Here is a look at some of Monday's top business stories
Hope of a Fed rate cut boost stocks
NEW YORK, Nov. 5 (UPI) -- Expectations that the U.S. Federal Reserve will slash interest rates once again this week drove up share prices in early afternoon trading Monday.
The blue-chip Dow Jones industrial average was 102.13 points higher, or 1.10 percent, to 9,425.67. The Nasdaq composite index, meanwhile, was up 39.07 point, or 2.24 percent, to 1,784,80.
The broader New York Stock Exchange composite index added 5.55 points to 563.15, while the Standard & Poor's 500 index was up 13.81 points to 1,101.03. The American Stock Exchange composite index was 2.09 points to 822.11, while the Wilshire Smallcap Index was up 7.55 at 664.60.
The Federal Open Market Committee will be meeting Tuesday, and Wall Street broadly expects policymakers to vote for yet another interest rate cut as the economy continues to weaken. If the FOMC does indeed vote to cut the key federal funds target rate once again, it would be the tenth cut this year.
The fed funds rate currently stands at 2.50 percent, and many investors expect the U.S. recession to be relatively short-lived, with recovery in place by the middle of next year if the central bank does indeed continue its aggressive easing policy.
Financial markets thus shrugged off the latest National Association of Purchasing Management report, which revealed earlier Monday that October's manufacturing index was at its lowest level ever, since the group began their studies in 1997. The index fell to 40.6 percent from 50.2 percent in September, with more than twice as many firms reporting weaker rather than stronger business activity, at 37 percent and 17 percent respectively.
In Europe, the London International Stock Exchange's blue-chip FTSE-100 index was up 79.60 points to 5,209.10, and the German DAX index was 148.54 points to 4,731.85. The French CAC-40 index was 115.94 stronger at 4,485.34.
Fed rate cut hopes also lifted Asian share prices broadly Monday, with demand for high-tech shares leading some of the biggest gains. A solid U.S. economic expansion is critical for the recovery of the larger part of Asia's export-oriented countries.
In Tokyo, the benchmark Nikkei 225 average closed up 63.76 points, or 0.61 percent, to close at 10,447.54, while TOPIX nudged up 0.36 points, or 0.03 percent, to 1.054.04.
Hong Kong's Hang Seng index rose 244.66 points, or 2.40 percent, to close at 10,430.72, and Taiwan's weighed index rose 82.03, or 2.05 percent, to 4,080.51. South Korea's composite index also gained 11.05 points, or 2.01 percent, to close at 561.62, while the Philippines' composite index picked up 4.15 points, or 0.42 percent, to 997.50.
But Southeast Asian markets saw some selling pressure, with the Thai Stock Exchange falling 1.23 points, or 0.45 percent, to 272.99, while Indonesia's Jakarta composite index fell 5.44 points, or 1.43 percent, to 375.21. Malaysia's Kuala Lumpur composite index dropped 3.80 points, or 0.64 percent, to 592.85, while Singapore's Straits Time index dipped 1.08 points, or 0.08 percent, to 1,340.49.
In South Asia, India's Mumbai Sensex 30 index fell 15.59 points, or 0.51 percent, to 3,037.01, while the Pakistan stock index tumbled 38.91 points, or 2.78 percent, to 1,360.90.
US service businesses take a downturn
WASHINGTON, Nov. 5 (UPI) -- Business activity in the U.S. service sector contracted sharply in October, according to a survey of the nation's purchasing and supply executives, released Monday by the National Association of Purchasing Management.
The monthly non-manufacturing "Report on Business" showed that business activity in the service sector registered a 40.6 percent level in October, a 9.6-point drop from September, indicating a sharp contraction in non-manufacturing economic activity.
Reports from U.S. purchasing and supply executives indicate that 15 different industry groups contracted or had no change from September, while only one sector (health services) indicated growth in October
"In October, NAPM's non-manufacturing business activity Index indicated a very abrupt decrease in activity in the non-manufacturing economy compared to September. Members report severe slowing of October business activity resulting from the aftermath of the Sept. 11 terrorist events which aggravated already weak business conditions," said Ralph G. Kauffman, head of NAPM's non-manufacturing survey committee.
Kauffman added that the events of Sept. 11, by increasing the level of uncertainty in the economy, also had the apparent effect of solidifying earlier tentative decisions by managers to reduce business commitments and employment. The results of these actions are strongly reflected throughout this month's report with declines noted by eight of NAPM's 10 non-manufacturing indexes.
Of the 10 indexes, six are primarily activity-oriented: business activity, new orders, backlog of orders, export orders, imports, and employment. Five of these registered record lows in October. The exception was imports, which decreased but did not reach a new low.
The indexes that increased were inventory sentiment, which rose to a near record high indicating that members have more inventory than they would like to have, and supplier deliveries, which indicated slower performance, mainly due to the effects of Sept. 11 on the transportation system. The transportation sector also had the highest rate of decline in new orders for the second consecutive month.
"Overall in October, non-manufacturing industries experienced the most dramatic slowdown in business activity since inception of NAPM's non-manufacturing report (in July 1997) Kauffman said. "All indexes of activity recorded reductions in October; with five indexes reaching record lows."
"One bright spot was the prices index which also reached a record low, indicating very little inflationary pressure on non-manufacturing industries at the present time," Kauffman added.
Mass. wants changes in Microsoft deal
BOSTON, Nov. 5 (UPI) -- Massachusetts will not go along with the federal government's proposed settlement of the Microsoft Corp. antitrust suit without major changes, setting the stage for possible protracted litigation, reports said.
State Attorney General Tom Reilly said he plans to protest the settlement at a court hearing Tuesday in Washington.
"Massachusetts will not sign the proposed agreement between Microsoft and the (Department of Justice) without major changes," Reilly said. He added he doubted such changes would happen prior to the hearing before U.S. District Judge Colleen Kollar-Kotelly.
Massachusetts is one of 18 states party to the suit filed against Microsoft more than three years ago by the Justice Department. The judge gave the states until Tuesday to decide whether to go along with the settlement announced Friday.
Reilly called for harsher penalties if Microsoft violates the deal and expressed hope he will be joined by other states, but added he did not know if that would happen.
"If we can get a core group of states, we can consider continuing litigation," Reilly said in Monday's Boston Herald.
The proposed 5-year federal consent decree imposes no penalties on Microsoft for previous anticompetitive practices, but does require the world's biggest software maker to provide programming interfaces with competitors' software, and bars it from discriminating against computer makers that favor competitors' software products.
"Microsoft is going to violate this agreement," Reilly said in Monday's Boston Globe. "That's their nature. Anyone that gets in their way, they crush them or they buy them."
Reilly said he believes Microsoft will be able to manipulate the tentative settlement to its advantage, and does not prevent Microsoft from bundling the Internet Explorer Web browser into its operating system, which he said would hurt competing software makers.
"The bundling issue was the essence of the lawsuit, and there's nothing to address it" in the tentative agreement, he said.
"There's no question in my mind that Microsoft will use this agreement to crush competition," Reilly said. "This agreement is not in the public interest."
After the proposed settlement was announced, Microsoft founder Bill Gates Jr. said he believed it was "a fair compromise on all sides" and "the right thing to do for our customers, the technology industry, and the economy."
