• Tepid Open: Goldman, JNJ earnings fail to jump-start markets.
• Europe Positive: Markets lifted by banking outlook.
• Asia Rises: Shares advance after U.S. gains.
• Oil Uptick: Crude prices bubble upward in early trades.

The Lowdown

Postive earnings weren’t enough to really lift spirits on Wall Street.

Better-than-expected earnings from Goldman Sachs (GS) didn’t push the broader market. As of 9:38 a.m., the Dow Jones Industrial Average was up 11 points at 8343. The Nasdaq opened flat at 1793 and the S&P 500 inched along, rising 3 to 904.

Goldman reported earnings of $4.93 a share, compared to earnings of $4.58 a share in the same quarter a year ago. It was expected to earn $3.48 a share. Dow component Johnson & Johnson (JNJ) also beat expectations, earning $1.15 a share, compared to $1.17 a share in the second quarter of 2008. Forecasters had expected earnings of $1.11 a share.

European markets were up as investors responded to Monday’s gains by U.S. markets and an improved forecast for Goldman Sachs from analyst Meredith Whitney. The positive comments sent other financial stocks like Aegon (AEG) and ING (ING) higher in European trading.

Asian stocks rose Tuesday after the U.S. rally and an improved outlook for South Korean steel company Posco (PKX), which raised its second-quarter output target by 6.4%, reflecting higher demand. Traders also warmed to new data suggesting Singapore’s gross domestic product will shrink between 4% and 6% this year, less than the 9% contraction previously forecast. Japanese beverage company Kirin extended Monday’s gains on news that it was discussing a merger with Suntory, and shares of chip-maker NEC also rose.

Oil prices rose considerably on earnings hopes as a precursor for economic recovery. As of 9:42 a.m., crude traded on the Nymex was up $1.38 at $61.07 a barrel.

Corporate News

• Goldman Sachs (GS) announced second-quarter earnings of $3.44 billion or $4.93 a share Tuesday, compared to earnings of $2.05 billion or $4.58 a share in the same period a year ago. Analysts had expected Goldman to earn $3.48 a share.  RELEASE
• Johnson & Johnson (JNJ) announced second-quarter earnings of $3.2 billion or $1.15 a share, compared to $3.3 billion or $1.17 a share in the same period in 2008. Forecasters had expected the company to have earned $1.11 a share.  RELEASE
• CIT (CIT) is in advanced talks with regulators about a financial rescue plan. One possible source of funds is a Federal Deposit Insurance Corp. program that guarantees new debt issues, The Wall Street Journal reported Tuesday, citing anonymous sources. So far, the government has treated CIT as if it were not too big to fail, although concerns remain about the effects of the lender’s potential to hobble small businesses should it collapse.

The Economy

• The Producer Price Index for finished goods rose 1.8% in June, compared to an increase of 0.2% in May, the Labor Department reported Tuesday. The index, a measure of wholesale inflation, was expected to rise 1.0%. The core index, which excludes volatile food and energy prices, rose 0.5%, compared to a decrease of 0.1% in May. It was expected to have risen 0.1%. REPORT
• Retail sales rose 0.6% in June to $342.1 billion the Commerce Department said Tuesday. Total retail sales, a key indicator of consumer spending, was expected to have risen 0.4%, compared to an increase of 0.2% in May. Excluding automobiles, sales were $285.1 billion, a 0.3% increase over May. Analysts had expected sales, excluding automobiles to rise 0.5%. REPORT
• The business inventories report for May is scheduled to be released by the Commerce Department at 10 a.m. Inventories are expected to have fallen 0.8%, compared to a decline of 1.1% in April.

• Stocks Sag: Shares drop on range-bound trading.
• Oil Slide: Worst one-week drop since January.
• Chevron Warns: Earnings hit by weak dollar.
• Sentiment Ebbs: Consumers less confident.

The Lowdown

Stocks dropped again Friday as oil declined and consumer sentiment worsened.

Traders looked ahead to tepid earnings prospects next week as many investors questioned the pace of recovery. The Dow Jones Industrial Average closed down 37 points at 8147. The Nasdaq closed up 3 points at 1756 after a seesaw session. The S&P 500 dropped 4 to close at 879.

Oil prices had their worst one-week slip since January, dropping 10%. Crude traded on the Nymex closed at $59.89 and remained below $60 in afternoon trading. The International Energy Agency slightly raised its 2010 world demand forecast Friday, saying it expects global crude consumption to rise 1.7%, up from its earlier forecast of 1.4%. A year ago, crude prices neared $147 a barrel.

But Chevron (CVX) warned that its fourth-quarter earnings would be “significantly lower” than the preceding quarter, pulling the energy sector down. The company said its anticipated decline was accelerated by the softening value of the dollar. 

Tech shares showed relative strength, propping up the Nasdaq on Friday. Yahoo (YHOO) was upgraded to Market Weight from Underweight by Thomas Weisel Partners in a vote of confidence for new CEO Carol Bartz. Google (GOOG) continued to get buzz from its increased share of U.S. searches and its launch of the new Google Chrome OS operating system, a direct rival to Microsoft’s (MSFT) Windows system.

Chinese fell for an eighth month because of weak global demand. Exports stood down 21.4% in June, compared to a year earlier, the Chinese customs bureau said. Exports had been expected to decline by 21% after a 26.4% decline in May.

Corporate News

• General Motors exited bankruptcy in a streamlined state, shedding its Pontiac, Hummer and Saturn brands. Fritz Henderson, GM’s chief executive and Edward E. Whitacre Jr., its new chairman, appeared at a 9 a.m. news conference to announce the start of the “New GM.” The company spent a shorter-than-expected 40 days in bankrupcty protection, and its emergence could represent a major achievement for the Obama Administration, which has committed $50 billion to bail out GM.
• AIG (AIG) is preparing to pay millions of additional dollars worth of executive bonuses on July 15, The Washington Post reported Friday, citing anonymous sources. The company is reportedly consulting with Kenneth Feinberg, the newly appointed compensation czar, in order to avoid the negative attention that accompanied its last bonus announcement. AIG will have to convince Feinberg of the fairness of the bonus package, an anonymous AIG official told the Post. His approval is critical to winning the government’s blessing for the bonuses. AIG has received more than $80 billion in federal loans since September.

The Economy

• The U.S. trade deficit fell 9.8% to $26.0 billion in May, the Commerce Department reported Friday. The news surprised economists who had forecast a deficit of $30 billion. The trade deficit is now at its lowest level since November 1999. Exports, excluding agriculture, rose 1.6% in May, while imports, excluding oil, fell 0.6%. REPORT
• The Reuters/University of Michigan preliminary reading of the July index of consumer sentiment was worse than expected, falling to 64.6 from its earlier level of 70.8. Analysts projected that the index, which is designed to measure the national attitude toward buying, would come in at 70.0. STORY

• Indexes Fall: Stocks hit April lows as bearish views dominate
• Oil Drops: Crude futures decline on reduced demand fears.
• G-8 Summit: Government debt comes into focus.
• Earnings Season: Aloca reports Wednesday.

The Lowdown

Stocks teetered, then fell sharply Tuesday afternoon driven first by declining oil prices and then spurred on by reports that fresh government spending may be needed to stabilize the economy. 

Green shoots, signs of ecnomic recovery, appeared to wilt before investors’ eyes, as commodities sold off, taking major stock indexes down as well.

The Dow Jones Industrial Average slid 161 points to close at 8164, a level not seen since late April.  The Nasdaq dipped 41 points to end at 1746 and the S&P 500 was down 18 to 881. Crude futures slid below $63 a barrel in late afternoon trading. 

The Mortgage Bankers Association reproted Tuesday that credit card delinquencies rose to a record 3.23% in the first quarter, another sign that economic revival has not yet arrived.

Ahead of the Wednesday start of earnings season, both Intel (INTC) and Marvell Technology Group (MRVL) saw mild boosts following upgrades from Merrill Lynch, which boosted its view on the semiconductor sector as it anticipates new demand after depleting inventories.

Oil prices again declined on fears of reduced demand, although traders reacted to news that U.S. regulators may curb speculation on oil and gas by limiting the holdings of energy futures traders. The Energy Select Sector SPDR fund (XLE) dipped after crude prices declined. Crude slipped $1.12 to close at $62.93 on the Nymex. The Group of Eight opens a summit Wednesday in Italy, and world leaders are expected to discuss high levels of government, now at its highest level since World War II.

The yen and the dollar rose against the euro on investor concerns that the economic recovery is on shaky ground. Government bonds fell in advance of planned debt sales by numerous countries, including the U.S.

Corporate News

• Goldman Sachs (GS) stands to lose millions from increased competition if the software allegedly stolen by ex-computer programmer Sergey Aleynikov is used by outsiders, a prosecutor said. Aleynikov was arrested July 3 at Liberty International Airport in Newark, N.J. He has allegedly transferred Goldman’s proprietary trading code to a computer server in Germany, according to Assistant U.S. Attorney Joseph Facciponti who spoke in federal court July 4.
• General Motors will be allowed to pursue its sale of assets to a Treasury-funded buyer, despite an appeal by some of the company’s creditors. The single appeal to the bankruptcy judge’s approval of the sale was filed by people with accident-related claims involving GM vehicles. They want the new company to take responsibility for current claims, but they will not prevent the sale from going forward, their lawyer Steven Jakubowski told Bloomberg.
• Lear (LEAR) filed for bankruptcy protection Tuesday after creditors approved a reorganization plan. The auto-parts supplier listed debt of $4.5 billion and assets of $1.3 billion as of May 30 on documents filed in U.S. Bankruptcy Court in the Southern District of New York. The company was faced with a dramatic sales drop as global auto sales tanked this year.

The Economy

• Chain store sales for the week of July 4 slipped 4.2% from the previous year, according to the latest reading of the Johnson Redbook Index. STORY

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Labor Update: Economy lost 467k jobs in June.
• Equities Fall: Investors disappointed by jobs report.
• Demand Rises: Factory orders top May consensus.
• Oil Slump: Crude prices down after inventories report.

The Lowdown

A short week on Wall Street came to a bleak ending.

Stocks took an steep fall Thursday, as traders recoiled after a disappointing June employment report. Each of the major indexes finished the day down more than 2.6%. The Dow Jones Industrial Average dropped 223 points to 8281. The Nasdaq gave up 49 at 1797, and the S&P 500 slipped 27 to 896.

All 30 of the Dow’s components ended the day in the red. Alcoa (AA), JPMorgan Chase (JPM) and Travelers Companies (TRV) were hit particularly hard.

The energy sector was also pummeled. Royal Dutch Shell (RDS.A) and ExxonMobil (XOM) each fell by more than 2.9% as oil prices fell on concern over demand. By 5 p.m., crude traded down $2.89 on the day at $66.42 a barrel.

The jobs report was a heavy weight on the broader market. Payrolls fell more than forecast in June, and the unemployment rate rose slightly, according to the Labor Department. Employers cut 467,000 jobs in June, compared to a decline of 345,000 in May. The unemployment rate hit 9.5%, up from 9.4% in May. Analysts had forecast payroll declines of 365,000 jobs and an unemployment rate of 9.6%.

World markets were broadly lower. In Europe, stocks fell Thursday after the European Central Bank held the Euro Zone’s benchmark interest rate at its record low of 1%. In Asia, stocks closed down on concern that the U.S. stimulus package isn’t doing enough to curb job losses.

Corporate News

• General Motors (GM) could file for an initial public offering in 2010, said Harry Wilson, an auto task force advisor who testified in U.S. bankruptcy court Wednesday. The company was in court to get approval to sell about 60% of its assets to the Treasury. The remainder will be owned by the Canadian government and a union reitree trust fund. GM could exit bankruptcy as soon as this month.
• Lear (LEA) plans to file for bankruptcy after reaching an agreement with secured lenders and bondholders, the company said Wednesday in a statement. The auto supplier is responding to a slowdown in sales brought on by a decline in production on the assembly lines of its major customers.
• Exelon (EXC) raised its hostile takeover bid for NRG Energy (NRG) by 12% to $7.45 billion after a drop in its share price reduced the premium it had offered. The revised bid is 7.9% higher than NRG’s closing price Wednesday.

The Economy

• Payrolls fell more than expected in June, declining by 467,000, compared to a decline of 345,000 in May, according to the Labor Department. The unemployment rate is now 9.5%, up from 9.4% in May. Unemployment was expected to reach 9.6%. Hourly earnings held steady at $18.53 after an increase of 0.1% in May. The average workweek fell by 0.1 to 33 hours. It was expected to hold steady at 33.1 hours. REPORT
• Weekly jobless claims fell to 614,000 in the week ending June 27, down from 627,000 the previous week, the Labor Department said. Forecasters had expected the number to come in at 615,000. REPORT
• Factory orders rose 1.2% in May, up from a revised April increase of 0.5%, the Commerce Department said. Factory orders, which reflect demand for durable and non-durable goods, had been expected to rise 0.9%. REPORT

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Fed Sticks: Funds rate held at 0.00% to 0.25%.
• Equities Even: Stocks give back gains after Fed.
• Housing Update: New home sales slipped in May.
• Oracle Beats: Firm tops Q4 estimates, lifts Nasdaq.

The Lowdown

A less-than-stellar economic prognosis from the Federal Reserve left Wall Street nonplussed Tuesday.

Stocks gave up early gains and finished mixed Wednesday after the Federal Reserve held the federal funds rate steady and cited slow but palpable improvements in the economy. The Dow Jones Industrial Average dropped 23 points to 8300. The Nasdaq picked up 27 at 1792, and the S&P 500 climbed 6 to 901.

The Fed surprised few traders when it left the benchmark interest rate at 0.00% to 0.25%. The move was widely expected, as recent economic data have signaled neither a recovery nor heavy price pressures. Still, the Fed was optimistic about the future.

“Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing,” the Fed wrote in its statement. “Conditions in financial markets have generally improved in recent months.”

The Fed said the housing recovery remains unstable and that rising unemployment is still a concern. The Fed added that it expects inflation “will remain subdued for some time.”

The latest housing data supported the Fed’s statement. The annual rate of new home sales dipped slightly in May to 342,000, according to a federal report released Wednesday. Economists had been expecting an increase.

In other economic news, demand looks a bit stronger after new data from the Commerce Department showed durable goods orders rose in May. Economists had projected a decline.

Tech stocks were the market’s bright spot, as traders cheered fourth-quarter results from Oracle (ORCL). The software firm topped analysts’ estimates and reported record margins.

In finance, Citigroup (C) said it would lift base pay for some of its employees by as much as 50%, CNBC reported. The change is designed not to increase overall compensation but to shift the model away from bonuses, which critics say promote risky behavior.

On the Nymex, oil prices were lower after the Energy Department said crude inventories dipped slightly last week. By 5:05 p.m., crude traded at $68.45 a barrel.

World markets were broadly higher. In Asia, Japan’s Nikkei picked up 0.4%, and Hong Kong’s Hang Seng rose 2.0%. In Europe, the U.K.’s FTSE picked up 1.2%.

Corporate News

• Oracle (ORCL) posted a 7% drop in fourth-quarter profit, but the firm still topped analysts’ estimates on support contract sales. The firm earned $1.89 billion, or 38 cents a share, up from $2.04 billion, or 39 cents a share, in the year-ago period. Excluding one-time charges, the firm earn 46 cents a share, two cents above Wall Street estimates.
• JPMorgan Chase (JPM) was named the strongest bank in a ranking of financial firms published in The Banker magazine. JPMorgan had ranked fourth strongest last year. Meanwhile, Royal Bank of Scotland (RBS) posted the largest loss ($59.3 billion) of any bank last year.
• IBM (IBM) tapped Elias Mendoza to be its new head of mergers and acquisitions, the firm said. Mendoza, who had overseen M&A for IBM in Asia, takes over for David Johnson, who had been wooed away by Dell (DELL).

The Economy

• The Federal Open Market Committee of the Federal Reserve left  the federal funds rate unchanged at 0.00% to 0.25%. The Fed said the pace of the contraction had slowed and that financial markets had showed signs of improvement since the last policy statement. The Fed also said core inflation appeared likely to remain in check for the foreseeable future. STATEMENT
• Durable goods orders, a measure of demand, rose 1.8% in May, up from a revised April increase of 1.8%, the Commerce Department said. Economists had expected a May decline of 0.9%. REPORT
• The annual rate of new home sales fell to 342,000 in May, down from a revised annual rate of 344,000 in April, the Commerce Department said. For May, economists had expected an increase to an annual rate of 360,000 sales. REPORT
• Crude inventories fell by 3.8 million barrels last week, but they remained above the upper limit of the average range for this point in the year, the Energy Department said. REPORT

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Quadruple Witching: Four investment vehicles expire.
• Stocks Mixed: Early gains erased as institutionals reshuffle.
• Make It Plural: Apple starts selling iPhone 3G S.
• Slower Decent: IMF official sees softer landing.

The Lowdown

A bumpy session brought a five-week rally to an end.

Stocks were mixed Friday, as institutional investors rebalanced their portfolios on a quadruple witching day. The Dow Jones Industrial Average gave back its early gains to stand down 16 points to 8538. That level represented a 3% dip for the week, the first in five the Dow hadn’t increased. The Nasdaq rose 19 to 1827, and the S&P 500 gained 2 at 921.

Today’s session falls on a quarterly quadruple witching day, in which equity options, index options, stock futures and index futures expire simultaneously. The result is typically heavy and somewhat volatile trading as funds and other institutional investors reassess their holdings.

World markets were broadly higher after U.S. markets got a boost Thursday on largely positive economic data. In Asia, Japan’s Nikkei picked up 0.9%, while Hong Kong’s Hang Seng advanced 0.8%. In Europe, the major indexes of London, Frankfurt and Paris each ended higher.

The global economy got a vote of confidence from the Internal Monetary Fund. The decline in global output is slowing, which should trigger a change in the IMF’s growth estimate for 2010, IMF First Deputy Managing Director John Lipsky said. Still, he offered a caution sign. “While the latest data point to a slowing of the global contraction, there is still great uncertainty regarding the timing and pace of economic recovery,” he said in prepared remarks at a business conference in Turkey.

Commodities followed the broader market lower. Crude traded down $1.79 cents at $69.58 a barrel.

Looking ahead, next week will be a busy one for economic data. On Tuesday, traders will get a look at the May data on new and existing home sales. On Wednesday, the Federal Reserve hands down its latest policy statement on interest rates, and on Friday, the Commerce Department releases its May readings on personal income and spending.

Corporate News

• Research In Motion (RIMM), the maker of the BlackBerry, reported better-than-expected first-quarter earnings but disappointed traders with an outlook below analysts’ views. For Q1, RIM earned $564.4 million, or 98 cents a share — four cents better than Street views. For Q2, the firm expects to earn between 94 cents and $1.03 a share on sales of $3.45 billion to $3.7 billion. Analysts had expected a second-quarter profit of 97 cents per share and $3.61 billion in sales.
• Apple (AAPL) is set to release the latest version of its iPhone this weekend. The new 3G S will cost $399, or $199 for customers upgrading from earlier 3G phones.
• Toyota (TM) is seeing unexpectedly high demand for its new third-generation Prius, the Associated Press reported. Toyota has received 180,000 orders for the hybrid vehicle, well above the 10,000 the firm expected in the car’s first month off the line.
• Bank of America (BAC), Morgan Stanley (MS) and PNC Financial Services (PNC) are among several banks receiving federal aid whose chief executives have been accused of using their corporate jets for personal reasons, The Wall Street Journal reported, citing flight records. Others include Regions Financial (RF) and Marshall & Ilsley (MI).

The Economy

• There are no substantial economic indicators scheduled to be released today.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Regulation Station: Obama reform proposal coming today.
• Futures Steady: Major indexes aimed for flat start.
• Oil Pulls Back: Crude drops below $70 before inventories.
• Magic Wand Wanted: Adobe posts 30% drop in net income.

The Lowdown

The market appears to have found a tourniquet.

Stocks headed to toward a fairly flat open Wednesday, as traders licked their wounds in the wake of a two-day selloff. Shortly before 7 a.m., Dow, Nasdaq and S&P 500 futures were trading right around fair value.

Still, traders will be eyeing the details of the Obama administration’s plan to reform existing regulations of the financial system. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers released an outline of the White House’s proposal earlier this week, but the financial sector could cheer or reject the fine print later today.

Also in Washington, the Senate Health Committee prepared to begin a series of meetings to discuss the Obama health care plan, which is now estimated to cost upwards of $1 trillion. At the same time, the Senate Finance Committee is formulating it own health care plan, a version which is expected to be more modest in scope and more bipartisan in appeal.

Commodities continued their steady decline. Energy prices slipped ahead of the released of last week’s crude inventories report. By 7:02 a.m., oil traded down 53 cents at $69.94 a barrel.

World markets were mixed. In Asia, Japan’s Nikkei picked up 0.9%, while Hong Kong’s Hang Seng gave up 0.5%. In Europe, the U.K.’s FTSE dipped 0.9% in midday trading.

Corporate News

• Adobe (ADBE) posted a 30% decline in second-quarter net income, the firm said. Excluding one-time charges, Adobe earned 35 cents a share, down from 50 cents a share in the year-ago period. Slumping software sales depressed Adobe’s bottom line.
• General Electric (GE) predicts credit will have loosened up by 2010 but stopped short of pinpointing a recovery, Reuters reported, citing Vice Chairman John Rice. “Until the financial systems start to work again it will be difficult to say that we’ve hit the bottom and started to come back,” Rice said.
• Morgan Stanley (MS) plans to expand its investing options for hedge fund clients in an effort to restore faith and interest in the vehicle, The Wall Street Journal reported. The firm will allow hedge-fund clients to put part of their assets in a trust owned by the firm, offering clients somewhere else to park their holdings besides the company’s brokerage divisions.

The Economy

• The May reading of the Consumer Price Index is scheduled to be released at 8:30 a.m. by the Labor Department. Economists expect the CPI to have risen 0.3% last month after having remained flat in April. Excluding volatile food and energy prices, economists predict the core CPI will have risen 0.1% in May, slowing from a 0.3% rise in April.
• The crude inventories report for last week is scheduled to be released at 10:30 a.m. by the Energy Department. In the prior week, inventories were above the upper limit of the average range for this point in the year.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Money-Back Guarantee: TARP repayments to begin next week.
• Woah, Nellie: Fed to slow asset portfolio expansion.
• Searching for Direction: Major indexes mixed on consumer data.
• Barclays Shrinks: BlackRock to buy BGI for $13.5 billion.

The Lowdown

The consumer remains a point of concern on Wall Street.

Stocks were lower Friday, after an improved but dissappointing reading of the Consumer Sentiment Index failed to pull the major indexes completely out of an early funk and commodities prices eased. The Dow Jones Industrial Average gained 28 at 8799, closing slightly higher than where it started Monday and above its 2009 starting point. The Nasdaq gave up 3 at 1858, and the S&P 500 gained 1 at 946. 

In economic news, the Consumer Sentiment Index rose to 69.0 in June — its highest point in the last nine months, but short of economists’ projections. The market had been looking for more of an improvement in consumer mood, particularly after recent data suggesting retail sales were making a comeback and the housing sector is nearing a bottom.

In finance, several firms will kick off the process of repaying loans taken out as part of the government’s Troubled Asset Relief Program as soon as next Wednesday, The Wall Street Journal reported, citing anonymous sources. The banks are said to include JPMorgan Chase (JPM), Morgan Stanley (MS) and American Express (AXP).

In Washington, the Federal Reserve is likely to slow its purchase of bonds in the near-term, as some Fed officials have grown uneasy about the potential inflationary affects of continuing to expand the bank’s portfolio.

World markets were mixed. In Asia, Japan’s Nikkei picked up 1.6%, while Hong Kong’s Hang Seng climbed 0.5%. In Europe, the U.K.’s FTSE dipped 0.5%.

On the Nymex, oil prices took a step back after a long rally. Crude traded down 55 cents at $72.13 a barrel.

Corporate News

• Barclays (BCS) has agreed to sell its Global Investment unit to BlackRock (BLK) for $13.5 billion, the firm said. The deal will make BlackRock the largest fund manager in the world.
• General Motors is close to a deal to sell its Saab division to an unnamed buyer, The Wall Street Journal reported, citing an anonymous source. GM is in the process of streamlining its operation before attempting to emerge from bankruptcy.

The Economy

• The Michigan Consumer Sentiment Index rose to a preliminary June reading of 69.0, up a bit from 68.7 in May, Reuters and the University of Michigan said. For June, economists had predicted a slightly bigger bump to a reading of 69.5. STORY

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Retail Rebound: Sales rose in May for first time since February.
• Equities Rise: Major indexes higher after economic data.
• Foreclosure Record: Filings top 1 million from March to May.
• Boundless Energy: Crude oil prices top $72 a barrel.

The Lowdown

An improved economic picture has given Wall Street a boost.

Stocks quickly recovered Wednesday’s losses, after a surprise from the labor sector and a nominal retail report helped offset another staggering month of foreclosures. By 10:11 a.m., the Dow Jones Industrial Average had picked up 84 points at 8824. The Nasdaq had climbed 17 to 1870, and the S&P 500 had risen 9 to 948.

The labor market showed more clear signs of improvement. Jobless claims fell last week below economists estimates, though they remained above 600,000. The April report on business inventories is scheduled to be released later this morning.

The retail sector offered lukewarm data. Retail sales rose in May, the first such increase since February, as consumers appeared more willing to spend. However, much of that increase came as a result of an increase in gas prices. A rebound in consumer spending is widely considered a necessary condition for a broader economic recovery.

In housing, foreclosure filings slipped 6% in May, easing off a record high in April, RealtyTrac said. However, May marked the third worst month on record for foreclosures, as well as the third consecutive month during which filings came in above 300,000. Filings were highly polarized: ten states accounted for 77% of foreclosure activity last month. The states with the most culprits: California, Florida and Nevada.

The foreclosure report muddied the picture of a housing sector on the mend. Recent home sales and price data had suggested the market is slowly coming back.

In Washington, the Obama administration tapped Kenneth Feinberg as its new so-called “pay czar,” a post that will shape the landscape of executive compensation. Feinberg handled Washington’s compensation fund for the victims of the 2001 terrorist attacks.

On the Nymex, energy prices continued their rally after the International Energy Agency raised its estimate for 2009 oil demand. By 9:55 a.m., oil traded up 82 cents at $72.15 a barrel.

World markets were fairly flat. In Asia, Japan’s Nikkei finished down 0.1%, while Hong Kong’s Hang Seng ended flat. In Europe, the U.K.’s FTSE picked up 0.7% in afternoon trading.

Corporate News

• Coca-Cola (KO) is in the middle of an international incident. The government of Venezuelan president Hugo Chavez has banned Coke Zero, one of the company’s no-calorie colas. “The product should be withdrawn from circulation to preserve the health of Venezuelans,” Health Minister Jesus Mantilla said in comments reported by the state-run news agency.
• Dell (DELL) is getting ready to open its check book. The computer retailer is preparing to acquire “a significant-sized company,” Reuters reported, citing an anonymous source who had spoken with Dell.
• Zipcar, one of several companies that allows urban consumers to share a fleet of vehicles, plans to go public next year, Reuters reported. The firm predicts sales will grow to roughly $1 billion within a decade.

The Economy

• Retail sales rose 0.5% in May, rebounding from a revised April decline of 0.2%, the Commerce Department said. Sales excluding autos also rose 0.5%, up from a revised April dip of 0.2%. Overall May sales were in line with economists estimates, but sales excluding autos were expected to rise 0.2% last month. REPORT
• Initial jobless claims fell to 601,000 last week, down from a revised 625,000 in the prior week, the Labor Department said. Economists had predicted the number people seeking unemployment benefits for the first time would dip to 615,000. REPORT
• Business inventories, a measure of lag demand relative to expectations, fell 1.1% in April, down a bit from a revised March decline of 0,9%, the Commerce Department said. For April, economists had projected another 1.0% decline. REPORT

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.

• Payroll Surprise: Economy lost fewer jobs than expected.
• Unemployment Rises: Rate hit 9.4% in May.
• Stocks In Flux: Traders uncertain after jobs data, but Dow finishes week up 3%.
• Mozilo Charged: Countrywide founder facing fraud suit.

The Lowdown

Wall Street is not quite sure what to make of the latest jobs report.

Stocks wavered after the release of a May jobs report revealed an unexpectedly soft drop in payrolls, but also a disappointing rise in the unemployment rate. The Dow Jones Industrial Average picked up 12 points at 8763, or a 3% gain for the week. That is 9 points short of where it started 2009. The Nasdaq was flat at 1849, and the S&P 500 decreased 2 to 940.

The economy lost 345,000 jobs last month, far fewer than the 520,000 economists had been expecting. The job loss was roughly half the average monthly decline for the last six months, the Labor Department said. The jarring change could suggest the labor market has reached a bottom.

The bad news: the unemployment rate, which ballooned to 9.4% in May, up from 8.9% in April and a bit above economists estimates. The average hourly work week also dipped slightly.

Energy prices turned flat after the employment report. Oil traded down 41 cents at $68.41 a barrel.

In corporate news, JPMorgan Chase (JPM) and American Express (AXP) may have been under government pressure to raise capital earlier this week, despite having passed their federal stress tests. The Federal Reserve forced the firms to raise their capital levels before setting aside money to repay loans taken out as part of the Troubled Asset Relief Program, The Financial Times reported.

World markets were mostly higher. In Asia, Japan’s Nikkei and Hong Kong’s Hang Seng each picked up about 1.0%. In Europe, the U.K.’s FTSE rose 1.2%.

Corporate News

• Citigroup (C) is under pressure from the Federal Deposit Insurance Corporation to make substantial changes to its management team, leaving Chief Executive Vikram Pandit exposed and at risk, The Wall Stret Journal reported, citing anonymous sources. The FDIC also pushed another regulator to lower its rating on Citi.
• Rio Tinto (RTP) abandoned its planned $19.5 billion deal with Chinalco. Instead, the firm said it would enter a $12.5 billion deal with BHP Billiton (BHP), Rio said in a statement.
• Countrywide Financial founder Angelo Mozilo has been charged with securities fraud and insider trading by the Securities and Exchange Commission. Mozilo, whose face has come to evoke the anger and resentment of the subprime lending crisis, is said to have emailed executives at his firm that they are “flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales,” according to the suit. As it turns out, he had reason to show concern.

The Economy

• The unemployment rate rose to 9.4% in May, up from 8.9% in April, the Labor Department. Meanwhile, the economy lost 345,000 jobs, slowing from a revised April loss of 504,000 jobs. The average hourly workweek slipped to 33.1 hours, down from 33.2 hours in April, and hourly earnings rose by 0.1% after a comparable gain in the prior month. Economists had expected a 520,000-job drop in payrolls, an unemployment rate of 9.2%, an hourly wage boost of 0.1% and an average workweek of 33.2 hours. REPORT

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 – 2009 SmartMoney. All Rights Reserved.