US stocks rise despite Syria

Strong car sales, revived merger and acquisition activity and an expected product launch from Apple have helped propel stocks higher in a week that also featured some major headwinds.

Despite uncertainty over Syria and a disappointing jobs report at the week's close, all three leading indices posted gains for the holiday-shortened week.

The Dow Jones Industrial Average rose 112.19 (0.76 per cent) to 14,922.50. The broad-based SP 500 advanced 22.20 (1.36 per cent) to 1,655.17, while the tech-rich Nasdaq Composite Index tacked on 70.14 (1.95 per cent) at 3,660.01.

Markets were closed on Monday for the Labor Day holiday.

The week's gains were a big improvement over August, which saw the steepest monthly declines for the Dow and SP 500 since May 2012.

Perhaps the week's biggest bright spot was US August auto sales, with the industry selling 17 per cent more cars than a year ago. General Motors, Ford and Chrysler all posted double-digit gains.

The robust auto sales lifted stocks on Wednesday and 'spilled over into better sentiment in general,' said Michael James, managing director of equity trading at Wedbush Securities.

Markets also digested Monday's news that Verizon would buy out Vodafone's 45-per cent stake in their Verizon Wireless joint venture for $US130 billion ($A143.16 billion). Verizon plans a record $US25 billion debt offering associated with the deal in the next week or two, a person close to the situation said.

On Tuesday, Microsoft turned heads when it announced a $7.2 billion acquisition of Nokia's handset business in a bid to become a bigger player in the smartphone business.

Some analysts see increased merger and acquisition activity as a sign of rising confidence in the economy.

Analysts were also cheered by an invitation from Apple announcing a September 10 event in California. The gathering is widely expected to launch two new versions of the iPhone, including a less expensive model expected to appeal to China and other emerging markets.

On Friday, The Wall Street Journal reported that Apple was preparing to ship iPhones to China Mobile in a long-anticipated deal. Apple closed the week 2.3 per cent higher at $498.22.

The news on autos, telecommunications and Apple helped offset Friday's disappointing jobs report. The Labor Department reported a gain of 169,000 jobs in August, below the 177,000 projected by analysts. The report also slashed the jobs estimates for June and July.

The report, while 'not a disaster,' was weak enough to suggest that the Federal Reserve will either delay its plans to taper its bond-buying program, or reduce the program even more gradually than previously thought, said William Lynch, director of investment at Hinsdale Associates.

'I don't think the economy, as sluggish as it is, can take too much in the way of tapering,' Lynch said.

Investors are also skittish over the Obama administration's efforts to launch a military strike on Syria in response to Syria's purported use of chemical weapons.

Crude oil prices Friday pushed to a 28-month high of $US110.53 in New York amid US-Russian tensions over Syria. But equity markets have reacted inconsistently to Syria news, sometimes dropping in recent weeks on Syria headlines, and sometimes not.

'Of all the risks out there, the one that has the highest probability to hurt the market in the near term is the Middle East situation,' said Scott Wren, senior equity strategist at Wells Fargo Advisors.

'The market's not as focused on it as I think it probably ought to be.'

Congressional debate on Syria is expected to dominate next week's news. The economic calendar is relatively light, with August retail sales and inflation data due on Friday.

The calendar also includes a September 12 meeting with Securities and Exchange Commission Chair Mary Jo White and leading exchanges in the wake of the August 22 outage at Nasdaq Stock Market caused by a tech glitch.

Anthony Conroy, a trader at BNY Convergex Group, predicted the market would trade in a 'tight range until we get more clarity on the Fed and more clarity on Syria.'

source: bigpondnews.com

Top Senate Dems urge Obama to take unilateral action on debt ceiling

WASHINGTON –  If President Obama were to break the impasse with Republicans over raising the debt limit by taking unilateral action, such a move would have the potential to set off a firestorm of controversy and spark a protracted legal battle.

Top Senate Democrats say, go for it.

The White House has dismissed talk that Obama would rely on unusual measures to raise the nation's debt limit without Congress' approval, but administration officials also have warned that the country could default on its debt and trigger a new economic crisis if lawmakers don't increase the limit on borrowing.

Senate Majority Leader Harry Reid, D-Nev., is among those urging Obama to consider options like invoking the 14th Amendment to the Constitution to find ways around the $16.4 trillion legal cap on government borrowing. The amendment states that the "validity of the public debt of the United States ... shall not be questioned," which some lawmakers believe permits a way out of the debt limit jam.

The government hit the debt limit last month and is juggling the books to buy additional time for Congress to act. But those moves only buy a few weeks of wiggle room, which requires Congress to act -- likely by mid- to late-February -- to avoid a market-quaking default on U.S. obligations.

The White House has said emphatically that it does not believe that the 14th Amendment permits Obama to ignore the debt cap on U.S. borrowing, though it considered the question during the 2011 debt crisis.

"There is no Plan B. There is no backup plan," White House spokesman Jay Carney said Wednesday. "There is no alternative to Congress raising the debt ceiling."

A letter to Obama on Friday from Reid and Sens. Dick Durbin, D-Ill., Chuck Schumer, D-N.Y., and Patty Murray, D-Wash., doesn't mention the 14th Amendment, but aides to the senators said that's what they have in mind in urging the president to consider unilateral action.

"We believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis -- without congressional approval, if necessary," the letter said.

Battling House and Senate leaders have made virtually no progress on a strategy for legislation to lift the debt cap. House Speaker John Boehner, R-Ohio, insists that any debt increase be matched by equivalent spending cuts. Obama, buoyed by his re-election victory, says he won't negotiate as he did in 2011, when he traded a $2.1 trillion debt increase for tight spending limits on agency budgets and automatic, across-the-board spending cuts if a congressional "supercommittee" failed to reach a budget agreement.

"Senate Democrats cannot ignore their responsibilities for political convenience -- and the American people will not tolerate an increase in the debt limit without spending cuts and reforms," said Boehner spokesman Michael Steel.

The impasse has people on both sides scratching their heads over how it will be resolved. The anxiety is such that some on the left are urging Obama to mint a coin worth perhaps $1 trillion to be deposited at the Federal Reserve and drawn upon to meet government obligations.

source: foxnews.com