DARTLINE INVESTOR

November 5, 2009, 4:05 pm … Closing Thoughts … The Standard & Poor’s 500 index closed up 20.13 to 1066.63, as the Labor Department said the number of newly laid-off workers seeking unemployment benefits fell to 512,000 last week, the lowest level since January and fewer than economists had forecast. Initial claims are considered a gauge of the pace of layoffs. The report fanned optimism that the government’s monthly report on employment Friday might prove better than expected. Analysts project that the unemployment rate rose to 9.9 percent in October. The biggest jump in productivity in six years drove hopes that lower costs will boost corporate profits. The report also illustrated that many employers remain reluctant to hire. The government said the amount of output per hour worked rose 9.5 percent in the July-September quarter. Meanwhile, retailers posted sales gains for the second straight month in October after more than a year of sliding sales. The retail industry posted a 2.1 percent sales gain for October, according to an International Council of Shopping Centers-Goldman Sachs tally. Investors are looking for any sign that consumers are willing to spend more as the holiday shopping season approaches. The news was hot, misplaced noise on the logic that a little better is not worse? … Bond prices were mixed. The benchmark 10-year Treasury note fell, pushing its yield up to 3.54 percent from 3.53 percent late Wednesday. Mixed economic data in recent weeks have made it difficult for investors to get a sense of where the economy is headed, leading to choppy trading. The Federal Reserve pointed to hopeful signs about the economy Wednesday but also said it would keep interest rates low for “an extended period” to help stimulate growth. While the market often jumps at good news, investors can’t shake fears that the economy won’t be able to maintain the 3.5 percent pace of growth seen in the third quarter as government stimulus programs wind down. … The Russell 2000 index of smaller companies rose 17.24, or 3.1 percent, to 580.36. … The dollar fell against other major currencies. Gold prices rose. Light, sweet crude fell 78 cents to settle at $79.62 per barrel on the New York Mercantile Exchange. … Overseas, European shares recovered from early losses to end higher after central banks left interest rates unchanged. The Bank of England said it would pump more money into the economy after news last week that the country remains in recession. Britain’s FTSE 100 rose 0.4 percent, Germany’s DAX index added 0.7 percent, and France’s CAC-40 gained 1.1 percent. Earlier Thursday, Japan’s Nikkei stock average fell 1.3 percent.

… LA Times reports after spending more than a year in suspended animation, the commercial real estate industry is expected to hit bottom in 2010 with a wrenching thud. Owners of business properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs and workouts with their lenders as the market finally faces up to the reality of its diminished conditions, according to a report set for release today. The long-awaited blood bath, however, will benefit investors who are able to swoop in to take advantage of record bargains. Unlike the formerly overheated housing market, which is in the process of being purged through foreclosures and sellers’ growing willingness to lower their asking prices, the business of buying and selling commercial real estate has been stuck in neutral since the recession kicked in. So far, potential sellers have been loath to lower their prices, and banks have been unwilling or unable to lend money for purchases. Even financially strapped owners who are unable to keep up their mortgage payments haven’t had to let go because their lenders don’t want to take back distressed properties in a down economy. Banks instead have often been willing to renegotiate loan terms, a practice drolly referred to as “extend and pretend,” as both lenders and debtors hoped the market would turn around.