Wall Street Jumps as Bernanke Testifies

The Standard & Poor’s 500-stock index posted its biggest decline in three weeks on Wednesday after minutes from the latest Federal Reserve policy meeting showed that some officials were open to cutting back on large-scale asset purchases as early as the June meeting.

The Dow Jones industrial average and the Nasdaq index also declined. Trading was volatile, with the Dow and the S.& P. rising in the morning, but falling in the afternoon.

The Fed minutes were released after comments from Ben S. Bernanke, the chairman, who said the Fed could decide to scale back the pace of bond purchases at one of the “next few meetings” if the recovery looked as if it would maintain positive momentum.

The comments were a blow to a market that had accelerated after Mr. Bernanke said the central bank needed to see further signs of traction in the economy before it trimmed back the stimulus.

“This is a very sensitive market and particularly sensitive to any notion that tapering will come too soon,” said Quincy Krosby, market strategist at Prudential Financial in New York.

“No one wants to be selling if the data reaches the point when the Fed begins to specifically talk about tapering. The market doesn’t wait for the Fed to move. It will move before. That’s how it operates.”

Ms. Krosby added that Mr. Bernanke went off script and, in his effort to be transparent, “he confused the market.”

According to the minutes of the April 30 to May 1 policy meeting, which were released on Wednesday, “a number” of officials were open to reducing large-scale asset purchases as early as the June meeting, but disagreement continued on what conditions would suffice to begin that move.

Investors have increasingly turned their attention to when the Fed’s $85 billion monthly bond purchase program might end or slow. The stimulus has been a major force behind a rally in United States equities that has helped the S.& P. 500 and the Dow industrials to double-digit gains.

The Dow Jones industrial average was down 80.41 points, or 0.52 percent, at 15,307.17. The S.& P. 500 was down 13.81 points, or 0.83 percent, at 1,655.35. The Nasdaq composite index was down 38.82 points, or 1.11 percent, at 3,463.30.

The S.& P. 500 rose as high as 1,687.18 and fell as low as 1,648.86 in Wednesday’s trading session while the Dow rose as high as 15,542.40 and fell as low as 15,265.96.

The price of the benchmark 10-year Treasury note fell 30/32, to 97 14/32, and the yield rose to 2.04 from 1.93 on Tuesday.

Five-Lawyer Gordon & Rees Group Jumps to SNR Denton

A team of five commercial litigators has moved from Gordon & Rees to SNR Denton in San Francisco.

Partners Fletcher Alford, Laura Geist and Douglas Scullion came to the international behemoth last month, bringing associates Kelly Fair and Anna Rassouli with them. The team practices commercial litigation and class action defense, serving clients in the financial services and insurance industries. Alford, who spent nearly 23 years at Gordon & Rees, said the group wanted to join a firm with a global footprint in light of the increasingly global nature of commercial litigation.

"I really enjoyed my time [at Gordon & Rees] and have the utmost respect for the people there," he said. "But SNR Denton is a very exciting place, an expanding and growing global firm that I think will be a great platform for my practice."

The firm got even more global this fall, when partners from SNR Denton, Canadian firm Fraser Milner Casgrain and French firm Salans signed off on a three-way union, which will result in an approximately 2,500-lawyer firm, Dentons.

Now, the megafirm wants to expand its ranks in California, said Sonia Martin, managing partner of the San Francisco office. Martin said she would like to use lateral hires to deepen the office's practices in Indian law and tribal representation, IP, insurance regulation and corporate work. And she added she has been looking to add litigators with the Gordon & Rees team's expertise for some time -- the office was founded to do insurance litigation, and that remains its focus.

"They do what we do. It's a natural fit," she said. "They really boost our bench strength in San Francisco in the core area."

The group from Gordon & Rees also complements the office's work in insurance regulation, Martin added. Many of the team's clients already turned to SNR Denton for regulatory assistance, Geist said. Most of those clients are expected to stay with the trio of partners after their move, she added.

"It was pretty nice for us to be able to combine with the folks here and bring our litigation and class action experience to the table," Geist said.

SNR Denton has not traditionally recruited from regional firms like Gordon & Rees, several people in the legal industry said. But the firm may be looking beyond its typical sources of talent to grow in the San Francisco Bay Area.

"It's a fiercely competitive market for talent, and it's gotten fiercer in the recent past," law firm consultant Kent Zimmermann said.

Subscribe to The Recorder

You must be signed in to comment on an article

Sign In or Subscribe
">

Five-Lawyer Gordon & Rees Group Jumps to SNR Denton

A team of five commercial litigators has moved from Gordon & Rees to SNR Denton in San Francisco.

Partners Fletcher Alford, Laura Geist and Douglas Scullion came to the international behemoth last month, bringing associates Kelly Fair and Anna Rassouli with them. The team practices commercial litigation and class action defense, serving clients in the financial services and insurance industries. Alford, who spent nearly 23 years at Gordon & Rees, said the group wanted to join a firm with a global footprint in light of the increasingly global nature of commercial litigation.

"I really enjoyed my time [at Gordon & Rees] and have the utmost respect for the people there," he said. "But SNR Denton is a very exciting place, an expanding and growing global firm that I think will be a great platform for my practice."

The firm got even more global this fall, when partners from SNR Denton, Canadian firm Fraser Milner Casgrain and French firm Salans signed off on a three-way union, which will result in an approximately 2,500-lawyer firm, Dentons.

Now, the megafirm wants to expand its ranks in California, said Sonia Martin, managing partner of the San Francisco office. Martin said she would like to use lateral hires to deepen the office's practices in Indian law and tribal representation, IP, insurance regulation and corporate work. And she added she has been looking to add litigators with the Gordon & Rees team's expertise for some time -- the office was founded to do insurance litigation, and that remains its focus.

"They do what we do. It's a natural fit," she said. "They really boost our bench strength in San Francisco in the core area."

The group from Gordon & Rees also complements the office's work in insurance regulation, Martin added. Many of the team's clients already turned to SNR Denton for regulatory assistance, Geist said. Most of those clients are expected to stay with the trio of partners after their move, she added.

"It was pretty nice for us to be able to combine with the folks here and bring our litigation and class action experience to the table," Geist said.

SNR Denton has not traditionally recruited from regional firms like Gordon & Rees, several people in the legal industry said. But the firm may be looking beyond its typical sources of talent to grow in the San Francisco Bay Area.

"It's a fiercely competitive market for talent, and it's gotten fiercer in the recent past," law firm consultant Kent Zimmermann said.

Subscribe to The Recorder

You must be signed in to comment on an article

Sign In or Subscribe
">

Chrysler Quarterly Profit Jumps

DETROIT (AP) — Strong U.S. sales powered Chrysler to a healthy third-quarter profit.

The company on Monday reported net income of $381 million, up 80 percent from $212 million a year earlier. The profit was due mainly to a 13-percent sales increase in the U.S., where Chrysler does three quarters of its business. The company sold nearly 417,000 cars and trucks in the U.S. under the Jeep, Dodge, Ram, Fiat and Chrysler brands.

Under the ownership of Italy's Fiat SpA, the Detroit company has been transformed since its 2009 trip through bankruptcy protection. It has posted profits since early last year and is now propping up Fiat, which is struggling with dropping sales in Europe.

Unlike its Detroit rivals General Motors Co. and Ford Motor Co., Chrysler has few sales in Europe and its profits aren't being eroded by losses there.

Chrysler's sales have been helped by a series of revamped cars and trucks that began rolling out in 2010, including the Jeep Grand Cherokee SUV, the Ram pickup and the Chrysler 200 midsize sedan.

The company's quarterly revenue rose 18 percent to $15.5 billion as global sales increased 12 percent.

The company earned $1.29 billion in the first nine months of the year, and it reaffirmed a 2012 profit forecast of $1.5 billion.

Chrysler Group LLC also repeated estimates that it would ship 2.3 million to 2.4 million vehicles worldwide this year, as well as generate $65 billion in revenue.

CEO Sergio Marchionne, in an e-mail to employees, said the competition isn't showing any signs of vulnerability, so the company will have to keep fighting for its share of the market.

"We are going in the right direction, and I simply ask you to keep faith in Chrysler and in each other and keep working to shape this company," he wrote.

Chrysler plans 66 new, revamped or special-edition cars and trucks by 2014, Marchionne wrote.

Even though it had a good quarter, Chrysler's rapid growth is starting to slow. Its U.S. sales last quarter fell about 4 percent from the second quarter and it faces increased competition from Honda and Toyota. The two Japanese companies have recovered from last year's earthquake and tsunami that hobbled their factories and left them short of models at U.S. showrooms.

U.S. Consumer Sentiment Jumps to a 5-Year High

The Thomson Reuters/University of Michigan’s preliminary October reading on the overall index on consumer sentiment came in at 83.1, up from 78.3 in September, and the highest since September 2007, the survey showed on Friday.

The new buoyancy among consumers comes shortly after the nation’s unemployment rate tumbled in September to its lowest in nearly four years.

“We are getting some quite interesting signals from consumer sentiment and employment data,” said David Sloan, an economist at 4Cast in New York.

The sentiment reading was well above the median forecast for a decline to 78 among economists surveyed by Reuters as consumers felt better about the economy.

The compilers of the survey said consumers felt better about the economy in both the long and the short term.

“What changed was how they evaluated economic conditions,” the survey director, Richard T. Curtin, said in a statement. “Economic conditions during the year ahead were expected to be ‘good’ by more consumers, and more consumers expected ‘good’ economic times over the next five years.”

The survey’s gauge of consumer expectations jumped to 79.5 from 73.5, well above an expected reading of 74. Expectations were at their highest since July 2007.

The survey’s barometer of current economic conditions rose to 88.6 from 85.7 and was above a forecast of 86.

Also on Friday, the Economic Cycle Research Institute, a New York-based independent forecasting group, said its measure of future economic expansion pushed higher last week, while the annualized growth rate rose to its loftiest in more than a year.

The institute said its Weekly Leading Index increased to 127.7 last week from a revised 126.2 the previous week. The index’s annualized growth rate accelerated to its highest level since May 2011, at 5.7 percent from 4.6 percent.

A separate report showed producer prices rose more than expected in September as the cost of gasoline surged, but underlying inflation pressures were muted in a sign the Federal Reserve has room to carry out its new monetary stimulus program.

“If you take out food and energy, you are essentially looking at a number that didn’t go anywhere and was actually probably a little weaker than expected,” said Cary Leahey, an economist at Decision Economics.

“These kinds of energy prices are debilitating to the economy and it is one of the reasons why we haven’t been able to get any kind of a glide speed above a 2 percent annual rate.”

The Labor Department said on Friday its seasonally adjusted Producer Price Index increased 1.1 percent last month. Economists polled by Reuters had expected prices at farms, factories and refineries to rise 0.7 percent after climbing 1.7 percent in August.

The Labor Department’s report agreed with the sentiment survey that showed consumers’ one-year inflation expectations fell to 3.1 percent from 3.3 percent.

BlackBerry Maker Posts a Loss, but Stock Jumps in After-Hours Trading

Without naming the rivals to the BlackBerry 10 phone, Thorsten Heins, the company’s president and chief executive, acknowledged that Apple’s iPhone 5, new smartphones running Google’s Android operating system and Windows Phones will make life even more of a struggle for RIM before its rollout.

“There’s many new products coming in so the market is going to get tougher, more challenging,” Mr. Heins told analysts in a conference call Thursday, adding that that will most likely force RIM to cut prices further.

After twice delaying the BlackBerry 10, the company has promised to deliver the smartphone sometime next year.

Many analysts had expected nothing but bad financial news for the quarter long before Thursday. “The street is largely giving RIM a pass on this quarter as it readies the important BlackBerry 10 launch,” said Bill Kreher, an analyst at Edward Jones. “The fact of the matter is that the company has really placed all its bets on BlackBerry 10.”

There was no concealing how far RIM’s fortunes had declined. Its net loss for the second fiscal quarter, which ended Sept. 1, was $235 million — better than the $518 million loss in the previous quarter, but a steep fall from the net income of $329 million in the same quarter a year earlier. Shipments of BlackBerrys last quarter were 7.4 million, compared with 10.6 million a year earlier.

The company said revenue in the most recent quarter was $2.9 billion, up from $2.8 billion in the first quarter though down 31 percent from $4.2 billion a year ago. Analysts had expected a far steeper year-on-year drop in revenue of 41 percent and some feared that the company had dipped into its cash holdings. But RIM actually increased its cash thanks to sharp cost-cutting.

As a result, RIM’s stock jumped more than 20 percent in after-hours trading. In the regular session, before its announcement, it closed at $7.14 a share. RIM’s shares have been as high as $24.74 over the last year.

Several analysts said they were now focused on next year. The new smartphones will be based on a new and more sophisticated operating system and are promised for the first calendar quarter of next year.

“I don’t think anything good can come out until they release BB 10, aside from selling the company or something else in the strategic review,” said Peter Misek, an analyst with Jefferies & Company.

But Shaw Wu, an analyst at Sterne Agee, said the dominance of Apple and Android had closed the window of opportunity for RIM’s BlackBerry 10 strategy and turned the company’s last great hope into its biggest problem.

“It’s about survival now, it’s not about BlackBerry 10,” said Mr. Wu, who is based in San Francisco. “That’s almost secondary. The battle now is staying alive and looking after your current customers. It’s not really clear that their core customers are looking for BlackBerry 10.”

Unless BlackBerry 10 is an exceptional hit, which is far from certain, Mr. Wu said that RIM might be able to continue for only one or two more years. Some analysts had expected that the company would report that subscriber growth had stalled. At a developers’ conference earlier this week, Mr. Heins  said that the number of BlackBerry users had instead grown to 80 million, up from 78 million.

Unlike other smartphone makers, RIM continues to directly profit from every active BlackBerry handset long after its sale. RIM receives monthly subscription fees from carriers for every BlackBerry in exchange for routing the phone’s data through its own, closed network. Under normal conditions, the network allows RIM to provide high security for corporate and government users and it reduces the amount of wireless data consumed by all BlackBerrys.

But it became apparent in the conference call that growth was driven by sales in markets like South Africa and Indonesia where prices and service revenue are low.

“They’re pushing the subscriber base up by offsetting the loss of very high-value customers in markets where it’s critical to build momentum now,” said Charles S. Golvin, an analyst at Forrester Research. “It’s a matter of the market getting away from them.”