Emerging market rout eases as data lifts growth hopes

1 of 2. A man walks through the lobby of the London Stock Exchange August 5, 2011.

Credit: Reuters/Suzanne Plunkett

NEW YORK | Fri Aug 23, 2013 10:19am EDT

NEW YORK (Reuters) - U.S. stocks and the dollar were mostly lower in early New York trade on Friday after a government report showed sales of new single-family homes in America fell sharply in July to their lowest level in nine months, casting a shadow over the country's housing recovery.

The report raised doubts about the timing and extent of cuts to the Federal Reserve's stimulus program.

"This has been a very unique market situation with the Fed stimulus being such an important component to the market rally. This is uncharted waters for us," said Gordon Charlop, managing director at Rosenblatt Securities in New York. "So regardless of what the move is, the fact you are someplace you haven't been before is cause for uncertainty."

The next Fed monetary policy meeting is scheduled for September 17-18.

The Dow Jones industrial average .DJI was down 27.80 points, or 0.19 percent, at 14,935.94. The Standard & Poor's 500 Index .SPX was down 1.78 points, or 0.11 percent, at 1,655.18. The Nasdaq Composite Index .IXIC was up 5.97 points, or 0.16 percent, at 3,644.68.

The dollar surrendered gains against a basket of currencies .DXY on Friday, after earlier climbing to a three-week peak versus the yen, helped by the rise in U.S. bond yields this week on expectations the Fed will reduce its asset-buying program next month.

(Reporting By Nick Olivari; Editing by Nick Zieminski)

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Emerging markets selloff intensifies after Fed, data lifts Europe shares

1 of 7. Traders work on the floor of the New York Stock Exchange August 21, 2013.

Credit: Reuters/Brendan McDermid

By Herbert Lash

NEW YORK | Thu Aug 22, 2013 12:28pm EDT

NEW YORK (Reuters) - Global equity markets gained and bond prices fell on Thursday after business surveys from around the world revealed a global economy in expansion, helping cement expectations the Federal Reserve will trim its bond-buying stimulus program in September.

Purchasing managers surveys showed better-than-expected growth in the euro zone, a rebound in China's vast manufacturing sector and U.S. manufacturing activity rising to a five-month high in August.

Data from the U.S. Labor Department also showed the number of Americans filing new claims for jobless benefits held near a six-year low last week, adding to signs the U.S. economy is starting to find a firmer footing.

While weekly initial claims for state unemployment benefits climbed 13,000 to 336,000 - just above the level expected by economists in a Reuters poll - the four-week moving average fell to its lowest level since November 2007.

The four-week average, seen as a better gauge of labor market trends, suggested the U.S. economy was growing enough to fuel steady improvement in jobs data.

However, the report did not change the view that the Fed will begin to trim, or taper, its monetary stimulus next month.

"The Fed tapering theme continues. Yesterday's Fed minutes reinforced expectations that the Fed will taper its quantitative easing program in September and today's jobless claims didn't really change that," said Greg Moore, a currency strategist at TD Securities in Toronto.

"The jobless claims rose, but they were not really that far off from the consensus forecast."

Global equity markets rose, with major European indexes up more than 1 percent.

MSCI's all-country world index .MIWD00000PUS rose 0.46 percent, while the FTSEurofirst 300 .FTEU3 index of top European shares rose 0.94 percent to close at a provisional 1,219.03.

The Dow Jones industrial average .DJI was last up 46.33 points, or 0.31 percent, at 14,943.88. The Standard & Poor's 500 Index .SPX was up 10.27 points, or 0.63 percent, at 1,653.07. The Nasdaq Composite Index .IXIC was up 30.08 points, or 0.84 percent, at 3,629.87. .N

European shares snapped a three-session losing streak after manufacturing survey data for August suggested that growth was taking root in the euro zone.

Markit's Flash Composite Purchasing Managers' Index showed business activity across the euro zone picked up at a faster pace than expected, bouncing to 51.7 from last month's 50.5.

"If you want to understand whether there is a positive or a negative outlook for equities, then PMIs are quite a good measure. We've seen a gradual improvement in PMIs since last July and now we're in growth territory," said James Butterfill, global equity strategist at Coutts.

German yields hit their highest since March 2012 as investors sold low-risk Bunds after forecast-beating business activity data and on expectations the Federal Reserve would soon slow its stimulus.

Ten-year German yields rose as high as 1.943 percent, and closed 4 basis points higher at 1.92 percent.

U.S. government debt prices also fell, pushing yields up. The benchmark 10-year Treasury note fell 4/32 in price to yield 2.9066 percent.

The dollar hit a more than two-week high against the yen at 98.80 yen, breaking past the August 15 peak of 98.66 yen, which had acted as initial resistance. It was last trading at 98.53 yen, up 0.89 percent.

The euro pared losses to trade near break-even. It was last up 0.02 percent at $1.3359.

Brent crude hovered near $110 a barrel as the upbeat data from China and the euro zone rekindled hopes for stronger demand from two of the world's largest energy consumers, while oil exports from Libya remained limited by strikes and unrest.

October Brent crude was last down 12 cents at $109.69 a barrel. U.S. crude gained 72 cents at $104.57.

(Additional reporting by Richard Hubbard; editing by Dan Grebler, G Crosse)

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Starbucks beats on higher sales, lifts forecast

NEW YORK (AP) — Starbucks says its profit climbed 25 percent in the latest quarter as its coffee costs eased and more caffeine-addicted customers flocked to its cafes around the world, with people in the U.S. spending a little more on items such as revamped sandwiches and new salads.

The results topped Wall Street expectations, and the company raised its full-year guidance. Starbucks' shares were up almost 7 percent in aftermarket trading.

The Seattle-based chain, which has more than 19,000 locations around the world, said global sales rose 8 percent at cafes open at least 13 months, with all regions registering growth. In its flagship U.S. market, the figure rose 9 percent.

The performance is in contrast to McDonald's Corp., which reported an underwhelming 1 percent increase in U.S. locations open at least a year earlier this week. The fast-food chain had partly blamed economic conditions, saying people have been reluctant to eat out.

Troy Alstead, chief financial officer for the chain, said the results demonstrate people's loyalty to the Starbucks brand, despite factors such as bad weather or a weak economy cited by other companies for underwhelming results in the quarter.

"We have some resilience, some insulation," Alstead said.

"Starbucks today exists within a universe of one," CEO Howard Schultz emphasized n a call with analysts.

Starbucks has been making a number of changes to drive up sales. In April, it rolled out revamped sandwiches in new packaging that come with slightly higher prices; the new egg salad sandwich, for example, costs $5.25, up from $5.15 previously.

New salads and grain bowls were also introduced at about $7 per box.

Moving forward, the company has been testing new baked goods — acknowledging that its baked goods don't have a great reputation. It also announced that it's teaming up with Danone to offer new, branded Greek yogurt parfaits that are set to start replacing its current offerings in cafes by next year.

It's also pushing aggressively to enroll people in its loyalty program, offering incentives such as a $5 load on cards for people who sign up. The benefits are twofold; Alstead said people tend to visit more often and spend more once they enroll.

In the meantime, Starbucks is also benefiting greatly from lower coffee costs, which are expected to continue for at least another year and half. Despite its lower costs, the company last month instituted price hikes in the U.S., a move which should help widen its operating margins even further.

Starbucks said sales rose 9 percent in China and the greater Asia region for the quarter. It also managed to increase sales by 2 percent at established cafes in Europe, where the company has been struggling. The company has been closing underperforming stores and licensing out operations in other regions.

Looking ahead, it cautioned that sales at established locations would ease back into the 5 percent to 7 percent range it saw in the first half of the year.

Starbucks Corp. earned $417.8 million, or 55 cents per share, for the period ended June 30. That's up from $333.1 million, or 43 cents per share, a year ago.

Analysts on average expected 53 cents per share.

Revenue rose to $3.74 billion, more than the $3.72 billion analysts had forecast.

It now expects earnings per share in the range of $2.22 to $2.23, up from $2.12 to $2.18.

Its shares rose to $72.30, after closing up 2 percent at $68.17. Its stock is up 34 percent over the past year.

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Follow Candice Choi at www.twitter.com/candicechoi

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