The U.S. index of Leading Economic Indicators (LEI) rose 0.3% in October, marking the seventh consecutive monthly gain, while the Philly Fed regional survey of business activity rose to 16.7 in November, a bit better than expected, reports Bob Willis for Bloomberg. Claims for jobless benefits remained at a 10-month low.

Semiconductor stocks are leading technology stocks lower after a downgrade on 10 semiconductor stocks, including Intel (NASDAQ: INTC) – which is down nearly 5.5% after the Bank of America/Merrill Lynch downgrade, reported Tenzin Pema for Reuters. Merrill said the supply of chips is growing faster than the demand, putting earnings at risk. So far in today’s trading, the Semiconductor HOLDRS (NYSE: SMH) is down about 4% and the SPDR S&P Semiconductor ETF (NYSE: XSD) is also down about 4%. (For more stories on the semiconductor industry, please see our semiconductor category).

A computer glitch this morning at the Atlanta airport, the busiest in the nation, caused cascading flight delays across the nation, reported Brian Knowlton of The New York Times. Air traffic controllers were forced to program flight plans manually. So far in today’s trading, the iShares Dow Jones Transportation Average Index Fund (NYSE: IYT) is down nore than 2% and  the Claymore/NYSE Arca Airline ETF (NYSE: FAA) is down more than 3%. (For more news on the airline industry, please see our airline category).

On the corporate front, there was more downbeat employment news. AOL, which is being spun off from Time Warner (NYSE: TWX), is asking their employee base of about 6,900 for 2,500 volunteers to be laid off, reports Nat Worden of the Dow Jones Newswires. If the voluntary program is unsuccessful, there will be involuntary layoffs announced by AOL. (For more stories on the media industry, see our media category).

Tony D’Altorio contributed to this article.

The Federal Reserve policymakers are anticipated to leave interest rates at record lows in order to entice Americans to continue to spend. They’re also expected to address the financial and economic strides the country has made in recent months, reports Jeannine Aversa for the Associated Press.

The service sector grew for the second consecutive month. The reading didn’t meat analysts’ forecasts, but the reading was above 50, indicating expansion. There was also encouraging news about the labor market: the number of private sector jobs lost in October was down for the seventh consecutive month, report Sara Lepro and Tim Paradis for the Associated Press.

Retailers had their best month in ages in October. Individual chains will report sales tomorrow, and the numbers are expected to be their strongest yet, The New York Times reports. Enthusiasm is on the restrained side; after all, consumers still aren’t spending at the level that economists would like. Sales of women’s clothing, for example, are 12.2% lower than they were in October 2007. SPDR S&P Retail (NYSEArca: XRT) is up about 0.25% this morning. (Why name brands are back in favor).

Time Warner (NYSE: TWX) posted a quarterly profit and stated that its business outlook had improved in the third quarter. The television and film units outperformed, but media subscriptions and ad sales are down, reports David Goldman at CNNMoney.

Comcast (Nasdaq: CMCSA) also reported earnings this morning, noting that they jumped 22% in the third quarter. Losses in television subscriptions were offset by gains in their Internet and voice divisions, reports Lance Whitney at Cnet News. PowerShares Dynamic Media (NYSEArca: PBS) is up about 1% this morning; Time Warner is 5.2%; Comcast is 4.9%.

The massive selloff was led by the Shanghai Composite Index, which tumbled 6.7% and entered a bear market. According to Lynn Thomasson and Adria Cimino of Bloomberg, the index is the worst performer this month among 89 benchmark indexes. In August, the index lost nearly 22%.

In more encouraging news, the Institute for Supply Chain Management-Chicago said that its business barometer rose to its highest level since September 2008.  The Index in August rose to 50, which is the dividing line between contraction and expansion.  Courtney Schlisserman of Bloomberg states that the index also showed gains in orders and an improvement in its employment index.

One of the world’s largest entertainment companies, Walt Disney (DIS), announced it is buying Marvel Entertainment (MVL) for $4 billion in cash and stock, which many believe will enable Disney to grab exposure to a broader viewing audience.  Despite the news, the PowerShares Dynamic Media (PBS) was down nearly 0.2% in morning trading.

In other news, oilfield services company Baker Hughes (BHI) announced that it will buy BJ Services Co. (BJS) in a cash and stock deal worth an estimated $5.5 billion. The deal marks the first major oil services takeover for the year.

Overall, all three major U.S. indexes were down in morning trading.  The Dow Jones Industrial Average dropped 0.8%, the S&P 500 gave up 1% and the Nasdaq was down 1.1%.

For more stories on China, visit our China category.

Kevin Grewal contributed to this article.

Spending in the communications sector is on pace to decline 1% this year, the first notable loss in at least 40 years, according to a report by a private equity firm. But what’s interesting is what’s projected to take place in the future:

• Stephanie Clifford for The New York Times reports that in five years, advertising spending in magazines will finally have rebounded after five years of decline — but at $9.8 billion, it will still be nowhere near the $12.9 billion it was in 2008.
• The video game industry will grow so much that it will dwarf the newspaper industry, which is fighting for its life.
• Where ad dollars are spent is shifting. The segments where advertising will decline most rapidly in 2009 are newspapers (down 18.7%); consumer magazines (down 14.8%); radio (down 11.7%); and broadcast television (down 10.1%). Ad spending on mobile phones is projected to go up 18.1%, and internet spending is projected to gain 9.2%.

The shift in media is already evident in media ETFs. PowerShares Dynamic Media (PBS) consists of companies that have a presence in both cable television and/or internet, including Comcast (CMCSA), Google (GOOG) and Walt Disney (DIS).

• PowerShares Dynamic Media (PBS): up 33.2% year-to-date

For more stories about the media, visit our media category.

The Commerce Department reported that U.S. GDP contracted at a pace of 1% from April to June, signaling that the recession is easing up. This barometer of the nation’s health has now contracted four straight quarters for the first time on record, dating to 1947, The reading was better than the 1.5% annualized contraction expected.

The fate of the government’s “cash for clunkers” program appears to be up in the air.  Many are glad to receive a little extra cash for their clunkers, but it is unclear just how much longer the program will be in existence.  It appears that just after one week of being implemented, the program has exhausted its $1 billion allocation.  This morning, official CARS.gov Web Site indicated that $780 million remained in the coffers, states Jennifer Liberto and Peter Valdes-Dapena of CNN Money.

In the earnings world, Chevron (CVX) reported a decline in second-quarter earnings of 71%.  This was well below Wall Street’s expectations of $0.97/share and was driven by many forces, including a decline of 79% from its oil and gas production arm.  The news sent the iShares Dow Jones U.S. Energy  (IYE) down nearly 0.3% in morning trading.

In the media arena, the Washington Post (WPO) reported a second-quarter profit and, unlike most other companies, didn’t come from cost-cutting measures. It relied on its other business to get it through the media slump.  The news sent the PowerShares Dynamic Media (PBS) up nearly 1% in morning trading.

Things are not looking much sunnier across the pond. Eurostat, the European Union’s statistic division, revealed that consumer prices have fallen for the second straight month.  Prices declined by 0.6% and was much higher than expected.  The drop in prices has been driven by the surge in unemployment that the EU nations have witnessed.

All three major U.S. indexes were up this morning, with the Dow Jones Industrial Average adding 0.3%, the S&P 500 0.2% and the Nasdaq 0.4%.

For more stories on energy, visit our energy category.

Kevin Grewal contributed to this article.

The Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods, or durable goods, unexpectedly dropped 2.5% in June. The decline was driven primarily by weak demand in commercial aircraft and the troubles faced by the automotive industry.  Economists were expecting a drop of 0.6%.

More earnings came out today, as well:

• Media giant Time Warner (TWC) reported a decline in profits of 34%.  The decline was caused by slow DVD sales and a decline in revenue from the company’s publishing, movie and online properties arm.
• The nation’s third-largest wireless service provider, Sprint Nextel (S), said its losses widened in the second quarter as revenue and subscribers continued to decline.  The company reported a loss of $0.13/share and wasn’t even close to Wall Street’s expectations of a loss of $0.02/share.
• ConocoPhillips (COP) reported a decline in earnings by 76%, slightly beating expectations.  On a positive note, the oil company said that daily production was up about 7% from a year ago.
• Virginia-based General Dynamics (GD) said that earnings dropped by 3.6%, a hair above analysts’ expectations.

In the technology world, Microsoft (MSFT) and Yahoo (YHOO) have formed an Internet partnership that will enable Microsoft to gain access to Yahoo’s search engine audience.  The deal is expected to increase revenues at both companies and put pressure on search engine leader Google (GOOG).  The ink on the deal isn’t expected dry for a couple more years.  The news sent the Technology Select Sector SPDR (XLK) down nearly 0.6% in morning trading; MSFT is 10.3% and YHOO is 1.3%.

Overall all three major U.S. indexes are down, with the S&P 500 giving up nearly 0.5%, followed by the Nasdaq, down 0.4% and the Dow Jones Industrial Average down nearly 0.3%.

For more stories on technology, visit our technology category.

Kevin Grewal contributed to this article.

A report by the New-York based Conference Board reported that its consumer confidence darkened in July as worries of unemployment offset any enthusiasm from the rally in the markets.  The Board’s Consumer Confidence Index fell to 46.6 from 49.3 in June – far from economists’ expectations of 49. To put it into perspective, a reading above 90 would signal that the economy is on solid footing.

On a positive note, there is more good news out of the real estate sector.  The Case-Schiller Index, which tracks home prices in 20 of the nation’s largest metropolitan cities, rose for the first time since 2006.  The index indicated that the value of U.S. homes grew 0.5% month over month and 13 of the 20 cities in the index showed gains.  Unfortunately, the sector is still not completely in the clear: on an annual basis the index is down 17.1%.  The news sent the MacroShares Major Metro Housing (UMM) up 2.3% in intraday trading.

In the earnings arena, United States Steel (X), reported a second-quarter loss as demand was badly hurt because of the global recession.  The nation’s largest steel maker reported a loss of $2.92/share and beat Wall Streets expectations of $3.45/share.

Media giant Viacom (VIA) posted second quarter earnings of $0.49/share, a hair above the $0.48/share forecast by analysts. The company cited weakness in advertising and its filmed entertainment business as the causes of its 32% profit decline.  The news sent the PowerShares Dynamic Media Portfolio (PBS) down 1% in morning trading; VIA is 5%.

Deutsche Bank (DB) reported an increase in net income of 68% driven primarily by strong investment banking numbers.

Overall, the Dow Jones Industrial Average and the Nasdaq was down 1%, while the S&P 500 dropped about 1.2% in morning trading.

For more stories on real estate, visit our real estate category.

Kevin Grewal contributed to this article.

As a sign of the trouble the newspaper industry happens to be in, the PowerShares Dynamic Media (PBS) doesn’t have any newspapers in its top 25 holdings. Last July, the fund counted Gannett (GCI) and The New York Times Company (NYT) as top holdings, but they’ve since been demoted. The fund instead now focuses on television and internet components.

Massachusetts Senator John Kerry  held a hearing on the future of newspapers and how the federal government can help, reports The Wall Street Journal. Newspapers are rapidly losing money as advertisers turn to search engines and readers increasingly get their news online – and for free.

A federal subsidy could help the industry, but what newspapers would have to give up to get it may not be worth it. For one, a subsidy could jeopardize the integrity of political endorsements. And if readers knew their paper was federally subsidized, would they trust that the reporting was truly unbiased?

• PowerShares Dynamic Media (PBS): up 17.7% year-to-date; Liberty Media 5.19%; The DIRECTV Group 5.15%; Time Warner Inc. 5.15%

Gross domestic product (GDP) measures the total goods and services output by the United States and is utilized to sum up the income generated by production over a specific time period for the a particular country.  For the first quarter of 2009, this important economic indicator dropped at a 6.1% annual rate, stretching the nation’s contraction in production for three straight quarters, reports Reuters. This decline was well below economists’ expectations of -4.9%.

The good thing is that the GDP numbers indicate that there is hope in the future.  Of all the numbers that go into calculating GDP, consumer spending, which accounts for nearly two-thirds of the U.S. economic activity, rose 2.2% and was boosted by a 9.4% jump in purchases of durable goods.

Despite failing some stress tests, banks have actually been upgraded by Fox-Pitt analysts, enabling the sector to advance.  Additionally, Citigroup (C) is pleading with the Treasury to allow them to pay employees bonuses.  The financial giant seeks to pay retention bonuses to infiltrate morale in a firm that has been hit hard by the financial crisis, states the Associated Press.  The Financial Select SPDR (XLF), jumped 3.5% in intraday trading, despite being down 15.9% for the year.

The global economic downturn has really taken its toll on the oil industry.  Europe’s largest oil company, Royal Dutch Shell, reported a 62% decline in first quarter profits and a 49% decline in sales.  To put it into perspective, the company states that it pumped 3.5% fewer barrels of oil per day as compared to the previous year.

On a positive note, cable provider Time Warner (TWX) beat Wall Street’s expectations by reporting earnings of $0.75/share as compared to the $0.58/share forecasted by analysts. Time Warner states that despite higher costs, an increase in subscribers fueled the better-than-expected performance.

President Barack Obama has officially hit the 100-day mark.  These first 100 days for the new administration has surely been busy with a crippled financial system, surging unemployment rates and huge opposition to a record-breaking spending plan.  However, it appears that some of the sectors that Obama has been trying to fix are the ones that have performed the best over the past three months. Hopefully, the President’s administration can keep the ball rolling in a positive direction.

The Dow Jones Industrial Average was up about 1.9%, the S&P 500 gained about 2.1% and the Nasdaq jumped nearly 2.5% in morning trading.

Kevin Grewal contributed to this article.

U.S. stocks and exchange traded funds (ETFs) oscillated between positive and negative territory this morning on better-than-expected earnings reports by JP Morgan Chase (JPM) and an unexpected drop in jobless claims.

JP Morgan beat analysts’ expectations, reporting earnings of $0.40/share as compared to the $0.32/share forecasted.  Additionally, the firm posted record fixed-income trading revenue and siad that it can repay U.S. rescue funds. This report, in combination with last week’s earnings release by Wells Fargo (WFC), suggests that there could be a little life left in the financial sector.

Unfortunately, the financials are still not completely in the clear.  JPMorgan says that it still expects loan defaults to increase, losses to increase in credit cards, home equity loans, mortgages and commercial real estate loans and the activity in fixed-income to taper off, states Madlen Read of the Associated Press.  These issues, in combination with over-leveraged financing, has kept many investors skeptical of the overall health of the sector, sending the Financial Select SPDR (XLF), down about 1.8% in intraday trading.

Yet another blow has been dealt to the housing industry, killing any hope of stability for now.  New U.S. housing starts fell more then expected in March by 10.8% to a seasonally adjusted annual rate of 510,000 units, reports the Associated Press.

To add fuel to the fire, new building permits declined by 9%. Completion of building projects rose by 3.5%, however. Additionally, foreclosure filings rose 24% in the first quarter from a year earlier, putting a further damper on home pricing.  A combination of the aforementioned news took its toll on the homebuilders, sending the SPDR S&P Homebuilders (XHB) down about 1.6% in intraday trading, despite being up 0.8% year to date.

On a positive note, new jobless claims fell more than expected for the second straight week.  The Labor Department reported that initial unemployment claims dropped to a seasonally adjusted 610,000 from a revised 663,000 the previous week.  This was significantly below analysts expectations of 655,000 and the lowest level since late January,states Christopher S Rugaber of the Associated Press. Generally, initial jobless claims reflect the pace of layoffs of companies and are considered a timely indicator of the state of the economy.  With this in mind, things are starting to look a little better.

Keep in mind that we aren’t in the clear, though.  The total number of Americans receiving unemployment benefits has surpassed the 6 million mark, for the first time ever and most analysts believe the labor market will remain weak for the remaining of the year on fears that employers are reluctant to hire until a full economic recovery is under way.

Some more big news that hit the markets were the following earnings reports:

• Nokia (NOK) beat analysts’ expectations by posting a smaller loss than expected on profits of $161 million.
• Southwest Airlines (LUV) posted an enormous loss on falling traffic and plans to trim its workforce.  The airline posted a loss of $0.12/share, much larger than the $0.01/share analysts forecasted.  The majority of this loss was a result of their fuel hedges.
• Media giant Gannett Co. (GSI), the publisher of USA Today, beat analysts’ expectations by posting profits of $0.34/share.  Analysts expected profits of $1.44 billion, or $0.24/share

The Federal Reserve released its latest “Beige Book” yesterday, which contained a little bit of economic optimism.  The data this time around showed declining demand for appliances, furniture and other goods, reports V. Dion Haynes for The LA Times. Overall, the report said, economic activity declined further or remained weak. The report is released eight times per year.

The Dow Jones Industrial Average was in the red, down about 0.65%, the S&P 500 was up about 0.12% and the Nasdaq climbed about 0.72% in morning trading.

Kevin Grewal contributed to this article.