
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April 27 (Bloomberg) -- U.S. stock-index futures fell after China raised its key interest rate, causing concern decelerating growth in the world's most-populous nation may weigh on global expansion.

Oil and mining shares including Phelps Dodge Corp. dropped on the prospect of lower demand for commodities in China and as Exxon Mobil Corp.'s profit trailed analysts' estimates.

Congressional testimony by Federal Reserve Chairman Ben S. Bernanke may shed light on prospects for higher borrowing costs in the U.S.

``Now most of the world is in a monetary tightening course,'' said London-based John Haynes, U.S. equity strategist for Rensburg Sheppards Plc, which manages $11.5 billion. ``Higher interest rates are not supportive for stocks.''

Dow Chemical Co. slipped after reporting profit declined in the first-quarter.

The Standard & Poor's 500 Index futures expiring in June lost 5.60 to 1303.50 at 8:45 a.m. New York. Dow Jones Industrial Average futures slid 47 to 11,335. The gauge yesterday reached the highest in more than six years. Nasdaq-100 Index futures fell 7.75 to 1703.

China joins the U.S. and Europe in raising the cost of borrowing. Concern that the Fed may keep lifting rates in the face of strong economic data has pushed bond yields higher and limited gains for U.S. stocks this month.

China's central bank increased its one-year lending rate to 5.85 percent from 5.58 percent, the People's Bank of China said. The change will be effective tomorrow.

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WASHINGTON (AP) -- Casting off an end-of-year lethargy, the U.S. economy bounded ahead in the opening quarter of this year at a 4.8 percent pace, the strongest growth spurt in 2 1/2 years.The latest report on the economy, released by the Commerce Department on Friday, showed that consumers, businesses and government all did their part in terms of robust spending and investment to spur a healthy pace of growth in the January-to-March quarter.

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WASHINGTON (AP) -- Manufacturing cranked up, builders boosted construction spending to an all-time high and consumers opened their wallets wider -- fresh signs the economy has snapped out of its end-of-year funk.

That was the message coming from the latest batch of economic reports released Monday.

A report from the Institute for Supply Management showed that factory activity expanded with gusto in April. The group's manufacturing index rose to 57.3 in April, from 55.2 in March. The showing was much better than the reading of 55 that economists were expecting.

In a second report, the Commerce Department said total construction spending in March climbed to $1.199 trillion, on an annualized basis, surpassing the previous record high set in February. That marked a big 0.9 percent jump from February's level -- a performance that exceeded analysts' projections of a 0.3 percent gain.

Private builders ramped up spending on a wide variety of projects in March, including residential construction and factories. The government also spent more on big public works projects, including power plants.

In another report from the department, consumer spending rose 0.6 percent in March, an improvement from the 0.2 percent increase registered in February. Consumer spending plays a key role in shaping overall economic activity.

Incomes, the fuel for future spending, advanced by 0.8 percent in March. That was up from a 0.3 percent increase in February and marked the largest gain since September.

Income includes government payments as well as wages. Payments from the new Medicare prescription drug plan had the effect of helping to boost overall income in March. Wages, meanwhile, grew by a moderate 0.4 percent for the second month in a row.

Both the spending and incomes figures were better than economists were expecting. Before the release of the report, they were forecasting spending and income to each rise by 0.4 percent.

The spending and income figures are not adjusted for inflation.
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NEW YORK (AP) -- Consumers seemingly unfazed by rising gasoline prices spent enthusiastically during April, giving retailers their best performance in two years.Warmer weather, a late Easter and hot fashion trends helped entice shoppers, but merchants remained wary about the possibility that expensive gas and higher interest rates could still curb consumers' appetites.

Based on results from 54 retailers, 35 beat estimates, one met, and the remaining 18 missed, Martis said. A positive sign was the robust results from teen retailers, indicating that younger consumers have a lot of discretionary spending despite high gasoline prices, she said.

The International Council of Shopping Centers-UBS sales tally of 69 retailers rose a robust 6.6 percent last month, the best performance since March 2004 when the reading was up 7.0 percent. The tally is based on same-store sales, or sales at stores open at least a year. Same-store sales are considered the best indicator of a retailer's performance.

A big factor boosting sales last month was a late Easter, which fell on April 16 and was three weeks later than last year. Because of the calendar shift, retailers and analysts look at the combined spring selling period of March and April, which was up a solid 4.3 percent, better than the 3.1 percent gain in the year-ago period.

Despite the upbeat reports, retailers, particularly those that cater to low-income consumers, remain anxious. Gas now hovers around $3 per gallon, and is expected to stay high during the heavy summer driving season.

http://biz.yahoo.com/ap/060504/retail_sales.html?.v=9

I never know what to make of. So it does not get a headline.

WASHINGTON (AP) -- Consumer confidence sank to a seven-month low as sticker shock from rising gasoline prices made Americans anxious about the economy's prospects and the strain on their own budgets.
The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence at 67.1 in early May. That marked a big deterioration from 89.4 in April.

http://biz.yahoo.com/ap/060505/ipsos_consumer_confidence.html?.v=2

WASHINGTON (AP) -- Consumers, spurred by a late Easter and warmer than usual weather, pushed retail sales up by a solid amount in April although soaring gasoline prices kept the increase below expectations.

The Commerce Department reported that retail sales increased 0.5 percent in April following a 0.6 percent advance in March. The slight slowdown was seen as an indication that the big jump in gasoline prices since early March was depressing demand for other consumer products.

Wall Street analysts had been forecasting a more robust 0.8 percent advance in retail sales, a forecast that was based on reports of strong demand during the month at big nationwide retailers such as Wal-Mart Stores Inc. and Target Corp.

Separately, the Labor Department reported that the number of Americans filing new claims for unemployment benefits totaled 324,000 last week, down by 1,000 from the previous week. That was less of an improvement than private economists had been expecting but the figure was influenced by some one-time technical factors, government analysts said.

In other economic news, businesses boosted their inventories held on shelves and backlots by 0.7 percent in March. It was the largest gain in 15 months and followed a much smaller 0.1 percent rise in February. The increase was led by a 1 percent rise in stockpiles held by retailers. Total business sales for retailers, wholesalers and manufacturers rose by 0.7 percent in March after having fallen by 0.6 percent in February.

Analysts said the weaker-than-expected rise in April retail sales was heavily influenced by a big jump in gasoline prices, which forced consumers to spend more filing up their tanks and less at other stores.

"With fuel costs up more than 50 cents per gallon since early March, the odds would seem to favor a slowdown, albeit temporary, in consumer spending over the next month or two," said Stephen Stanley, chief economist at RBS Greenwich Capital.

Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said that even with the "mildly disappointing" sales results in April, retail spending is still up a healthy 6.6 percent from a year ago.

The 0.5 percent rise in April retail sales was the weakest showing since a 0.8 percent drop in sales in February.

http://biz.yahoo.com/ap/060511/economy.html?.v=15

May 11 (Bloomberg) -- U.S. 10-year Treasuries fell the most in more than a week after the government sold $13 billion of the securities, adding supply at a time when the Federal Reserve is signaling that it may raise interest rates further.

Investors pushed yields higher even after a Commerce Department report showed retail sales in April rose less than forecast. Fed policy makers yesterday boosted their target rate to 5 percent from 4.75 percent and said ``further policy firming may yet be needed.''

``Since the Fed's statement, the market has been left with a bearish tone,'' said Mustafa Chowdhury, head of U.S. interest- rate research at Deutsche Bank AG in New York. The firm is one of the 22 primary dealers of U.S. government securities that are obligated to bid at the auctions. ``The prospect of more rate increases is significant for investors.''

The yield on the benchmark 10-year note rose 5 basis points, or 0.05 percentage point, to 5.17 percent at 1:26 p.m. in New York, according to bond broker Cantor Fitzgerald LP. Yields move inversely to bond prices. The price of the 4 1/2 percent security due in February 2016 fell almost 3/8, or $3.75 per $1,000 face amount, to 94 7/8, the biggest drop since May 1.

The securities sold today drew a yield of 5.14, the highest yield since May 2002. For every $1 sold, there was $2.53 worth of bids, down from $2.87 at March's sale. Indirect bidders, a group that includes foreign central banks, bought 30.7 percent of the securities. Since the Treasury began releasing such data in May 2003, the share of 10-year notes won by indirect bidders has ranged from 2.9 percent to 54.7 percent.

Ten-year Treasuries have lost 4.3 percent this year, compared with a gain of 1.4 percent at this point in 2005, according to Merrill Lynch & Co. index data.

http://www.bloomberg.com/news/markets/bonds.html

May 15 (Bloomberg) -- Treasuries may extend their biggest drop in a decade as international investors shun U.S. assets because of the dollar's decline.

Treasuries lost 2.04 percent this year, according to indexes prepared by Merrill Lynch & Co. The dollar's 9 percent decline against the euro and 6 percent drop versus the yen is making returns even worse for international investors, who own more than half the $4.2 trillion of U.S. government bills, notes and bonds.

``There's further for the dollar to drop and that might make people even less inclined to buy Treasuries,'' said Timo Schild, an investment strategist at Frankfurt-based Deka Investments GmBH, which oversees $55 billion.

The Treasury Department today may say international investors bought fewer U.S. assets in March than in February. Net purchases of stocks and bonds dropped to $79.7 billion from $86.9 billion in February, according to the median estimate in a Bloomberg survey of economists. International purchases of U.S. securities peaked at $106.4 billion in October.

Benchmark 10-year notes fell six of the past seven weeks, pushing yields up to 5.20 percent, the highest since May 2002, from 4.67 percent. The 5 1/8 percent note due May 2016 ended last week at 99 15/32, according to bond broker Cantor Fitzgerald LP.
http://www.bloomberg.com/apps/news?pid=10000103&sid=age4VYKDBOtg&refer=us

WASHINGTON (AP) -- Crude-oil futures declined more than 3 percent Monday, falling below $70 a barrel amid concerns about weakening demand and rising inflation. Meantime, a Bush administration official said late in the trading day that the U.S. would ban arms sales to Venezuela, a major oil supplier, because of its insufficient counterterrorism efforts. It was not immediately clear what impact the move would have on oil markets, though one analyst said if Venezuela retaliated by refusing to sell crude to the United States, it could push prices higher.

Light, sweet crude for June delivery fell $2.39 to $69.65 a barrel on the New York Mercantile Exchange. That followed a drop of $1.42 on Friday.

Nymex gasoline futures fell more than 10 cents to $2.075 a gallon, while natural gas futures fell 15 cents to $6.13 per 1,000 cubic feet.

June Brent crude futures on London's ICE Futures exchange fell $1.97 to $70.35 a barrel.

Michael Guido, Societe Generale's director of commodity strategy, chalked up the selloff to technical trading.

"This is demand destruction not on a consumer level. It's demand destruction on a trading level," he said.

"The reality of it is that the market was in desperate need of a correction," Guido said. "There was not a big change in the world economy."

Still, the International Energy Agency said last week that high prices have pushed oil demand downward, and the Federal Reserve raised concerns about inflation, suggesting interest rates might be pushed higher in order to slow growth.
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WASHINGTON (AP) -- Wholesale prices leaped by 0.9 percent in April, the most in seven months, propelled largely by soaring costs for gasoline and other energy products. The jump in the Producer Price Index, which measures the costs of goods before they reach stores shelves, came after a sizable 0.5 percent increase in March, the Labor Department reported Tuesday.

http://biz.yahoo.com/ap/060516/economy.html?.v=7

WASHINGTON (AP) -- Consumer prices -- propelled by higher gasoline, clothing medical care costs -- jumped sharply in April, stoking inflation fears and sending stocks tumbling. The 0.6 percent increase in the Consumer Price Index, the government's most closely watched inflation barometer, was the largest in three months, the Labor Department reported Wednesday. The rise came after a strong 0.4 percent advance in March.

Excluding energy and food products, which can swing widely from month to month, "core" prices went up by 0.3 percent in April for the second month in a row. The Federal Reserve and economists closely look at this core inflation reading to get a better sense of how other prices are acting.

The sizable increase in core prices especially fanned fears that rising energy costs may be starting to breed a broader bout of inflation throughout the economy.

"The needle is moving in the direction of higher inflation," said economist Ken Mayland, president of ClearView Economics. "This is not good news and suggests more companies are passing along their higher costs to consumers."

The latest readings on inflation were slightly worse than economists were expecting. Before the release of the report, they were forecasting a 0.5 percent increase in overall consumer prices and a 0.2 percent rise in core prices.

So far this year, consumer prices are rising at an annual rate of 5.1 percent, much faster than the 3.4 percent increase registered for all of 2005. Core prices are advancing at a brisk 3 percent pace, compared with a more moderate 2.2 percent rise for last year.

http://biz.yahoo.com/ap/060517/economy.html?.v=11

WASHINGTON (AP) -- Orders to U.S. factories for big-ticket manufactured goods fell in April by the largest amount in three months as aircraft orders plunged and demand for computers and other electronic products dropped by the largest amount in nearly six years.

The Commerce Department reported that demand for airplanes, appliances and other durable goods decreased by 4.8 percent last month, much larger than Wall Street had been expecting. Orders had posted strong gains of 6.6 percent in March and 3.6 percent in February.

The April setback was the largest since a 7.6 percent drop in January and reflected a 32.2 percent falloff in demand for commercial aircraft after big gains in previous months and a 10.4 percent decrease in orders for computers and other electronic products. It was the biggest decline in this category since July 2000.

While the overall economy is expected to slow in the current quarter, the size of the drop in durable goods orders caught analysts by surprise. They had been expecting a smaller -- 0.5 percent -- pullback following strong gains in previous months. The month-to-month changes in durable goods orders are extremely volatile and other indicators continue to point to strength in the manufacturing sector.

The Institute for Supply Management reportered that its index for manufacturing rose to 57.3 in April, the highest level in six months, led by strength in production and employment.

U.S. manufacturing companies, the hardest hit sector in the 2001 recession, are expected to continue posting sizable gains this year, driven by efforts to rebuild lean inventories and continued strong business investment.

For April, orders fell by $10.5 billion to a seasonally adjusted total of $210.2 billion.

Demand in the transportation sector fell by 12.7 percent , reflecting a 1.6 percent drop in orders for motor vehicles and parts and a 32.2 percent fall in demand for commercial aircraft, a category that had posted gains of 67.7 percent in March and 72 percent in February.

http://biz.yahoo.com/ap/060524/economy.html?.v=2

May 26 (Bloomberg) -- Companies announced a record $1.42 trillion of mergers and acquisitions this year, surpassing the pace of 2000, as rising profits give executives more money to pay for takeovers.

Arcelor SA's 13 billion-euro ($16.6 billion) offer today for most of Russia's OAO Severstal pushed the M&A total over the previous high, data compiled by Bloomberg show. Companies worldwide announced 24 purchases of more than $10 billion this year, compared with 16 in the same period of 2000, the year America Online Inc. agreed to buy Time Warner Inc. for $186 billion in the biggest ever takeover.

The last time so many mergers were announced the global stock market was at the start of a three-year decline. A difference now is that interest rates in the U.S. and Europe are lower. Earnings at the biggest U.S. companies increased at a quarterly rate of more than 10 percent since 2003.

``Companies always look for growth and now they're doing it through acquisitions because markets have been going up, meaning you can pay more and vendors are more willing to sell because they can get more,'' said John Tattersall, a partner at PricewaterhouseCoopers in London.

Total takeovers so far this year compare to the $1.41 trillion of deals announced in the same period of 2000. For all of that year, acquisitions amounted to $2.94 trillion. In 2005, a total of $2.64 trillion of deals were struck.

The biggest announced takeover this year is AT&T Inc.'s $67 billion offer for BellSouth Corp. That was followed by E.ON AG of Germany's 29.1 billion-euro bid for Endesa SA of Spain, which also received an offer from Gas Natural SDG SA.
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May 27 (Bloomberg) -- U.S. Treasuries held onto the gains they made last week amid signs a housing slowdown may cool the economy and curb demand for riskier investments such as stocks.

The benchmark 10-year note's yield was little changed on the week, even as the Federal Reserve's preferred measure of inflation accelerated. Traders pared their expectations for a rate increase by the central bank at its next meeting in June.

``The bulls have a little bit of an edge here, but I don't see how we can continue to have a long bond yield below 5 1/4 percent over the long term,'' said James Collins, an interest- rate strategist at Citigroup Global Markets Inc. in Chicago.

The yield on the benchmark 10-year note declined 1 basis point, or 0.01 percentage point, on the week to 5.05 percent, according to bond broker Cantor Fitzgerald LP. Yields move inversely to bond prices. The yield on May 15 touched an almost four-year high of 5.20 percent. The price of the 5 1/8 percent note due May 2016 this week rose 1/16, or 63 cents per $1,000 face amount, to 100 19/32.

During the week the 10-year yield touched 4.98 percent, the lowest in a month, as U.S. and emerging-market stock benchmarks declined. Economic reports showed a drop in durable goods orders and a backlog of homes for sale, boosting demand for bonds.

Shorter-maturity yields declined on the week even as monthly auctions of $36 billion of new two- and five-year notes increased the supply of Treasuries.
http://www.bloomberg.com/apps/news?pid=10000103&sid=aY_WPR6RrucY&refer=us

NEW YORK (AP) -- Although Wall Street has shown signs of recuperating from its recent selloff, this week's batch of critical economic reports could easily shatter investors' fragile optimism and send stocks sliding again.

With few earnings reports due, the market will once again be fixated on economic growth and inflation as traders judge the possibility of more interest rate hikes from the Federal Reserve.

Ever since the Fed warned earlier this month that higher rates could be needed to thwart the impact of surging energy prices, investors have been more cautious than usual about letting their expectations build. Last week's erratic trading was evidence they're still hesitant about putting money in the market; stocks had simply fallen so much that they were due for a bounce.

Analysts say that uncertainty will linger until the Fed makes its next move on interest rates at its June 28-29 meeting. Until then, Wall Street can only guess the odds of more rate hikes, taking cues from reports like this week's data on worker productivity, job growth and manufacturing activity.

The key data in those reports will be their inflation measures, said Ken McCarthy, chief economist for vFinance Investments. The central bank's mission has been to lift rates enough to support a growing economy but keep prices from climbing. Stronger-than-expected increases could send investors retreating again.

But if the growth in labor costs and hourly wages match or come in slightly below economists' estimates, that could help carve away at investors' skepticism. "Those are the kinds of numbers the market would love to see because it shows the economy is growing but not in danger of overheating," McCarthy said.

The major indexes got a boost toward the end of last week as evidence of a slowing economy brightened the outlook for interest rates. For the week, the Dow Jones industrial average gained 1.21 percent, the Standard & Poor's 500 index added 1.04 percent and the Nasdaq composite index rose 0.75 percent.

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NEW YORK (AP) -- Consumer confidence soured in May, as Americans fretted about jobs and the overall economy, a private research group said Tuesday.

The Conference Board said its consumer confidence index fell to 103.2, down from the revised 109.8 in April. Still, May's reading was better than the 100.9 expected by analysts.

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NEW YORK (AP) -- Higher oil prices and sliding consumer confidence sent stocks plunging Tuesday as a weak sales report from Wal-Mart Stores Inc. raised concerns about retail spending. The Dow Jones industrial average skidded more than 150 points.

Although the Conference Board's consumer confidence index fell less than expected, investors were concerned about an eroding consumer picture after Wal-Mart blamed its modest sales on the impact of gasoline and utilities prices on its customers.

More declines for the U.S. dollar fueled jitters about inflation and slowing global growth amid sharp drops in overseas markets. A broker's downgrade of General Motors Corp. also added pressure to the Dow industrials.

Tuesday's selling followed three straight days of gains last week, when mild economic data calmed inflation fears and temporarily halted a steep two-week slide. Investors have been wary of the chance for more rate hikes; this week's key figures on labor costs and wages are expected to provide some guidance on the Federal Reserve's next move.

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WASHINGTON (AP) -- Worried about the potential for inflation to get worse, Federal Reserve policy-makers at their May meeting considered raising a key interest rate by half a percentage point before opting for a quarter-point increase.

Chairman Ben Bernanke and his Fed colleagues also opted to leave the door open to additional rate increases "in view of the risk that the outlook for inflation could worsen," according to minutes of the Fed's May 10 closed-door meeting released Wednesday.

Those minutes showed that Fed officials discussed a number of options -- ranging from leaving rates unchanged to boosting them by a half percentage point. Policy-makers mulled these options as they weighed whether it was more likely that the economy would slow given the Fed's previous rate increases or whether soaring energy prices might touch off broader inflation. Then they approved the quarter-point increase, the 16th consecutive hike of its kind.

That unanimous decision boosted the federal funds rate to 5 percent, the highest level in 5 years. The Fed had started the campaign to tighten credit in June 2004.
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WASHINGTON (AP) -- The U.S. economy appears to be shifting into a lower gear with residential construction falling sharply and manufacturing activity slowing.Those developments and a benign reading on wage pressures helped ease worries that an overheated economy might spawn inflation troubles.

The Commerce Department reported Thursday that residential home building dropped by 1.1 percent in April, the biggest decrease since January 2004. The weakness in homebuilding contributed to a drop in overall construction of 0.1 percent, the first setback since June 2004.

A second report from the Institute of Supply Management showed that its closely watched gauge of manufacturing activity turned in a weaker-than-expected reading of 54.4 in May. That was down from 57.3 in April and a sign, analysts said, of a significant slowing in momentum in manufacturing over the past four months.

Those developments plus a sharp downward revision in unit labor costs for the first quarter helped to calm Wall Street fears that inflation was threatening to get out of control. The Dow Jones industrial average was up in early trading Thursday.

The construction report was one of the strongest signs yet that the nation's five-year housing boom is cooling off, a development that reflects a campaign by the Federal Reserve to boost interest rates as a way of slowing the economy and keeping inflation under control.

In another report of slowing housing activity, the National Association of Realtors said its index for pending home sales fell for a third straight month in April, dropping by 3.7 percent from the March level. This index tracks sales of previously owned homes where a contract has been signed but the deal has not yet gone to closing.

David Lereah, chief economist for the Realtors, said that home sales, which set records for five straight years, are now "falling from historic highs" but appear set to stabilize at a solid pace for the year.

http://biz.yahoo.com/ap/060601/economy.html?.v=11

WASHINGTON (AP) -- After years of talking about the Goldilocks economy -- not too hot and not too cold -- all of a sudden it appears the little rascal just got mugged by the three bears. While the economy began the year growing at a strong pace, activity seems to have hit the skids in the spring.

Factory orders fell in April. The five-year housing boom is cooling, with home sales falling and price gains slowing. In the biggest shocker of all, the government reported Friday that businesses created just 75,000 new jobs in May -- 100,000 fewer than expected.

If the onslaught of weaker economic data was not bad enough, there also are signs that long-dormant inflation may be starting to be a problem, and not just in the pain from $3 per gallon gasoline.

The relentless rise in crude oil to above $70 per barrel seems to be starting to trigger price problems outside of energy. The core rate of inflation, excluding food and energy, is now above the 2 percent upper limit favored by Federal Reserve Chairman Ben Bernanke and his colleagues.

Slowing economic growth and rising inflation raise the specter of stagflation. This dreaded combination of economic stagnation and inflation had the country in its grips for more than a decade through the 1970s and early 1980s, bringing grief to the presidencies of Richard Nixon, Gerald Ford and Jimmy Carter.

In perhaps the most ominous worry of all, some economists see parallels between May 2006 and May 2000.

Six years ago, an unexpectedly weak payroll number was dismissed as a fluke. Yet in hindsight, it was the start of a slide that culminated in a recession the next year that ended the longest economic expansion in U.S. history.

While economists hope this year's slowdown will have a more benign ending, they are busily marking down their economic forecasts based on the recent weaker-than-expected numbers.

The overall economy grew at an annual rate of 5.3 percent in the January-March quarter. Economists foresee a rate of about 2.5 percent in the current April-June quarter, down a full percentage point from estimates for these three months.

"We are starting to see evidence that the economy is slowing pretty abruptly," said David Wyss, chief economist at Standard & Poor's in New York. "The question is will there be enough strength in other areas to offset the slowdown in consumer spending and housing."

http://biz.yahoo.com/ap/060604/cloudy_economy.html?.v=2

NEW YORK (AP) -- The service sector of the U.S. economy expanded in May, but at a slower pace than in April, a private survey of supply managers said on Monday.
The report is a possible indication that fuel prices are starting to crimp growth in the service sector, which accounts for two-thirds of the U.S. economy. The survey by the Institute for Supply Management indicated concern about the prices of raw materials and fuels.

The ISM index of non-manufacturing activity was 60.1 in May, down from 63 in April. The latest reading matched analysts' expectations.

http://biz.yahoo.com/ap/060605/economy.html?.v=2

June 7 (Bloomberg) -- Concerns about slowing economic growth sent U.S. stocks lower for a third day and pushed the Dow Jones Industrial Average toward its first close below 11,000 in three months.

Chemical makers DuPont Co. and Dow Chemical Co. paced a decline among producers of materials that feed an expanding economy as Deutsche Bank downgraded the shares. The biggest drop in oil prices in two weeks and a profit forecast from Target Corp. supported the market.

Federal Reserve Bank of Atlanta President Jack Guynn became the fourth central banker this week to express concern about inflation, leaving investors to speculate the Fed may keep raising interest rates regardless of the state of the economy.

``The biggest fear in the financial markets is that the Fed keeps tightening as the economy is slowing,'' said John Augustine, who helps manage $22 billion as chief investment strategist at Fifth Third Asset Management in Cincinnati. ``Investors are moving to the sidelines to wait out the Fed.''

The Dow average fell 42.02, or 0.4 percent, to 10,960.12 as of 3:28 p.m. in New York, bringing its decline from a six year high set last month to 5.9 percent. The Standard & Poor's 500 Index lost 4.31, or 0.3 percent, to 1259.54. The Nasdaq Composite Index lost 5.77, or 0.3 percent, to 2157.01.

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aHLdnca_h5tI&refer=news_index

http://agonist.org/20060608/u_s_stocks_rebound_as_investors_flee_global_retreat

June 12 (Bloomberg) -- U.S. Treasuries fell as Cleveland Federal Reserve President Sandra Pianalto said the rate of inflation ``exceeds my comfort level,'' bolstering expectations the central bank will raise interest rates again this month.

Two-year yields, which move inversely to prices, touched their highest level since June 1, when they rose to a five-year high. Prices of consumer goods excluding food and energy prices rose more than forecast in March and April. The Labor Department is set to release figures for May in two days.

``The first trade of the morning is to walk in and sell it,'' said Ted Ake, head of U.S. Treasury trading at Mizuho Securities USA Inc. in New York, one of the 22 primary U.S. government securities dealers that trade with the New York Fed. ``The consensus on the street is the market's too high'' if the Fed is going to raise rates again this month.

Yields on two-year notes, more sensitive than longer- maturity debt to changes in monetary policy, rose about 2 basis points to 5.02 percent at 10:52 a.m. in New York, according to bond broker Cantor Fitzgerald LP. A basis point is 0.01 percentage point. The yield touched 5.05 percent on June 1. They may rise as high as 5.15 percent if the Fed raises its target rate to 5.25 percent this month, Ake said.

The price of the 4 7/8 percent security due May 2008 fell 1/32, or 31 cents per $1,000 face amount, to 99 23/32.

The Fed has raised its target for the overnight lending rate between banks 16 straight policy meetings since June 2004, most recently to 5 percent on May 10. Interest-rate futures show traders are pricing in an 86 percent chance of a quarter-point increase, up from 82 percent on June 9. A month ago they put the odds at 42 percent.

Ten-year yields rose 1 basis point to 4.99 percent. The two-year note's yield last week moved higher than the 10-year yield for the first time since March, reflecting expectations Fed rate increases will lead to slower economic growth and inflation.
http://www.bloomberg.com/apps/news?pid=10000103&sid=aZC1nEow.UEw&refer=us

WASHINGTON (AP) -- Inflation at the wholesale level slowed in May after two big months of increases, even though gasoline prices and inflation pressures outside of energy and food continued to climb.
The Labor Department reported Tuesday that its Producer Price Index, which measures inflation pressures before they reach the consumer, was up just 0.2 percent last month, even better than the 0.4 percent rise that many economists had been expecting. The improvement reflected the fact that energy prices rose by just 0.4 percent after a 4 percent jump in April, and food prices actually fell by 0.5 percent.

However, the core rate of inflation, which excludes food and energy, was up 0.3 percent in May, compared with more modest gains of 0.1 percent in both March and April. That was slightly higher than the 0.2 percent increase analysts had been expecting.

In other economic news:

--Retail sales edged up just 0.1 percent in May, reflecting weak auto sales. Excluding autos, retail sales were up 0.5 percent, but much of that strength came from a jump in gasoline prices.

--Inventories held by businesses on shelves and back lots rose by 0.4 percent in April following an even bigger 0.7 percent rise in March. Inventory increases during a period when the economy is slowing could be a warning sign that factory production will be reduced in future months to get inventories more in line with sales.

Analysts said the weakness in retail sales in May was consistent with their view that the economy is slowing from a sizzling 5.3 percent rate of growth in the first three months of the year to around 3 percent in the current April-June quarter.

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WASHINGTON (AP) -- The economy flashed signs of slower growth heading into the summer but that didn't help alleviate inflation concerns. Stung by rising costs for energy and other materials, some businesses felt inclined to boost their prices.

That was the picture emerging from a Federal Reserve survey, released Wednesday, of the business climate around the country.

Although overall economic activity did expand from the middle of April to early June, "there were some signs of deceleration," the Fed survey said.

In four of the 12 Fed districts surveyed -- Atlanta, Kansas City, Richmond and San Francisco -- economic activity moderated, the report said. Seven districts -- Boston, Chicago, Cleveland, Dallas, Minneapolis, New York and St. Louis -- said economic growth was about the same as in the Fed's last report, released in April. Only one district reported an improvement in economic conditions: Philadelphia.

Consumers -- a key force shaping overall economic activity -- did ring up sales, but they also showed some signs of caution. Some Fed districts reported retail sales were slowing or weaker than anticipated at discount stores or to lower-income customers, who have especially felt the pinch of lofty gasoline prices.

"High gasoline prices were cited by a few districts as changing purchasing patterns or clouding the outlook for sales," the Fed survey said. "A couple of districts also said that rising interest rates were a concern."

The Fed's survey was taken after the latest run-up in energy prices. Oil prices zoomed to a record high of $75.17 in late April. They have retreated somewhat and are now hovering above $68 a barrel. Gasoline prices, meanwhile, have topped $3 a gallon in many areas.

The survey also was taken after the Federal Reserve boosted interest rates to a five-year high to help fend off inflation. The central bank's action on May 10 marked the 16th rate increase since June 2004.
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