All about business

Job hunters may be better off being unemployed and searching for permanent work rather than taking temporary positions, a new study contends.

“It’s not that temp work is bad, per se,” said David Autor, who co-wrote the study. “It’s that people who are successful as temps, would tend to be far more successful in direct hire jobs. It’s the opportunity cost rather than direct harm.”

Autor, an economist at the Massachusetts Institute of Technology, and colleague Susan Houseman carried out a broad study of outcomes for 37,000 job seekers. The study group comprised clients of Work First, a public job-placement service operating in Detroit whose goal is to get people off welfare.

Applicants were randomly assigned to jobs; some were temporary positions doled out by agencies, others were direct hires to participating companies. All the jobs were relatively low-wage, low-skill labour.

Autor found that those workers who lucked into direct-hire employment, on average, earned 30 to 50 per cent more over the next two years than workers who took temp jobs. They found that earnings for temp workers tended to jump at the outset but then settled back when those jobs ended after a few days or weeks.

“The average outcome is that people placed in temp jobs do less well than they would have if they had just spent the extra time to search for a direct-hire position,” Autor said from his office at M.I.T. on Monday.

“Holding the temp job has two consequences: First of all, it’s very difficult to search for a job while you’re working. Second, when you’re connected to a temp agency, you may have the illusion a job is about to show up. They say, ‘We’ll call you when we have something.’ I wouldn’t call it ‘complacency,’ but it may create the sense that you’re doing something when you’re not payday loans guaranteed no fax.”

At the root of all this is the onerous nature of the job hunt itself.

“We know from all kinds of studies that people … hate searching for work. They hate it much more than working.”

Temp work, it seems, jolts people out of a job-hunting state of mind while offering no long-term benefits.

“Direct-hire placements give people stability. Stability is very valuable,” Autor said. “People often talk about the benefits of flexibility and so forth. Most of those benefits are actually for the employer rather than the employee.”

One of his conclusions is that government should not be in the business of trying to place people in temp jobs.

“You don’t need a government agency to connect you to a temp agency. Everybody knows where they are,” Autor said. “What is hard is connecting workers directly to employers.”

The participants in the study were a very particular kind of worker – one with little training. But Autor believes the study’s findings apply to a broad economic spectrum.

He is very careful not to suggest that people who need to put food on the table should be turning down any sort of job. But he gently suggests that the goal should be a successful job search, not a short one.

“What I’d like (job seekers) to take from this is that although temporary work sometimes leads to a direct-hire position, that’s probably not the most fruitful way to get them, relative to the sort of painful work of a direct-hire search,” Autor said.

“Don’t view temp work as the on-ramp into the labour market.”

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Colorado nonprofits expected a tough year in 2009 — and that’s exactly what they got, according to a survey released Wednesday by the Colorado Nonprofit Association and the Community Resource Center.

Of the 450 leaders of Colorado nonprofit organizations surveyed, 48 percent said their organizations expect to fall short of their revenue goals for the year.

Other key survey findings:

• Fifty-six percent of respondents reported an interval over the last 12 months when total expenses exceeded total revenue.

• Sixty-five percent said a major donor reduced or eliminated support due to the economic downturn.

• Sixty-four percent said the economy had a negative impact on obtaining funding from foundations, government agencies and corporations.

The survey — entitled “Weathering the Storm” — is an update of a similar report published earlier this year.

When it became apparent that nonprofits in the state were doing worse than they expected at the beginning of the year, CRC and the Colorado Nonprofit Association invited charities to complete an online questionnaire between Oct. 26 and Nov. 6.

But despite discouraging financial returns, the latest report shows that Colorado nonprofits are taking measures to persevere in during a challenging economic time.

According to the survey, the state’s nonprofits responded to the funding gap by:

• Collaborating with other organizations, with 39 percent sharing expenses and costs payday loan.

• Increasing fundraising activities. Thirty-two percent of nonprofits ramped up face-to-face solicitations, 42 percent requested more foundation grants and 27 percent asked board members to contribute more money.

• Reducing expenses. To respond to the economic downturn, 28 percent of nonprofits surveyed cut back or eliminated programs. Meanwhile, 21 percent cut staff pay or hours and nearly 16 percent laid off staff.

• Using more unpaid volunteers. The survey said 43 percent of nonprofits are already using more volunteers and nearly 40 percent are considering such action.

Looking ahead over the next three years, many Colorado nonprofit leaders say they are re-examining their services and existing programs.

Roughly one-third are re-evaluating their assumptions with the possibility of fundamental restructuring. Another 35 percent expect to expand services in key areas (an increase from 26 percent in the first version of the report).

However, most respondents said they expected their nonprofit will “stay in business.” Fewer than 1 percent of respondents anticipated the need to close.

Click here to download the report in PDF format.

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Technology has been a driving force in this year’s initial public offerings.

Consider ChangYou.com Ltd., a Chinese online game developer whose stock price jumped 25 percent at its offering day in April on the NASDAQ. It is now up more than 100 percent from its IPO price.

The company recently had the U.S. launch of its Dragon Oath martial-arts online game, a hit in Asia for the past three years. It has three more online games scheduled for release here and is opening a subsidiary in Santa Clara, Calif.

Among the 16 other tech IPOs in 2009, price gains of better than 30 percent since their offering have been produced by SolarWinds Inc., a management and monitoring software firm; A123Systems Inc., a manufacturer of rechargeable lithium-ion batteries; and Opentable Inc., an online reservation site.

In a year of other IPO gains by familiar names such as Hyatt Hotels and Vitamin Shoppe, the average first-day IPO price "pop" has been 7 percent, and the average overall return 10 percent, according to RenaissanceCapital.com.

But don’t get the impression we’ve returned to the wild-and-crazy IPO markets of the past. Some planned IPOs haven’t even hatched and others have quickly laid an egg because investor caution rules the roost.

"Demand for IPO money continues to run off the scale, as the need for companies to access the capital markets increases," observed David Menlow, president of IPOfinancial.com in Millburn, N.J. "However, the tug of war is between the comfort level of potential investors and the need for capital for these companies."

Investors are wary of debt-laden companies put on the IPO block by private-equity firms. An example is the Dole Food Co. IPO that was priced at the low end of its expected range, closed lower on its offering day in October and has since declined.

Rather than focus on one market sector, an investor should examine each IPO carefully to see if it makes sense, Menlow advised. Years ago, investors couldn’t care less what an IPO did because they just wanted in on the deal, resulting in "a lot of dogs with fleas" among those IPOs, he said.

"We’re in the last stage of a double-dip recession and starting to see some rays of sunshine in the IPO market," said Linda Killian, portfolio manager of IPO Plus Aftermarket Fund in Greenwich, Conn., up 16 percent over the past 12 months. "The IPOs that have come to market have been priced to sell."

Getting the 2009 IPO market off on the right foot was Mead Johnson Nutrition Co., a quality spin-off from Bristol-Myers Squibb Co. whose IPO was priced right, Killian noted. When that success was followed by Rosetta Stone Inc instant payday loan., another viable growth company, other firms were enticed to come to market, too.

IPO Plus Aftermarket Fund, which requires a $5,000 initial investment, buys a portfolio of IPO stocks at the time of the offering and in their subsequent aftermarket trading. The largest of the fund’s 23 holdings were recently Visa Inc., Constant Contact Inc., Athena Health Inc., Mead Johnson and Rackspace Hosting Inc.

"Individual investors can look for good IPOs that have traded down since they were offered," said Killian. "For instance, RailAmerica Inc. is below its IPO price and, although leveraged, is a well-run regional freight railroad operating in 27 states and part of Canada that has fared well in the economic downturn."

Institutional investors still drive the overall IPO market, since only select investors at full-service brokers typically get the opportunity to invest in IPOs. Most average investors invest in IPOs on the secondary market after their initial price pop. IPO Plus Aftermarket Fund is another way of doing that.

"The overall stock market is driving the IPO market, which is playing catch-up," explained John Fitzgibbon, founder of IPOScoop.com in Edison, N.J. "The IPO market is a follower, not a leader, and you must have a good stock market in order to get a good IPO market."

Among financial IPOs, Cypress Sharpridge Investments Inc. and Invesco Mortgage Capital Inc. have made gains, pointed out Fitzgibbon, but "the rest are underwater." Some real estate investment trusts also attempted to sweep up toxic assets into IPOs to get rid of them, but those IPOs have stumbled, he said.

"I always keep an eye on the initial IPO filing versus the final filing, since an increase indicates excessive demand and therefore likely good aftermarket performance," he said.

Rue21 Inc., a fast-growing specialty retailer for young women and men whose recent IPO was priced above its expected range and ended its offering day up 28 percent, is "a barn-burner," believes Fitzgibbon. It has had rapid growth and rising profits while displaying ability to predict fads, he said.

He is less enthusiastic about Dollar General Corp., the largest retail-store IPO in more than a dozen years, because it was loaded with debt by Kolberg Kravis Roberts and "pushed out the door as an IPO." But even though that IPO was priced at the low end of its expected range, it has since risen in price based on current investor confidence in discount retailer prospects.

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Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Chinese growth is likely to be hurt by an absence of consumer demand from trading partners such as the U.S.

“The Chinese, I suspect, will have a bubble of their own to confront,” Gross said in a Bloomberg Television interview yesterday from Pimco’s headquarters in Newport Beach, California. “It’s gearing up for export that doesn’t find an end consumer, that’s the real problem in China.”

The “systemic risk” of new asset bubbles in global economies and markets is rising with the Federal Reserve keeping interest rates at record lows, Gross wrote in his December investment outlook posted on Pimco’s Web site yesterday. Under what Pimco has termed the “new normal,” investors should be prepared for lower-than-average historical returns with heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy.

“With unemployment in the double digits and likely to stay close to that for the next six months despite job creation ahead, the Fed has nowhere to go,” Gross, co-founder and co- chief investment officer of Pimco, said on Bloomberg Television.

Fed Chairman Ben S. Bernanke said after a Nov. 16 speech in New York that it’s “not obvious” that asset prices in the U.S. are out of line with underlying values after a 64 percent jump in the Standard & Poor’s 500 Index from its March low.

Negative Rates

Treasury three-month bill rates turned negative yesterday for the first time since financial markets froze last year on concern that the rally in higher-yielding assets has outpaced the prospects for economic growth. The two-year note yield touched 0.68 percent, the least since Dec. 19.

The Fed cut its target rate for overnight lending between banks to a range of zero to 0.25 percent in December. Policy makers reiterated on Nov. 4 that they intended to keep the rate at the record low for an extended period.

The “heavy lifting” will likely be done first by other central banks such as those in Australia and Norway that have already begun to increase interest rates, Gross wrote cashadvance.

“China may abandon its dollar peg within six months’ time and with it, its own easy monetary policy that has fostered more significant mini-bubbles of lending and asset appreciation on the Chinese mainland,” he added.

China’s Currency

China has kept its currency at about 6.83 per dollar since July 2008 to help sustain exports amid a global economic slump.

China’s trade surplus in October almost doubled from the previous month, to $24 billion. The nation, with the world’s largest foreign-exchange reserves of $2.3 trillion, is the biggest creditor to the U.S., holding $798.9 billion of Treasuries as of September.

“With renewed upward appreciation of the yuan may come potentially volatile global asset price reactions to the downside — higher Treasury yields, and lower stock prices — which the Fed must surely be leery of before making any upward move, of its own,” Gross wrote.

The U.S. economy grew in the third quarter for the first time in more than a year as gross domestic product increased 3.5 percent from July through September after shrinking the previous four quarters, a Commerce Department report showed on Oct. 29.

Gross advised following the lead of billionaire investor Warren Buffett on buying utilities because their earnings growth will mimic U.S. economic growth and provide steady dividend income. Buffett’s Berkshire Hathaway Inc. agreed this month to take over Burlington Northern Santa Fe Corp., the No. 1 U.S. railroad, for $26 billion.

Fund Returns

The Total Return Fund managed by Gross boosted its investment in Treasuries, so-called agency debt and other government-linked bonds to 48 percent of assets in September from 44 percent in August, according to Pimco’s Web site. The holdings were the most since August 2004.

The $192.56 billion Total Return Fund returned 18.29 percent in the past year, beating 54 percent of its peers, according to data compiled by Bloomberg. The one-month return is 1.11 percent, outpacing 59 percent of its competitors. Pimco is a unit of Munich-based insurer Allianz SE.

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U.S. President Barack Obama said on Sunday the world economy was on a path to recovery but warned that failure to re-balance the global economic system would lead to further crises.

Obama was addressing Asia Pacific leaders in Singapore, where officials removed any reference to market-oriented exchange rates in a communique after disagreement between Washington and Beijing over the most sensitive topic between the two giants.

The statement from the Asia Pacific Economic Cooperation (APEC) forum endorsed stimulus measures to keep the global economy from sliding back into recession and urged a successful conclusion to the Doha Round of trade talks in 2010.

An earlier draft pledged APEC’s 21 members to maintain “market-oriented exchange rates that reflect underlying economic fundamentals.”

That statement had been agreed at a meeting of APEC finance ministers on Thursday, including China, although it made no reference to the Chinese yuan currency.

An APEC delegation official who declined to be identified said debate between China and the United States over exchange rates had held up the statement at the end of two days of talks.

That underscored strains likely to feature when Obama flies to China later on Sunday after Washington for the first time slapped duties on Chinese-made tires.

Beijing fears that could set a precedent for more duties on Chinese goods that are gaining market share in the United States.

Obama told APEC leaders the world could not return to the same cycles of boom and bust that sparked the global recession.

“We cannot follow the same policies that led to such imbalanced growth. If we do, we will continue to drift from crisis to crisis, a failed path that has already had devastating consequences for our citizens, our businesses, and our governments,” Obama said.

“We have reached one of those rare inflection points in history where we have the opportunity to take a different path — to pursue a new strategy for jobs and growth. Growth that is balanced. Growth that is sustainable.”

Obama’s strategy calls for America to save more, spend less, reform its financial system and cut its deficits and borrowing. Washington also wants key exporters such as China to boost domestic demand.

YUAN ON THE AGENDA Chinese President Hu Jintao has been under pressure to let the yuan appreciate, but in several speeches at APEC he ignored the issue and focused instead on what he called “unreasonable” trade restrictions on developing countries.

One of the key themes when Obama visits China for three days will be the yuan, which has effectively been pegged against the dollar since mid-2008 to cushion its economy from the downturn.

Washington says an undervalued yuan is contributing to imbalances between the United States and the world’s third-biggest economy. China is pushing for U.S. recognition as a market economy and concessions on trade cases that would make it harder for Washington to take action against Chinese products. 

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and cooling off — in the 20 biggest U.S. cities.

Source: RealtyTrac

Lured back to prime neighborhoods

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Thanks to sinking home prices, these 5 homebuyers were able to score deals in areas they couldn’t previously afford.

View photos

Mortgage Rates

NEW YORK (CNNMoney.com) — Sun Belt cities dominated the list of metro areas with the biggest foreclosure problems during the first six months of 2009.

Cities in just four states — California, Florida, Arizona and Nevada — captured 29 of the top 30 places with the highest foreclosure rates, according to a report issued by RealtyTrac on Thursday. Greeley, Colo., was the only outsider, coming in at 29th.

The good news is that some of the worst hit spots, such as the Central Valley cities in California, showed some improvement, according to James Saccacio, chief executive officer of RealtyTrac.

"There are some significant differences beginning to show up in the data," he said. "Some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates."

But we could also be in a lull before the third wave of foreclosures hits, according to Rick Sharga, RealtyTrac’s spokesman. The first wave was triggered by the subprime mortgage meltdown. The second wave was caused by layoffs and other economic fallout from the subprime meltdown. "The third wave," said Sharga, "will be the fallout from the option-ARM resets over the next several months."

Where it’s getting worse

Many cities with populations larger than one million experienced rapid increases in foreclosure during the past six months. Seattle, for example, wasn’t the worst hit city, but it experienced the biggest increase in the rate of filings. While a relatively small 1 in 107 homes received notices, that is a 72% jump compared with the same period a year ago. In second place was Minneapolis, where the filing rate grew by 58.6% to 1 in 90 homes; Phoenix spiked 51.7% to 1 in 22.

But some big cities showed substantial improvement. Filings in Greater New York fell 23.5% (1 in 211), and tumbled 40.7% in Boston (1 in 144) and 31.3% in Houston (1 in 153)

Taking the title of foreclosure capital is Las Vegas, which surpassed Stockton, Calif., for the honors. Stockton, which is 80 miles east of San Francisco, wore the crown for all of 2008.

Vegas, with a whopping 1 in 13 properties receiving a foreclosure filing during the first six months of 2009, is six times worse than the national average of 1 in 84. The number grew 56% since the first half of 2008.

The Cape Coral-Ft. Myers, Fla., area was second with 1 in 14 homes. California posted six cities in the top 10 list, with Merced coming in third at 1 in 15 homes being in trouble.

The Rust Belt, however, may have put the worst of its foreclosure problems behind it. Now even economically devastated Detroit recorded only 1 in 54 properties receiving filings. That’s a 16% decline over the first half of 2008.

Cleveland, one of the first cities to get whacked, has also improved and is now ranked only 56th among all U.S. metro areas. The city was once home to the nation’s hardest hit neighborhood — Slavic Village — but filings are now just 1 for every 73 homes, a 30% decline.

Inversely, Chicago, which had not previously suffered from the foreclosure blight, has pushed up 30% from last year to 39th place among cities. That equates to 1 in every 59 homes having a black mark. 

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Citigroup surprised Wall Street Friday as the embattled banking giant reported a $4.3 billion profit in the second quarter.

But the results were boosted largely by a $6.7 billion after-tax gain related to the completion of its sale of a majority of its Smith Barney wealth management division to Morgan Stanley (MS, Fortune 500).

On a per share basis, the company said it earned 49 cents a share. Analysts were expecting the New York City-based bank to record a loss of $1.07 billion, or 37 cents a share.

Citigroup CEO Vikram Pandit said that the latest results signaled that the company’s turnaround efforts were finally starting to take hold, but acknowledged that there was still much work to be done, particularly in the company’s consumer-related businesses.

"Sustainable profitability remains our primary goal," Pandit said in a statement.

Citigroup has earned a reputation as one of the nation’s most troubled financial institutions. From the time the credit markets began to unravel in late 2007 up until the end of last year, the company lost more than $28 billion.

The bank’s problems subsequently led the government to take a $45 billion stake in Citigroup in the form of preferred shares and warrants to help stabilize the bank.

Conditions at the company appear to be less dire as of late thanks to a broad recovery in banking stocks and hopes that the economy has hit bottom. But Citigroup still faces a number of difficult challenges.

Regulators have been anxious to steer the bank back towards profitability, and recent reports have suggested that the company still remains under intense scrutiny by regulators, namely the Federal Deposit Insurance Corp.

Pressure from authorities reportedly prompted Ned Kelly to step down as the firm’s chief financial officer last week, with John Gerspach, Citi’s chief accounting officer, taking his place.

The government will soon complete the conversion of its preferred shares in Citi into common stock, which will give American taxpayers more than one-third ownership stake in the company. The conversion was announced in late February as part of an effort to bolster Citi’s capital levels.

Citi also continues to be subject to the strictest government limitations on executive compensation, which some believe will make it tough for the bank to retain key employees.

Pandit downplayed such talk during a conference call with analysts Friday, suggesting instead that the recent departures of some top Citi executives are in line with normal employment trends on Wall Street.

At the same time, the company, along with the rest of the banking sector is now facing what is shaping up to be the most sweeping government reforms for the U.S. financial system since the Great Depression.

A tale of two Citis

Friday’s results, however, mark the first time the company broke out performances for its two divisions - Citicorp and Citi Holdings - since deciding to split the firm in January cheap car insurance.

Both units were profitable during the quarter, with the smaller Citi Holdings, which included the company’s infamous pool of troubled assets, earning $1.36 billion.

Still, those results were driven mainly by the Smith Barney transaction.

"It makes it look like the quarter was not horrible, but the reality is the underlying core operations are still doing quite terribly," said Michael Williams, director of research at research firm Gradient Analytics.

Williams added that JPMorgan Chase (JPM, Fortune 500) and Goldman Sachs (GS, Fortune 500), two firms that also delivered blowout quarterly results earlier this week, did so without the help of similar one-time gains.

The more stable Citicorp, which oversees, among other things, its investment bank and consumer banking businesses, earned $3.06 billion during the quarter, a decline of 11% from a year ago.

Strong trading results and resilience in Citi’s fixed-income operations helped compensate for double-digit revenue declines in the company’s traditional investment banking businesses, including equity underwriting, which was off 33% from the same period last year.

The issue of credit, however, remained front and center for the entire firm, much like its peers. Credit costs skyrocketed in the quarter, climbing to $12.4 billion, due in large part to loan losses. The company added $3.9 billion to its reserves to insulate itself against future loan losses.

With the recession still raging, Citigroup and other banks have been grappling with losses tied to various consumer-related loans.

Pandit and Gerspach indicated Friday that dealing with those losses, particularly in areas such as credit cards and mortgages, remained among their top priorities.

But both men were quick to point out that there were some encouraging signs, including moderation in the pace of mortgage delinquencies.

Some analysts worried, however, about signs of increased deterioration in corporate credit. The value of non-performing loans in Citi’s corporate lending portfolio swelled nearly six fold to $12.4 billion in the latest quarter.

"The consumer continues to get worse, but corporate loans are getting worse at a faster rate," said Williams.

Nonetheless, Citigroup’s results fall in line with the rest of its peers who reported better-than-expected second-quarter numbers this week. In addition to the strong results from Goldman Sachs and JPMorgan Chase, Bank of America (BAC, Fortune 500) revealed earlier Friday it earned $3.2 billion in the latest quarter.

Citigroup (C, Fortune 500) shares finished Friday slightly lower. 

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Stocks plunged Tuesday, falling to two-month lows, as fears that the market has gotten ahead of any economic recovery were ramped up ahead of the start of the quarterly reporting period.

A selloff in commodity prices took its toll on the underlying stocks, adding to the market weakness and worries about the duration of the recession.

The Dow Jones industrial average (INDU) lost 161 points, or 1.9%, closing at its lowest point since April 28.

The S&P 500 (SPX) index lost 18 points or 2%, closing at its lowest point since May 1.

The Nasdaq (COMP) fell 41 points, or 2.3%, closing at its lowest point since May 27.

Stocks have been inching lower since mid-June as a three-month stock market rally has lost steam.

"Investors are grasping the fact that the recovery, when it does come, may not be as robust as what many hope for," said Robert Siewert, portfolio manager at Glenmede. "While positive GDP would seem likely to return in the third or fourth quarter of this year, investors are starting to look out to what growth will look like next year."

The S&P 500 had spiked 40% on bets that the economy is stabilizing, but a recent bout of mixed news has stalled the advance, culminating with last week’s weaker-than-expected June jobs report.

Economic news due later this week includes readings on retail sales, the job market, import and export prices and consumer sentiment.

"This is a very tough recession," said Scott Armiger, portfolio manager at Christiana Bank & Trust Company. "It’s not going to be short and shallow like in 2001. We’re more than 18 months into it and there doesn’t seem to be a catalyst to turn things around."

He said that until the economy shows measurable signs of improvement, stocks are going to be hard-pressed to move much higher.

Underscoring the depth of the recession, a report Tuesday from the Mortgage Bankers Association showed delinquencies on credit cards and other loans jumped to a record 3.23% in the first quarter. That was a modest rise from the previous quarter.

Declines Tuesday were broad-based, with 25 of 30 Dow components sliding. Falling oil prices dragged on Dow oil components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). The biggest losers were Boeing (BA, Fortune 500), IBM (IBM, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), 3M (MMM, Fortune 500) and United Technologies (UTX, Fortune 500).

Profit reports on tap: Wall Street is also gearing up for the start of the second-quarter reporting period, which unofficially kicks off after the close Wednesday with Dow component Alcoa (AA, Fortune 500) payday loans guaranteed no fax.

The aluminum maker is expected to post a loss of 37 cents per share, according to Thomson Reuters estimates. Alcoa earned 65 cents a year ago. Alcoa shares inched higher Tuesday after the company’s CEO reportedly said that China’s economy has stabilized and that some sectors are coming back.

Next week brings reports from some of Wall Street’s biggest financial firms, including Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Citigroup (C, Fortune 500).

However, most quarterly financial reports are due out later in the month. S&P 500 companies are expected to have lost nearly 36% versus a year ago, according to the latest figures from Thomson Reuters.

Market participants will be looking to see not only that companies beat forecasts, but that they provide an encouraging outlook for future quarters.

"People are looking at the second half as an inflection point for economic growth," Siewert said. "Anything that would contradict that would be seen as a negative."

G8: The summit of the world’s leading industrialized nations begins Wednesday in L’Aquila, Italy. President Obama is expected to speak about the economic outlook. The leaders of Japan, Britain, France, Italy, Germany, Canada and Russia will also speak.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.46% from 3.51% late Thursday. Bond markets were closed Friday. Treasury prices and yields move in opposite directions.

Other markets: In global trade, Asian and European markets tumbled.

Energy prices slipped, with U.S. light crude oil for August delivery falling $1.12 to settle at $62.93 a barrel on the New York Mercantile Exchange.

In currency trading, the dollar gained versus the euro and fell versus the yen.

COMEX gold for August delivery fell $4.80 to settle at $929.10 an ounce.

Market breadth was negative and volume was light. On the New York Stock Exchange, decliners beat advancers three to one on volume of 770 million shares. On the Nasdaq, losers topped winners three to two on volume of 1.69 billion shares. 

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The Nasdaq surged Friday and the broader market struggled at the end of the first down week in a month for Wall Street.

The Dow Jones industrial average (INDU) lost 16 points, or 0.2%. The S&P 500 (SPX) index added 3 points or 0.3%. The Nasdaq composite (COMP) rose 20 points or 1.1%.

Blue chips posted slim gains Thursday after better-than-expected reports on the labor market and manufacturing helped counter a recent batch of mixed economic news. The revived optimism remained in play Friday.

But Friday was also under the influence of the quadruple options expiration, or "quadruple witching," a quarterly event in which stock index futures and options and individual stock futures and options all expire at the same time. It creates volatility in the underlying stocks, particularly toward the end of the session.

"We need to get past the quadruple witch and then next week we’ll see where we are," said Rick Bensignor, chief market strategist at Execution LLC.

"I think the highs we saw a week ago were probably the highs we’ll hold on to for the near term," he said.

Since bottoming March 9 at a 12-year low, the S&P 500 had run up 40% through last week. But stocks closed lower this week on worries that the rally may have outpaced any signs of recovery.

Bensignor said that the market is at a critical point technically and is vulnerable to a bigger pull back in the short term.

Next week brings reports on housing, durable goods orders and the labor market. The Federal Reserve holds a two-day meeting to discuss monetary policy.

Jobs: The jobless rate rose in nearly every state in the nation in May, the government reported. One state — Nebraska — registered a decline and Vermont saw no change.

Michigan led the nation with a 14.1% jobless rate, followed by Oregon with a 12.4% rate. For the full year, jobless rates were higher in all 50 states and the District of Columbia.

However, the labor market typically lags any other broader recovery in the latter stages of a recession, so the day’s jobless numbers didn’t seem to impact investors looking for signs of a broader stabilization.

A number of recent indicators have suggested the job market is starting to stabilize, but that hasn’t helped the millions of unemployed Americans looking for work.

iPhone: Apple (AAPL, Fortune 500)’s iPhone 3G S went on sale Friday, and was expected to sell as many as 500,000 copies this weekend, according to a Piper Jaffray analyst. The third generation of the iPhone features a better camera that includes video capturing and editing capabilities, a longer-lasting battery, voice-command control and a built-in digital compass cheap cash advance.

The 16-gigabyte version costs $199 with a new contract with AT&T (T, Fortune 500) and the 32-gigabyte version costs $299 with a new activation. Apple will also still sell an 8-gigabyte version for $99.

Apple shares gained 2.7% Friday.

On the move: Falling commodity prices dragged on the underlying stocks, keeping the blue chips in negative territory.

Dow oil components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) slipped. Other Dow losers included Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Coca-Cola (KO, Fortune 500), Procter & Gamble (PG, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500).

Components Hewlett-Packard (HPQ, Fortune 500) and Microsoft (MSFT, Fortune 500) gained, offsetting the losses.

Microsoft was higher after Goldman Sachs added the software leader to its "conviction buy" list, according to reports.

JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and American Express (AXP, Fortune 500) all gained, along with the broader financial sector. The KBW Bank (BKX) sector index rose 2%.

Late Thursday, Research in Motion (RIMM) reported higher quarterly earnings that topped estimates and higher revenue that missed estimates. The BlackBerry maker also forecast current-quarter earnings that are above forecasts and sales at the low end of forecasts. Shares fell almost 5% Friday.

Market breadth was positive and volume was heavy because of the quadruple options expiration. On the New York Stock Exchange, winners topped losers three to two on volume of 2.13 billion shares. On the Nasdaq, advancers beat decliners three to two on volume of 3.01 billion shares.

Bonds: Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.82% from 3.83% Thursday. Treasury prices and yields move in opposite directions.

Other markets: U.S. light crude oil for July delivery fell $1.82 to settle at $69.55 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery rose $1.60 to settle at $936.20 an ounce.

In currency trading, the dollar fell versus the euro and the yen.

In global trading, Asian markets ended mixed and European markets ended higher. 

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Stocks ended modestly higher Thursday, with all three major gauges closing at multi-month highs after the day’s economic reports fed hopes that a recovery is brewing.

The Dow Jones industrial average (INDU) gained nearly 32 points, or 0.4%. Despite falling short of its 2008 finish, the index ended at its highest level since Jan. 6.

The S&P 500 (SPX) index added over 5 points, or 0.6% and closed at its highest point since Nov. 5.

The Nasdaq composite (COMP) climbed 9 points, or 0.5% and closed at the highest point since Oct. 6.

Stocks have been on the rise since bottoming March 9, with the Dow up 34%, the S&P 500 up 40% and the Nasdaq up 47%, as of Thursday’s close.

But stocks have seesawed this week after rising Treasury yields and higher commodity prices sparked worries about inflation hampering a burgeoning recovery.

Thursday restarted the advance, as a rise in retail sales and a bigger-than-expected dip in jobless claims raised hopes that the pace of the recession is slowing. But the early advance lost momentum; the S&P 500 failed to hold on after briefly hitting a key level that traders and other market pros watch.

Nonetheless, the trend remains upward.

"The market keeps chugging along and it’s pretty impressive," said Michael Church, president at Addison Capital. "None of the economic data screams outright recovery, but the market tends to move first."

He said that the runup has been liquidity driven, with investors not wanting to miss the boat, even after three months of gains. However, the pace of the advance has been slowing lately and that’s bound to continue.

He said that the immediate concern over the next few weeks is the rise in interest rates.

On Friday, May import and export prices are due from the Labor Department. Also, the University of Michigan releases its June consumer sentiment index.

Bonds: A comparatively strong 30-year bond auction Thursday helped temper worries about pricing pressures, at least in the short term.

Treasury prices jumped, lowering the corresponding yields. The benchmark 10-year note yield fell to 3.85%, down from 4% early Thursday morning. The yield touched 4% during Wednesday’s session for the first time since last October.

Economy: Retail sales climbed 0.5% in May, the Commerce Department reported. The report was in line with forecasts and showed an improvement from April, when sales fell a revised 0.2%.

Sales excluding autos rose a bigger-than-expected 0.5%. Economists surveyed by Briefing.com thought sales without volatile autos would rise 0.2% after falling a revised 0.2% in April.

But the report mostly reflects the recent rise in gas prices, rather than any new direction for the consumer, said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc.

"Basically the consumer is still dead in the water," he said cash loans no credit check. "We’re not going to see a rise in consumer spending in the second quarter like we did in the first. Household balance sheets are a disaster."

A Federal Reserve report showed Americans saw $1.3 trillion in wealth disappear in the first quarter of this year, as home values declined and the stock market tanked. But the rate of decline was slower than last year. In the fourth quarter alone, $5.1 trillion in wealth disappeared, the biggest quarterly plunge since the Fed started tracking data in 1951.

Another report showed that foreclosure filings fell 6% in May from April, but still saw the third-worst month on record. The report showed that one of every 398 households received some kind of filing in the month, including notices of default, scheduled auctions or bank repossession.

The number of Americans filing new claims for unemployment fell 24,000 to 601,000 last week, according to a Labor Department report released Thursday morning. Economists though claims would dip to 615,000.

However, continuing claims, the number of Americans who have been receiving benefits for a week or more, rose to 6,816,000 from a revised 6,757,000 in the previous week.

BofA: Bank of America (BAC, Fortune 500) CEO Ken Lewis stressed Thursday that pressure from the government played a key role in the company’s decision to complete its purchase of Merrill Lynch last year.

Lewis said the federal government threatened to remove management or board members if the company went back on its promise to buy Merrill, even though Merrill’s financial state was deteriorating.

Other markets: In global trading, Asian markets ended mixed and European bourses ended higher.

In currency trading, the dollar fell versus the euro and the yen.

U.S. light crude oil for July delivery rose $1.35 to settle at $72.68 a barrel on the New York Mercantile Exchange, the highest close since October.

COMEX gold for August delivery rose $7.30 to settle at $962 an ounce.

Market breadth was positive and volume on the New York Stock Exchange was light for the fourth session in a row. On the New York Stock Exchange, winners beat losers three to two on volume of 1.22 billion shares. On the Nasdaq, advancers topped decliners nine to five on volume of 2.49 billion shares.

Has the recession actually helped you? From lower debt payments to cheaper home prices, many people have benefited from the current downturn. If you’ve made out financially and want to share your story, please email steve.hargreaves@turner.com.

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