U.S. MARKET AVERAGES

After a lower opening and trading in the negative territory the major U.S. averages turned higher as traders think signs of economic slowdown due to hurricane damages might lead the Fed Reserve Board to slow its interest-rate hike.
In the first trading hour stock markets declined, affected by growing economic concerns after the Commerce Department released data, indicating the consumer spending for July exceeded personal incomes for the same month which happens for the second time during the last 46 years. The 1% growth in consumer spending contradicts the lower-than-expected personal incomes rise of only 0.3%.

A slower growth in the manufacturing sector, indicated by a report released by the ISM, as well as long-time recovery from Hurricane Katrina raised concerns among investors.

The market got a boost from the energy sector and the gold sector which was recently up 4.2% on weakness of the dollar which is explained with the report from the ISM. The airline sector fell 3.9%.

Healthcare, technology and telecommunication stocks also provided a lift to the market.

Auto stocks were down ahead of their monthly sales reports.

Retailers, led by Wal-Mart, Target Corp. and Costco Corp. posted better-than-expected sales for August.

Costco Wholesale posted a 9% growth in comparable August sales. Haggar Corp. said it has agreed to be purchased by Infinity Associates, Perseus and Symphony Holdings for $212 million.

IBM has signed a global contract with Dutch global bank ABN AMRO worth about 1.5 billion euro over 5 years.

Novartis, Swiss pharmaceutical company, offered $4.5 billion to gain full control of U.S. vaccines maker Chiron. Novartis already owns just over 42% of Chiron.

ECONOMIC NEWS

Construction spending in July was $1,099 billion, virtually unchanged from
June but up 6% from July 2004. Total non-residential construction spending
was $477 billion, down 0.3% from last month but up 3.1% from one year ago.

The Institute for Supply Management released a report, according to which the Purchasing Managers Index fell to 53.6 in August compared with 56.6 in July. It also showed that the Price Index rose to 62.5 in August from 48.5 in July on higher energy prices. The report indicated that the New Orders Index decreased to 56.9 in August from 60.6 in July. The Production Index fell to 55.9 this month vs. 61.2 in the previous. The employment Index declined to 52.6 in August against 53.2 in July.

The Department of Commerce released a report which indicates that personal spending in July has significantly increased to 1% compared with 0.8% in June matching economists’ expectations.
The report also showed 0.3% increase in personal income for July after an unrevised increase of 0.5% in June. Economists had expected growth of 0.6%.

In addition, the Commerce Dept. said that personal saving was a negative $58.8 billion in July compared to a positive $0.9 billion in June.

The Commerce Dept. also said that prices rose 0.3 percent in July after coming in unchanged in the two previous months. Excluding food and energy, prices rose by a more modest 0.1 percent in July after coming in unchanged in June.

The U.S. Department of Labor revealed Thursday that initial jobless claims came in at 320,000 for the week ended on August 27, an advance of 3,000 from the previous week's revised total.

The 4-week moving average for initial claims, which flattens out the week-to-week volatility, rose 1,250 to 316,750. Continuing claims for the week ended on August 20, the most recent week for which the government has data, rose 36,000 to 2.607 million.

Truck and auto sales for August are forecasted to drop vs. the previous month. Economists expect car and light truck sales dropping to an annual rate of about 14.1 million from July's 17 million, fueled by automakers' offer of employee discounts.


INTERNATIONAL MARKET NEWS