Finance news. My opinion.

U.S. stocks ended a choppy day of trading lower Monday, as a dismal economic outlook overshadowed earlier optimism fueled by takeover talk.

After starting the session sharply higher and seesawing throughout the day, the Dow Jones industrial average (INDU) lost 39 points, or 0.4%, the S&P 500 (SPX) ticked down 4 points, or 0.4%, and the Nasdaq (COMP) composite dropped 20 points, or 0.9%.

It’s been a rocky ride for Wall Street over the past couple of weeks, as investors have shifted their focus between positive company news and gloomy economic readings.

Disappointing reports on jobs, manufacturing and economic activity battered confidence last week, dragging the Dow and S&P lower for the second straight week.

With little economic news on tap Monday, investors turned their attention to talk about takeover activity. But an early comeback failed to gain steam, ending in yet another down day for the three major indices.

"We’re trying to reverse some of those losses," said Steven Goldman, a market strategist at Weeden & Co. "But since economic data has been showing gradual signs of weakness there’s still an overshadowing concern that will likely keep any rally narrow and in a defensive tone."

Economy: No major economic releases were scheduled Monday, so investors were already looking ahead to the government’s revised reading of GDP due Friday, said Dave Rovelli, managing director of U.S. equities at Canaccord Adams.

Gross domestic product (GDP), the broadest measure of the nation’s economic activity, is forecast to be revised down to an annual rate of 1.4%, a significant drop from its previous reading of 2.4%.

"Everybody knows it’s going to be revised down, so everybody is nervous and just waiting for that number," said Rovelli. "But because it’s the last two weeks of August and stocks tend to drift higher when trading volume is so light, you may see the market start to rally until that GDP number comes out."

Last week, investors were hit with a slew of dismal indicators, including a report showing that weekly jobless claims surged to the highest level since November high risk personal loans.

Companies: Hewlett-Packard put in a bid early Monday for data-storage company 3PAR, offering $1.6 billion, a 33.3% premium on the offer proposed by rival Dell last week. Shares of 3PAR (PAR) spiked nearly 45%, while Dell’s (DELL, Fortune 500) stock slipped 1% and shares of HP (HP) fell 2%.

Shares of fertilizer producer Potash (POT) closed slightly higher after its board of directors told shareholders to reject a hostile takeover bid of $38 billion from mining company BHP Billiton (BHP), saying "superior offers or other alternatives are expected to emerge." Shares of BHP fell less than 1%.

The Gulf Coast Claims Facility, led by Kenneth Feinberg, will take over the BP oil spill claims process Monday. The claims will be paid using the $20 billion escrow account established by BP (BP). Shares of the oil company dipped less than 1%.

World markets: European shares closed higher. The CAC 40 in France rose 0.8%, Britain’s FTSE 100 gained 0.8% and the DAX in Germany was up 0.1%.

Asian markets slipped. Japan’s benchmark Nikkei index ended down 0.7%, the Hang Seng in Hong Kong fell 0.4% and the Shanghai Composite edged lower 0.1%.

Currencies and commodities: The dollar rose against the euro and the U.K. pound, but fell versus the Japanese yen.

Oil futures for October delivery slipped 72 cents to settle at $73.10 a barrel. Gold for December delivery edged down 30 cents to $1,228.50.

Bonds: Treasury prices were higher, and the yield on the 10-year note fell to 2.60% from 2.62% late Friday. Bond prices and yields move in opposite direction.

Market breadth: Market breadth was negative. On the New York Stock Exchange, losers outnumbered winners by two to one on volume of 865 million shares. On the Nasdaq, decliners beat advancers by nearly three to one on volume of 1.7 billion shares. 

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Local stocks remained steady or declined slightly in Friday trading.

Golden Enterprises Corp. (Nasdaq: GLDC) dropped 9 cents or 2.7 percent to finish at $3.20. BioCryst Pharmaceuticals (Nasdaq: BCRX) declined 15 cents or 2.6 percent to close at $5.69.

Hibbett Sporting Goods Inc. (Nasdaq: HIBB) dipped 63 cents or 2.3 percent to end the day at $26.91.

Other local stock action included:

Regions Financial Corp. (NYSE: RF) lost 1 percent or 7 cents to finish at $7.40.

Books-A-Million (Nasdaq: BAMM) dropped 9 cents or 1.5 percent to close at $5.99.

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Energizer Holdings Inc. posted a profit of $104 million in its third fiscal quarter, up 43 percent from $72.7 million a year earlier.

Net sales for the quarter ended June 30 increased 8 percent to nearly $1.1 billion from $997.5 million, thanks to a favorable impact of currencies totaling $18 million, the launch of the new Schick Hydro shaving razor and the inclusion of Edge and Skintimate shaving products, which added $41 million to net sales for the quarter, the Town and Country, Mo.-based company (NYSE: ENR) said.

Earlier this year, Energizer Chief Executive Ward Klein unveiled the Schick Hydro — the company’s most advanced razor yet — after five years and $150 million in research and development.

The product launch is an escalation of its razor war with market leader Procter & Gamble, which also has operations in St. Louis.

"We are pleased with the initial launch results of the new Schick Hydro men's shaving system," Klein said in the earnings release Tuesday. "Our distribution build was the fastest we have ever executed, and this true innovation in men's shaving is being well received by consumers No teletrack payday loans."

But negative trends continue in the battery category, prompting Energizer to start a "thorough review of our household products division," Klein said.

An increasing number of devices are using built-in rechargeable battery systems, particularly in developed markets, hurting demand for primary batteries. "This trend, coupled with aggressive competitive activity in the U.S. and other markets, could put additional pressure on segment results going forward," Energizer said in its earnings release Tuesday. "In light of this trend, the company is evaluating a number of initiatives to better position its Household Product business including options related to capacity requirements, the mix of product offerings, go-to-market strategies and investment initiatives. We expect this evaluation to continue for the next three to six months."

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Wichita home sales in June were down about 1 percent from the same period a year ago, according to data from the Wichita Area Association of Realtors.

The change came as the final closings were being reported from the federal government’s home buyer tax credit programs. Buyers utilizing the program had to close on their purchases by June 30.

A total of 896 homes were sold in the Wichita area during June, down from 906 in June 2009 no fax payday loans.

June’s numbers followed three consecutive months in which sales increased year-over-year.

Of the homes sold last month, 769 of them were existing homes and 127 were new.

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Stocks skidded in the first half of the year, particularly in the second quarter. But investors probably haven’t seen the worst of it.

Welcome to the second half.

With the S&P 500 down more than 15% from the highs of late April and all three major indexes at more than 6-month lows, a bigger selloff could be brewing.

"By year-end we could be roughly where we are now, but between now and then, we could be substantially lower," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.

Going back to World War II, a decline of 15% off the highs has often turned a correction into a bear market — a drop of 20% to 30% — according to Standard & Poor’s chief investment strategist Sam Stovall.

Late Wednesday, S&P cut its 12-month price target for the S&P 500 to 1,190 from 1,270, citing the "intensifying headwinds."

The Dow is down 7.6% year-to-date, with most of the losses coming in the past two months when the Dow lost more than 10% on worries that the European debt crisis and signs of slowing in Asia will send the U.S. economy back into recession.

"What we saw in May and June was investors trying to understand that it’s going to be a tepid recovery at best," said Alan B. Lancz, president at Alan B. Lancz & Associates.

"We’ll be selective buyers on the dips," he said. "But the weaning off the government stimulus, China slowing down, BP’s oil spill and the sovereign debt issues are going to be an overhang for some time."

Fear of a double dip: Worries that debt-plagued European nations such as Greece and Spain will default on their borrowings were somewhat mitigated by European leaders establishing a nearly $1 trillion fund to provide support. But with governments struggling to implement cutbacks and the euro flailing near a four-year low, concerns remain in play.

"The European issues highlight the fact that fiscal deficits cannot run indefinitely and that we need to fix some of our long-term debt issues," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management."

Congress’ budget chief said Wednesday that the outlook is daunting considering the level of debt cash advance flexible payments.

Recent reports showing that the housing market is slumping again and that job growth remains anemic have added to worries about the strength of any U.S. recovery.

Volatility: The last two months have also brought a return to the level of volatility seen at the height of the financial market crisis in 2008.

"I think we’ll continue to see volatility, with a lot of it to the downside," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management.

He said that between overly optimistic earnings forecasts getting trimmed and the reality of certain tax cuts expiring at the end of the year, the choppiness is unlikely to calm down.

Corporate earnings growth in question: Despite all the turmoil, analysts have barely cut earnings estimates for the second quarter and second half of 2010, and all of 2011, according to Thomson Reuters.

"Since mid-May, analysts have ratcheted their second-quarter estimates down modestly, but they seem to be taking a ‘wait-and-see’ approach for the next 18 months," said John Butters, Thomson’s senior research analyst.

Earnings are expected to have risen 27.2% in the second quarter versus a year ago, down just slightly from mid-May estimates. Financial sector forecasts have come down the most — which is fitting, since those forecasts were raised the most in late April, when the stock market was at its highs.

Analysts currently expect 2010 earnings to rise 34% from a year ago, the biggest year-over-year growth since Thomson began tracking the info in 1998.

For 2011, analysts expect year-over-year growth of 17%.

On the upside, the P/E ratio for the S&P 500 is 12.3 versus the five-year trailing average of 14.2.

"Either the market is overdoing the fears and there’s room for stocks to rally, or the market is ahead of the analysts and the estimates need to come down," said Butters. 

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The mortgage meltdown is hitting the African-American and Latino communities harder than whites, a new study has found.

Of borrowers who took out mortgages between 2005 and 2008, some 8% of both African-American and Latino borrowers have lost their homes to foreclosure, compared to 4.5% of non-Hispanic whites, according to a study by the Center for Responsible Lending, released Friday.

The racial and ethnic disparities continued even after controlling for income differences. The center’s research shows that African-American and Latino borrowers were about 30% more likely to get higher rate subprime loans than white borrowers with similar risk characteristics.

Of the total pool of homeowners, 17% of Latinos have lost their homes to foreclosure or are at imminent risk of losing their homes, while 11% of African-Americans are in that position. By comparison, 7% of non-Hispanic whites have lost their homes or are about to.

The reason for the disparity is that African-Americans and Latinos were marketed riskier, higher cost loans that became unaffordable during the mortgage and economic crisis, said Keith Ernst, the center’s director of research.

"These are more expensive mortgages," he said. "They are more likely to fail."

African-American and Latino communities are likely to lose $373 billion in declining property values between 2009 and 2012.

The report also found that an estimated 2.5 million foreclosures were completed between 2007 and the end of 2009. This is roughly one in every 20 mortgages outstanding at the time of the crisis.

More than eight in 10 of these foreclosures were on owner-occupied homes with mortgage originated between 2005 and 2008.

An estimated 5.7 additional foreclosures are imminent.

"This crisis still has a long way to go," Ernst said. 

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Investors are having a hard time getting a handle on the stock market lately. And many are getting worried.

The whipsaw returns are producing flashbacks to late 2008, when triple-digit swings in the Dow Jones industrial average were the norm.

Wall Street’s worry list is long: the European debt crisis, huge U.S. government deficits, saber-rattling between North and South Korea, and the shakiness of the economic recovery.

With so much unsettled, the urge to go on the defensive is understandable.

"We’ve had a big recovery," says Matt Berler, co-manager of the Osterweis Fund (OSTFX), which has a reputation as a haven in a falling market. "Now that it’s behind us, we could see markets gyrate, and really end up going nowhere."

If that’s not for you, your options aren’t limited to shifting more heavily into bonds or cash. You can stick with stocks, but take a more cautious approach.

A select group of mutual fund managers have shown they’re masters of defense, capable of picking the stocks most likely to emerge unscathed when trouble strikes. They can cushion the blow further by selling some of their riskier picks and shifting heavily into cash.

Below are seven funds with top records during two especially steep recent declines in the Dow Jones industrial average: Jan. 14, 2000, to Oct. 9 2002, when the dot-com bubble burst, and Oct. 9, 2007, to March 9, 2009, when subprime mortgage troubles spread throughout the financial system.

The seven, screened by Morningstar, are diversified stock funds that finished in the top 3 percent among their peers during both downturns.

But these funds are about more than just defense. They’ve held up in rising markets as well. All have 10-year records placing them in the top 10 percent among their peers.

The seven, in alphabetical order:

— American Century Equity Income (TWEIX) has one of strongest records among large value funds over the past 15 years, with low volatility no fax payday advances. Lately, the fund has bet heavily on utilities stocks, typically good defensive plays in times of trouble.

— Calamos Growth & Income (CVTRX) supplements its stock holdings with convertibles, stock-bond hybrids giving the holder the option to swap from a bond to a stock at a predetermined price. It’s a way to get more potential upside than with regular bonds, along with a steady income stream and reduced volatility.

— Forester Value (FVALX) was the lone U.S. stock fund to finish 2008 with a gain, up 0.4 percent, while nearly every other fund suffered a double-digit loss. Forester Value trailed 79 percent of its peers last year as the same defensive characteristics, that protected it in 2008, held it back when the market turned around.

— Parnassus Equity Income (PRBLX) emphasizes mature dividend-paying stocks that can ride out downturns. The strategy has landed the fund in the top 1 percent among its peers over the past 3- and 5-year periods.

— Royce Special Equity (RYSEX) buys stocks of small companies with clean balance sheets and steady cash flow, and rarely trades them. It’s helped the fund post an average 11.5 percent return per year over the last 10 years.

— Sequoia Fund (SEQUX), which typically holds just 10 to 25 favored stocks, and sticks with them for years. Its latest top holding, at 20 percent of the portfolio, is Berkshire Hathaway, Warren Buffett’s investment company.

— Yacktman Focused (YAFFX) focuses on large-company stocks. Its performance ranks in the top 1 percent of its peers over the last 3, 5- and 10-year periods. Lately, it has found safety in beverage stocks that aren’t buffeted by economic cycles.

If the recent slide extends into a bear market — defined as a drop of 20 percent or more — these funds should serve investors well.

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Comstock Saloon opens today at the junction of North Beach and the Financial District.

The men behind the bar at Hayes Valley's Absinthe, Jeff Hollinger and Jonny Ragin, have teamed with Absinthe owner Bill Russell-Shapiro to open a contemporary take on an old-time saloon. Comstock will have a full menu of classic cocktails, and the bartenders will custom craft drinks to individual tastes.

The bar, at Columbus and Pacific avenues, occupies a building that has been a bar since 1907. That heritage inspired the space's design, which includes many decorative pieces from the last century.

A front "saloon" room contains a 20-foot long bar, five wooden booths and some small tables and chairs.

The adjacent main dining room has banquettes and tables; Carlo Espinas, late of Camino in Oakland, is the chef.

In addition to Comstock Saloon, Russell-Shapiro is also working on plans to expand into the former Citizen Cake location in Hayes Valley.

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The number of Americans filing initial claims for unemployment insurance fell for the third straight week, according to weekly government data released Thursday.

There were 444,000 initial jobless claims filed in the week ended May 1, down 7,000 from a revised 451,000 the previous week, according to the Labor Department’s weekly report.

Economists surveyed by Briefing.com had expected new claims to fall to 440,000 in the latest week. The number of new claims was the lowest since the 442,000 reported in the week ended March 27.

The Labor Department also tracks the four-week moving average of initial claims, which smoothes out volatility in the measure. That number was 458,500 for the week, down 4,750 from the previous week’s revised average of 463,250.

"Things are lining up for recovery, but it’s slower in its evolution than we expected," said Carl Riccadonna, U.S. economist for Deutsche Bank in New York.

A lack of economic confidence could be keeping hiring managers on the sidelines, according to Riccadonna. Jobless claims at or below 400,000 could help to boost morale.

"It’s not helped when you look on TV and see developments in Europe and people worried about the impact of trans-Atlantic contagion," he said.

The number of people filing continuing claims totaled 4,594,000 in the week ended April 24, the most recent data available. That figure was down 59,000 from the preceding week’s revised 4,653,000 claims, and slightly below the 4,600,000 economists expected, according to Briefing.com. Continuing claims were down for the fifth straight week.

The four-week moving average for continuing claims totaled 4,649,000, up 8,000 from the preceding week’s revised average of 4,641,000.

Continuing claims data exclude people whose benefits expired or those who have moved to state or federal extensions. It reflects those filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks.

In April, lawmakers in the House and Senate approved an extension of unemployment insurance until June 2. The move followed a number of tax breaks andother measures designed to spur job growth and help push the current 9.7% unemployment rate lower.

Although many economists say the measures are slowly working, states are still feeling the pinch and jobless claims would have to fall further, faster, before the national unemployment rate ticks lower no fax pay day loan.

There has been increasing debate over whether the decline in continuing claims is due to real job creation or people exhausting their benefits. Riccadonna says there’s no easy way to tell, but that "if the pace of job creation continues to accelerate, we can be increasingly confident that the drop in continuing claims is people finding jobs and not just rolling off the books."

Jobless claims fell the most in Florida, with a dip of 2,766 in the week ended April 24, primarily due to fewer layoffs in the construction, service, and manufacturing industries.

North Carolina and New York also saw dips in the 2,600 range. California, Massachusetts and Oregon topped the list of states with the largest increases in initial claims.

The report follows a spate of upbeat economic data in recent weeks. But that has been overshadowed by fears that Greece’s debt crisis could spread throughout Europe.

Riccadonna said that he is not overly concerned about the impact on the United States in the short term, beyond some "exchange rate effect." However, a significant decline in the euro to $1.15 could hurt the competitiveness of U.S. exports, which he says has been a key driver in the recovery so far.

Three separate reports on Wednesday pointed to strong signs of jobs growth when the Bureau of Labor Statistics releases its official read of the unemployment situation on Friday. Economists surveyed by Briefing.com forecast that the U.S. added 187,000 jobs in April, compared to a gain of 162,000 in the prior month.

Still, total hiring would need to be 200,000 or more a month to push the rate down significantly, he said. Given recent economic data, he thinks the "big one" could come as early as May.

Although the nation is expected to have added jobs last month, many economists forecast the unemployment rate, also due Friday, to remain unchanged at 9.7%. Riccadonna is a bit more optimistic, forecasting a slight tick down to 9.6%.

"Really substantial gains in excess of 300,000 should be sufficiently jarring enough to wake up hiring managers and also the financial markets," said Riccadonna. "We’re turning the corner. The question is how fast?"  

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Severn Bancorp Inc. pared its loss in the first quarter, setting aside less money to cover potential losses in its loan portfolio.

The Annapolis-based parent of Severn Savings Bank (NASDAQ: SVBI) lost $528,000, or 10 cents a share, for the three months ended March 31. That was an improvement from the $1.3 million, or 18 cents a share, the company lost in the period a year earlier.

During first quarter 2010 Severn added $2.5 million to its loan-loss reserves, down from $4.5 million a year earlier and $5.5 million in fourth quarter 2009.

Severn’s capital levels exceed the requirements for federal banking regulators to consider the bank “well capitalized,” it said in a press release Thursday no faxing pay day loans.

“While we are not satisfied with the loss for the quarter, we are encouraged by the improvement in asset quality and the prospects for improved performance for the remainder of 2010,” Severn CEO Alan J. Hyatt said in a statement.

Severn Savings Bank has four branches in Annapolis, Edgewater and Glen Burnie.

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