Commentary by John M. Berry
Sept. 8 (Bloomberg) -- Pauline, the heroine of the 1914 classic silent-film serial, was threatened with death in 20 weekly episodes, escaping narrowly each time. One can only hope the U.S. economy won't have to face so many perils before the risk of recession fades and it gets back on a solid growth track.
The latest is whether the continuing loss of payroll jobs -- 84,000 last month and 605,000 so far this year -- will limit income gains and hurt consumer spending enough to start a spiral into recession.
The monthly losses, as large as they are, are only a small fraction of those usually incurred during recessions. This year's decline has cut total payroll employment by less than half a percent, and the impact on workers' incomes has been small.
Employers have managed to produce more with less labor. The gross domestic product increased at a 3.3 percent annual rate in the second quarter at the same time the number of jobs fell and the unemployment rate rose.
The result was a spectacular jump in productivity. On Aug. 4, the Labor Department said output per hour worked climbed at a 4.3 percent rate this spring at non-farm businesses. Production was up 3.4 percent and hours worked dropped 0.8 percent.
Some of the increase in GDP was due to the tax rebates many households received as part of the economic-stimulus package enacted earlier in the year. More importantly, a decline in the value of the dollar contributed to a surge in U.S. exports that provided a boost to the economy.
Housing Crash
Meanwhile, the drag on growth from the crash in the housing market was only about half as great as in the previous three quarters.
The bursting of the housing bubble might, by itself, have been enough to trigger a recession. However, the resilient economy looked like it was weathering that peril when overreaching by many banks and securities firms helped produce the worst crisis in financial markets since the Great Depression.
As the crisis deepened, yet another peril appeared: Prices for a wide range of commodities, including oil and food, skyrocketed. Retail prices for gasoline, milk, bread and other types of food took off, denting consumers' pocketbooks.
Gasoline and diesel-fuel costs soared to more than $4 a gallon, wiping out a large share of the market for sport-utility vehicles and pickup trucks.
None of these threats has disappeared, and economic forecasters are divided over whether this extended period of slow growth and job loss is going to turn into something worse.
Another Gain
Economic growth probably will register another small gain in the July-September quarter, on the order of 1 percent to 2 percent. The fourth quarter might be even weaker, though it could provide a positive surprise.
One big plus is the recent drop in a broad array of commodity prices, including most of all, oil. On Aug. 5, crude oil for October delivery fell to about $106 on the New York Mercantile Exchange, down 28 percent from its peak of more than $147 in mid-July.
Gasoline prices haven't fallen that much, though in the week ended Sept. 5 they were down about 44 cents a gallon to $3.67, a 10 percent drop over a two-month period.
That big decline may be tempering a key source of this year's economic weakness, a large drop in new-car and truck sales. For instance, General Motors Corp. sales are down 18 percent this year from 2007. And falling consumer purchases of motor vehicles and parts clipped about 0.6 percentage point off second-quarter GDP growth.
Auto Sales
Price-cutting at GM -- and lower gasoline prices -- helped spur sales of domestically produced vehicles last month, a pleasant surprise for the beleaguered industry.
``I'm optimistic, the industry did tick up in the month of August,'' said Mark LaNeve, GM's head of North American sales and marketing. ``It just felt better. At some point, we hit the bottom of this market. We won't know until it's over.''
Like housing, the most important thing regarding motor- vehicle sales is that they stop falling, so they are no longer a drag on GDP, as they have been since mid-2007. Maybe that's happening.
The question at this point is how all these interconnected forces play out.
The financial crisis has eased though hardly disappeared. Some types of credit are hard to get and many lending institutions have had such large losses that they are reluctant to grant new loans.
There are ever-more signs that housing is stabilizing even as home prices fall more in some important markets. The drag on GDP probably will shrink more and disappear by early next year.
With growth slowing in many parts of the world, including Europe, commodity prices ought to retreat a good deal more, which will ease inflation pressures. Unfortunately, those pressures will still be great enough that the Federal Reserve won't be in a position to reduce its 2 percent overnight lending rate target.
By the middle of next year, perhaps sooner, if things go as well as they did for Pauline, the U.S. economy should be on a solid footing again.
Sept. 8 (Bloomberg) -- For John McCain and Barack Obama, the race for the White House is a battle of the old and the new -- and it has little to do with age.
The U.S. presidential election is shaping up as a contest over the old America of Ohio's shuttered factories and Michigan's fading auto plants, as well as the newer America that loops from Northern Virginia's suburbs through the Sun Belt and west to Colorado.
While a sputtering economy and an unpopular war may give the Democrats an edge heading into the eight-week sprint to the Nov. 4 vote, other issues lurk in the background. Chief among them is whether Americans are ready to elect their first black president in Obama, 47, an Illinois senator.
``Democrats go into '08 as very clear favorites because of the obvious facts,'' says Merle Black, co-author of ``Divided America: The Ferocious Power Struggle in American Politics'' and a political science professor at Emory University in Atlanta. ``In that sense, it looks like Obama's election to lose.'' Still, Black adds, ``he might lose it.''
McCain leads Obama by 50 percent to 46 percent among registered voters, according to a weekend USA Today/Gallup Poll. The surge following the selection of McCain's running mate Sarah Palin marks a turnaround from a poll taken before the Republican convention, when he lagged by 7 percentage points.
Still, many Republicans say they have a disadvantage. Arizona Senator McCain, 72, is ``either tied or behind in every swing state,'' says John Weaver, a former top adviser. ``It's an uphill battle, cobbling together 270 electoral votes.''
In Play
Republicans face voter dissatisfaction over someone whose name won't be on the ballot -- George W. Bush, a president with approval ratings that are among the lowest in history.
Bush is ``the unspoken name in every aspect of the debate,'' says Andrew Kohut, director of the Washington-based Pew Research Center.
McCain's campaign is betting it can keep Florida and Ohio, two states Bush won in 2004, while adding Michigan and Pennsylvania, two states he lost.
In Pennsylvania, Ohio and Michigan, ``the group in play is the white working-class voter who had reservations about Obama but think they have been harmed by the economy,'' Kohut says.
The Obama campaign, meanwhile, is seeking to expand the Electoral College map in the South, pouring millions of dollars into Virginia, North Carolina and Georgia. It also has paid staff working in historically Republican states like Alaska, North Dakota and Montana.
The Palin Factor
McCain's choice of Sarah Palin as a running mate galvanized the Republican base that has been wary of McCain because of his clashes with religious leaders he once termed ``agents of intolerance'' and his sponsorship of a campaign-finance law. Her Sept. 3 acceptance speech drew raves from Republicans inside the St. Paul, Minnesota, convention hall and around the country.
Still, the Palin selection may give Democrats an opening to question McCain's decision-making because the Alaska governor, 44, has been in office for just 20 months.
In choosing his own running mate, ``Obama started early and was thorough from the start,'' says former Nebraska Senator Bob Kerrey, 65, a Democrat who's now president of the New School University in New York. The Democratic nominee considered his selection of Senator Joe Biden, 65, of Delaware as ``the most important decision of his campaign,'' Kerrey says.
By contrast, McCain ``waited until the last minute,'' he says. ``If this is the way he does it -- and I like John a lot -- this is not good.''
While winning the base is important, both campaigns also will try to capture the broad middle of the electorate. The McCain campaign, saddled with Bush's unpopularity, says it has already started to blunt Democratic attacks that a Republican victory would amount to a third Bush term.
Redefining Republicans
``I think we literally redefined the Republican Party and the stakes of this election,'' Rick Davis, McCain's campaign manager, said on Bloomberg Television. Davis said that McCain wants to ``turn the page'' from Bush's politics.
Democrats say the McCain effort won't work. Despite the Palin pick, ``the essential architecture of this race is the same, which is that they continue to cling to the tattered banner of a failed policy, and we continue to talk about change,'' says David Axelrod, 53, Obama's chief political strategist.
Palin is ``basically to the right of her party, and he's down the line with the basic Bush policies,'' Axelrod says.
Both campaigns will try to wring every vote from core supporters. For Obama, that means blacks in urban areas; for McCain, it's rural white conservatives.
`Very, Very Good'
In the last two presidential elections, Republicans dominated the ``ground war'' -- dispatching legions of volunteers into key precincts where they knew they could turn out their voters. Ed McFadden, who advised Fred Thompson on his presidential primary bid, says Republicans are confident they can do it again.
``Typically, you don't see the get-out-the vote program really kick into high gear until after they understand what the ticket looks like,'' McFadden says. ``The get-out-the-vote is going to be very, very good'' with Palin on board.
``We have the network and system in place that to some degree just has to reconnect,'' he says. Republicans also look to state ballot initiatives focusing on hot-button issues like immigration and gay marriage in states including Florida, Oregon and Arkansas to encourage their supporters to the polls.
But getting out the vote will be different this time because of the record amount of money -- $390 million so far --that Obama has raised, and because of the impact of new technology.
Young Voters
The use of the Internet and text-messaging may drive the outcome, particularly among the young voters who have been among Obama's most enthusiastic backers. The question is whether they will come to the polls in large numbers in November; if they do, it would be the first time since the voting age was lowered to 18 in 1972 that they will substantially affect the result.
Obama's campaign is conducting a massive voter-registration drive. Steve Hildebrand, his deputy campaign manager, says three states -- Florida, Michigan and North Carolina --- have more than 400,000 new voters; Georgia and Pennsylvania have more than 300,000. Most of the new voters favor Obama, he says.
Internet advertising has resulted in ``thousands and thousands of click-throughs onto sites where they can register to vote,'' he says, and ``it's something we'll continue through the general election.''
Foreign Policy
The conventions provided the first set pieces of the campaign; the next will be Sept. 26, when McCain and Obama meet in Oxford, Mississippi, to debate foreign policy, the first of three scheduled confrontations.
The conventions represented the last events of the campaign over which the candidates could assert much control. Though they will try to script as many moments as possible, the election may be determined by how they react to unanticipated events.
McCain's big challenge is trying to keep the White House in Republican hands while not allowing himself to be yoked to the incumbent president. McCain and Palin ``have got to show an understanding of the economy, and demonstrate empathy for people who are negatively impacted,'' Weaver says.
Democrats will use Bush's record to make that difficult. ``This will be a referendum on the way things are today relative to eight years ago,'' Kerrey says. ``The American people want something different.''
Sept. 8 (Bloomberg) -- The U.S. Treasury's takeover of Fannie Mae and Freddie Mac is aimed at keeping the companies going into 2009, while leaving the next president and Congress to decide their long-term structure.
Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart yesterday placed the two firms in a government-operated conservatorship, ousting their chief executives and eliminating their dividends. The Treasury may purchase up to $200 billion of stock in the firms to keep them solvent.
``Some of this is a stopgap to try to prevent the mortgage market from falling apart,'' former Federal Reserve Bank of St. Louis President William Poole said on Bloomberg Radio. The federally chartered, shareholder-owned structure, with risks covered by taxpayers, is ``an unacceptable situation,'' he said, projecting the Treasury may need to cover as much as $300 billion of losses.
Yesterday's action leaves open the option favored by former Federal Reserve Chairman Alan Greenspan, to split up and sell off the companies, or a full nationalization that would cement the government's role in mortgage markets. Avoiding a decision on the issue enhances the likelihood of congressional backing for the emergency steps, Democratic Senator Charles Schumer said.
Role of Government
``The new Congress and the next administration must decide what role government in general, and these entities in particular, should play in the housing market,'' Paulson said yesterday in Washington. There is a consensus now that ``they cannot continue in their current form,'' he added.
The FHFA, which will run the conservatorship, ejected Fannie CEO Daniel Mudd, 50, and Freddie CEO Richard Syron, 64. They were replaced by Herbert Allison, 65, former CEO of TIAA- Cref, and David Moffett, 56, who was a US Bancorp vice chairman.
The Treasury also said yesterday it will provide secured short-term funding to Fannie, Freddie and 12 federal home-loan banks, and purchase mortgage-backed debt in the open market.
``This is not a permanent solution -- they've not saved Fannie and Freddie, what they've done is they've bought 15 months,'' said Bill Ackman, founder of Pershing Square Capital Management in New York, which has sold short the two companies, or bet on declines in their securities. ``It's a band aid. They haven't permanently recapitalized the companies.''
Shares Drop
Fannie and Freddie dropped 50 percent in Frankfurt. The New York Stock Exchange suspended pre-market trading in the shares, while saying in a statement that all markets will be free to trade the stocks as of 9:30 a.m. New York time.
Credit Suisse analysts cut their stock price target on the companies to $1.
``This could result in the GSEs being used as a policy tool, to the detriment of existing shareholders,'' Credit Suisse analysts led by Moshe Orenbuch wrote in a research report.
Yields on Fannie Mae and Freddie Mac debt relative to benchmarks tumbled by the most on record.
The difference between yields on Washington-based Fannie's 5-year debt and 5-year Treasuries fell 29.1 basis points to 64.9 basis points as of 8 a.m. in New York, the lowest since May, according to data complied by Bloomberg. The yield fell to 22.1 basis points below interest-rate swaps, another benchmark, the lowest since February and down from 4.8 basis points.
Asian Shares Rally
Asian stocks rallied the most in seven months and Treasuries fell as the takeover buoyed confidence the U.S. will prevent the global credit crisis from deepening.
The takeovers bring Fannie, formed after the Great Depression and spun off in 1968, and Freddie, created in 1970, back under the government's fold. It's the biggest step yet in officials' efforts to grapple with a yearlong credit crisis that has caused more than $500 billion of losses and writedowns.
``This action should lead to an increased availability of mortgage financing, which will help achieve stability in housing,'' Bank of America Corp. Chief Executive Officer Kenneth Lewis, said in e-mailed remarks. Paulson consulted with Lewis last week, according to two people briefed on the discussions. Bank of America spokesman Scott Silvestri declined to comment on the talks.
Under the plan, the Treasury will receive $1 billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie. The government will receive annual interest of 10 percent on its stake.
Reduce Holdings
As a condition for the assistance, Fannie and Freddie eventually will have to reduce their holdings of mortgages and securities backed by home loans.
While common stockholders of Fannie and Freddie won't be eliminated, they will be last in line for any claims, Paulson said. Preferred shareholders will be second in absorbing losses, he said. Interest and principal payments will continue to be made on the companies' subordinated debt, Lockhart said.
``Government intervention is not something that I came here wanting to espouse, but it sure is better than the alternative,'' Paulson said today in an interview with Bloomberg television. ``This is the first time in my career I had trouble sleeping, and it wasn't because it was a difficult decision.''
The government is taking an increasing role in financial markets, after the Fed six months ago provided $29 billion of financing to prevent Bear Stearns & Cos.'s collapse. Chairman Ben S. Bernanke praised yesterday's action in a statement.
`Deeper Crisis'
Democratic presidential nominee Barack Obama said yesterday that ``some'' intervention was necessary to prevent a ``larger and deeper crisis.'' After the current crisis subsides, ``the plan must move toward clarifying the true public and private status of our housing policies,'' he said.
``We've got to keep people in their homes,'' Republican presidential candidate John McCain said in an interview with CBS's ``Face the Nation'' program. ``There's got to be restructuring, there's got to be reorganization, and there's got to be some confidence that we've stopped this downward spiral.''
The government takeover comes almost two months after Paulson first sought emergency powers to inject capital into the beleaguered mortgage-finance companies. Congress approved the measure in legislation signed by President George W. Bush on July 30.
Paulson had indicated until early last month that it was unlikely he'd use the authority, and then kept silent even as investors clamored for clarity on how a government intervention would work.
The `Only Country'
``I'm hoping we're not talking about eliminating it all together,'' Dodd said of the Fannie-Freddie model, adding that the U.S. is the ``only country'' where homeowners are able to get 30-year fixed-rate mortgages because of the two enterprises.
``This will be a real problem'' if the takeover is ideologically driven, said Dodd, who plans to hold hearings on the matter.
Included in yesterday's measures is a Treasury program to purchase new mortgage-backed securities from the two companies, starting with a $5 billion purchase this month.
The Treasury will also hire independent asset managers to purchase and run the portfolio of mortgage-backed securities it will buy. ``There is no reason to expect taxpayer losses from this program, and it could produce gains,'' the department said.
``Paulson has threaded the needle just right by taking necessary action to stabilize U.S. financial markets while minimizing the liability for taxpayers,'' Schumer of New York, who heads the congressional Joint Economic Committee, said in a statement. ``This plan will be met with broad acceptance in Congress because it doesn't prejudge the ultimate fate of Fannie Mae and Freddie Mac.''
Inflated Capital
Paulson's decision, taken after consulting with Bernanke, followed a review that found Washington-based Fannie and McLean, Virginia-based Freddie used accounting methods that inflated their capital, according to people with knowledge of the decision.
Paulson, 62, hired Morgan Stanley a month ago to probe the companies' finances. The investment bank concluded that the accounting, while legal, enabled Freddie, and to a lesser extent Fannie, to overstate the value of their reserves, according to the people who declined to be identified because the findings were confidential.
Fannie and Freddie own or guarantee almost half of the $12 trillion in U.S. home loans and the government had been leaning on the companies to help pull the economy out of the housing crisis.
Concern over the companies' capital pushed their borrowing costs to record levels over U.S. Treasuries, sent their common and preferred stocks tumbling and boosted mortgage rates. Fannie is down about 66 percent in New York Stock Exchange trading since the end of June. Freddie has fallen about 69 percent.
Sept. 8 (Bloomberg) -- London Stock Exchange Group Plc, Europe's oldest independent exchange, said attempts to fix its biggest computer failure in more than eight years is ``taking longer than expected.''
The fault, which started at about 9 a.m. today, has left some traders without prices and unable to buy or sell shares for about six hours. The exchange was still trying to re-connect customers at 2:20 p.m., according to the LSE's Web site. It didn't say when the trading will restart and spokesmen for the LSE weren't immediately available to elaborate.
The breakdown is the longest disruption since April 2000, when a computer fault shut the exchange for eight hours. It coincided with a rally in European stocks today and surge in trading volume following the U.S. government's decision to take control of Fannie Mae and Freddie Mac. About 352 million shares were traded before 9 a.m. in London today, more double the amount in the same period the previous week.
``It's so frustrating as it's been going on for four hours,'' said Ian Murrell, a director at Wills & Co. Stockbrokers Ltd. in London. ``It's potentially one of the busiest days of the year given the overnight news.''
The benchmark FTSE-100 index had gained as much as 3.8 percent in early trading before the fault. Meanwhile, the benchmark Dow Jones Stoxx 50 Index surged 3.9 percent by 1:35 p.m., the biggest gain in about six months.
Traders said they were unable to place orders for U.K. shares as European stocks rallied today. UBS AG was up 11 percent in as of 2:35 p.m. in Zurich, while Deutsche Bank advanced 6.7 percent in Frankfurt.
Severe Storm
``We are appreciating what is going in other markets, which have moved on from the earlier levels,'' Murrell added. ``We just can't take advantage of it.''
The LSE shut for almost eight hours on April 5, 2000, after a problem with the London Market Information Link, a computer system used to connect the exchange with data vendors and dealers. The exchange closed for a day on Oct. 16, 1987, after a severe storm battered southern England, leaving many traders unable to get to work.
LSE also faces competition from as many as seven new competitors, among them Chi-X Europe Ltd. and Turquoise, an electronic market backed by nine investment banks. Chi-X, which started in March last year and now accounts for about 18 percent of all trading in FTSE 100 shares across exchanges, said it handled trades all morning.
`Worse Time'
``Today's meltdown from the LSE couldn't have come at a worse time,'' said Sejal Patel, a London-based trader at CMC Markets Plc. ``It has served to highlight the benefits of having an additional exchange.''
London Stock Exchange shares traded up 41.5 pence at 800 pence as of 2:54 p.m. in London on Chi-X. About 68,000 shares had traded on the platform, compared with 268,000 that were traded on LSE before the computer fault stopped trading.
``It's a good thing that there is choice now in Europe and people can choose,'' Chi-X Europe Chief Executive Officer Peter Randall said in a telephone interview today. ``Alternative platforms offer resilience to the system.''
The LSE was forced to extend its closing auction in November last year after a similar fault left traders without live prices for 40 minutes. LSE spokesman John Wallace declined to say if the exchange will extend trading hours today.
``The LSE will come out of this very, very badly,'' said Omer Bhatti, head sales trader at WorldSpreads Group Plc in London. ``People will begin to think seriously about having alternatives.''
Sept. 8 (Bloomberg) -- U.S. stocks climbed the most in a month, adding to a rally across Europe and Asia, as the government takeover of Fannie Mae and Freddie Mac improved the outlook for a financial system battered by $507 billion in credit losses.
Citigroup Inc., Wachovia Corp. and American International Group Inc. added more than 9 percent in New York trading after Treasury Secretary Henry Paulson said the government will provide short-term funding to mortgage lenders Fannie and Freddie. Pulte Homes Inc. and Lennar Corp. jumped more than 12 percent, leading homebuilders to a four-month high. A rally in banks from Germany to Japan sent the MSCI World Index up the most since March.
The takeover ``goes a long way toward addressing the number one negative, the downward spiral in housing prices,'' said Henry Herrmann, president and chief executive officer of Waddell & Reed Financial Inc., which manages $70 billion. ``If the market ended the day lower I'd be stunned.''
The Standard & Poor's 500 Index gained 24.71 points, or 2 percent, to 1,267.02 at 10:06 a.m. in New York. The Dow Jones Industrial Average rose 251.02, or 2.2 percent, to 11,471.98. The Nasdaq Composite Index advanced 20.49, or 0.9 percent, to 2,276.37. About seven stocks climbed for each that fell on the New York Stock Exchange.
All 24 industry groups in the S&P 500 advanced as higher commodity prices boosted energy and mining companies. Treasuries fell, pushing 10-year note yields up by the most since July, as investors sought higher-yielding assets.
Financial Rally
Citigroup climbed $1.77 to $20.84, while AIG added $2.03 to $24.37 and Wachovia jumped $1.85 to $18.60. JPMorgan Chase & Co., the third-biggest U.S. bank, increased 8.5 percent to $42.96.
The S&P 500 Financials Index climbed 6 percent, its biggest gain since July.
The Federal Housing Finance Agency will take over Fannie and Freddie under conservatorship, replacing their chief executives and eliminating their dividends. Under the plan, the Treasury will receive $1 billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9 percent of Fannie and Freddie.
``The market likes less uncertainty and this takes care of that,'' said E. William Stone, who oversees $66 billion as chief investment strategist at PNC Wealth Management in Philadelphia. ``If this helps re-stabilize the housing situation it's got to be looked at as a positive.''
Freddie lost 80 percent to $1.02, while Fannie Mae dropped 84 percent to $1.16. Citigroup and Lehman Brothers Holdings Inc. lowered their recommendations on the shares. Merrill Lynch & Co. cut its share-price forecast for Fannie Mae to 50 cents and its estimate for Freddie Mac to 25 cents.
Financial stocks in the S&P 500 had fallen 26 percent this year before today as banks from Merrill Lynch & Co. to Citigroup were forced to raise capital to cover losses stemming from the collapse of the subprime mortgage market. Fannie and Freddie had slumped more than 82 percent in 2008.
Preferred Shares
Banks with large holdings of Fannie Mae and Freddie Mac preferred shares may fail to join in the advance as the takeover eliminated the two companies' dividends.
Sovereign Bancorp Inc., the second-largest U.S. savings and loan, had stakes in Fannie and Freddie valued at $623 million as on June 30. Sovereign slid 2.3 percent to $9.44. Other lenders with significant holdings of Fannie and Freddie preferred shares include Gateway Financial Holdings Inc., Midwest Bank Holdings Inc. and Frontier Financial Corp.
Washington Mutual Inc. rose 18 percent to $5.02. The biggest U.S. savings and loan replaced Kerry Killinger as chief executive officer, naming Alan Fishman of Meridian Capital Group to replace him. Killinger's expansion into subprime mortgages contributed to $6.3 billion in losses in the past three quarters and an 88 percent slump in WaMu's stock in the past 12 months.
Goldman Sachs
Goldman Sachs Group Inc. climbed 5.4 percent to $172 in New York. Merrill Lynch & Co. analyst Guy Moszkowski raised his recommendation on the shares to ``buy'' from ``underperform.''
The rally in banks came even as Oppenheimer & Co. analyst Meredith Whitney slashed her third-quarter earnings estimates for Goldman, Lehman Brothers Holdings Inc., and Merrill Lynch & Co, citing a decline in trading volumes and share sales.
Schlumberger Ltd., the biggest oilfield-services company, and Exxon Mobil Corp., the largest U.S. energy company, gained as Hurricane Ike delayed the resumption of oil and natural gas production in the Gulf of Mexico, driving the commodities' prices higher. Crude oil rose for the first time in seven days and natural gas rose for a fourth straight day.
UST, Cognizant
UST Inc. gained 61 cents $68.16 in New York after Altria Group Inc. agreed to buy the largest U.S. snuff producer for $10.3 billion in cash.
Cognizant Technology Solutions Corp. added 3.5 percent to $28.71. Cognizant, which provides on-site computer-technology support as well as cheaper labor abroad, may climb to $40 a share as the U.S. and global economies recover, Barron's reported, citing Sanford C. Bernstein & Co. analyst Rod Bourgeois.
U.S. stocks declined last week, sending the S&P 500 to its steepest weekly retreat in three months, led by commodity producers as falling fuel and materials prices signaled global economic growth is slowing.
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