Business and Finance

Stock futures are declining as strong earnings from U.S. companies are being overshadowed by a week’s worth of disquieting economic reports from China and Europe.

The Dow Jones industrial average futures are down 27 points to 12,974 and Standard & Poor’s 500 futures are off 1.6 points to 1,387.3. Nasdaq 100 futures are down less than a point at 2,730.50.

The Commerce Department is expected to report Friday that for the fifth time in six months, more Americans bought new homes cash advance in one hour. On three days so far this week, housing reports have suggested that the worst is over in a sector that has dragged heavily on the U.S. economy.

But investors can’t seem to shake the thought of a hard landing for China, or of an slow recovery in Europe.

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The Federal Reserve paid $75.4 billion to the U.S. Treasury as an expanded bond portfolio generated $83.6 billion in interest income from its open-market operations last year.

The Fed

World stock markets were mixed Monday as doubts about Greece’s ability to follow through with tough economic reforms required under an international bailout overtook good news about the U.S. economy.

Benchmark oil rose fell below $107 per barrel while the dollar was higher against the euro but lower against the yen.

Britain’s FTSE 100 fell 0.4 percent to 5,941.15. Germany’s DAX dropped 0.6 percent to 7,114.64 and France’s CAC-40 lost 0.7 percent to 3,568.63.

Wall Street was poised to fall, with Dow Jones industrial futures down 0.3 percent to 13,130 and S&P 500 futures slipping 0.3 percent to 1,294.30.

Debt-loaded Greece recently qualified for a second multibillion dollar bailout after its private creditors took significant losses on their bond holdings to avoid losing even more money in a Greek bankruptcy. Now, new doubts are emerging about whether Greece will be able to deliver on austerity promises that were part of the bailout deal.

“Officials remain concerned about the ability of Athens to politically deliver on the tough economic-overhaul policies, especially considering that the forthcoming elections in Athens may mean new leaders aren’t as committed to reforms,” Stan Shamu, market analyst with IG Markets in Melbourne, Australia said in an email.

In Asia, Hong Kong’s Hang Seng Index fell 1 percent to 21,115.29 as falling home prices in China and its weak trade in the first two months of 2012 kept investors’ verve in check.

New home prices dropped in 45 Chinese cities in February, the official Xinhua News agency said, the result of government policies intended to cool property speculation.

Evergrande Real Estate Group lost 3.7 percent, and Industrial & Commercial Bank of China, the world’s biggest bank by market value, lost 1.5 percent.

Further evidence from the U.S. last week that its economic recovery is gaining strength buoyed stocks elsewhere in Asia. The U.S. is a crucial market for the region’s exporters.

The Dow Jones industrial average is up 8.3 percent this year, and the Nasdaq on Friday broke through 3,000 for the first time since the dot-com days more than a decade ago.

Japan’s benchmark Nikkei 225 finished higher for the fifth session in a row and recorded its highest close since a disastrous earthquake and tsunami on March 11, 2011. The index gained 0.1 percent to 10,141.99.

South Korea’s Kospi index added 0.6 percent to 2,047 and Australia’s S&P ASX/200 rose 0.3 percent to close at 4,290.80. Benchmarks in Singapore, Taiwan and Indonesia fell.

In mainland China, the benchmark Shanghai Composite Index gained 0.2 percent to 2,410.18. The Shenzhen Composite Index rose 1.1 percent to 993.75.

Benchmark oil for May delivery was down 32 cents to $106.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.95 to finish at $107.06 per barrel.

The euro fell to $1.3153 from $1.3171 late Friday in New York. The dollar fell to 83.08 yen from 83.36 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

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The price of oil is lower Wednesday, after the government reported that supplies rose last week, as analysts expected.

Gasoline pump prices continued to climb, rising to a national average of $3.811 per gallon.

Benchmark crude fell by 61 cents to $106.10 per barrel in New York. Brent crude, used to price oil imported by U.S. refineries, fell 6 cents to $126.16 per barrel in London.

The Energy Department said that supplies increased by 1.8 million barrels last week payday advance lenders. Gasoline supplies fell by 1.4 million barrels as refineries sold off remaining stockpiles of winter gasoline blends. Supply levels were near analysts’ estimates.

The government also says energy demand remains weak. Demand dropped 5.4 percent for oil and 7.2 percent for gasoline compared with the same week last year.

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The Federal Reserve is pushing back against some banks

WASHINGTON • U.S. service companies expanded in February at the fastest pace in a year, helped by a rise in new orders and job growth.

The Institute for Supply Management said Monday that its index of nonmanufacturing activity rose to 57.3, up from January’s 56.8 and the third straight increase. Any reading above 50 indicates expansion.

Expansion in the service sector coincides with the lowest unemployment in three years, five straight months of solid to strong job growth and rising consumer confidence.

The trade group of purchasing managers surveys roughly 90 percent of U.S. companies in all sectors outside of manufacturing. That includes retail, construction, financial services, health care and hotels.

Fourteen of the 18 industries that the survey tracks expanded in February. Real estate, rental and leasing, transportation and warehousing, construction, hotels and restaurants, and information technology firms were among those that reported growth.

Anthony Nieves, chairman of the ISM’s survey committee, said that most of the comments from the group’s members “reflect a growing level of optimism about business conditions and the overall economy.”

Companies expressed concerns about inflation and rising gas prices, Nieves said. A measure of prices paid by service firms jumped to the highest level in 11 months.

Still, the overall reading for the sector was the best since February 2011.

“February seems to be off to a strong start for the economy,” John Ryding, an economist at RDQ Economics, said in a note to clients. “The pickup in order growth was particularly encouraging,” he added, because it indicates that growth will likely continue.

A separate report showed factory orders fell 1 percent in January, the biggest decline in 15 months. Businesses sharply reduced orders for machinery, equipment and other so-called core capital goods, the Commerce Department said.

The decrease was largely expected after a tax cut expired at the end of last year. Even with the decline, orders have gradually been climbing back to near pre-recession levels.

Demand for services should continue to rise, according to the ISM report. A measure of new orders reached its highest point in a year.

The group’s employment index declined from its highest reading in six years. Still, it stayed at a level that suggests many service companies are adding workers.

That confirms other data that show service companies have stepped up hiring. The government said last month that service firms added 176,000 jobs in January, the most in four months.

On Friday the government issues its February jobs report. Economists expect another big month of job gains; the latest forecast predicts 210,000 total net jobs were added last month, according to a survey by FactSet.

Big job gains at service firms are necessary to reduce unemployment. Factories are creating a lot of new jobs, but the sector isn’t large enough to employ that many people.

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Even as lawmakers spent the fall debating its fate, the use of Missouri’s Historic Preservation Tax Credit surged at the end of 2011.

State officials authorized $90.8 million worth of the credits – which pay back a developer one-fourth of the cost to rehab a historic building – in the six months from July 1 to Dec. 31, 2011. That’s $18 million more than the entire 12 months prior and a pace similar to the program’s pre-recession heyday in the mid-2000s, when it funded the rehab of countless lofts, office buildings and single-family homes across St. Louis.

The quick clip of authorizations – which happen before a building is rehabbed (credits are cashed in after the project is done) – suggest that, after a few slow years, a new wave of redevelopment may be kicking off in St. Louis and Kansas City. But it also comes amid unrelenting pressure from Jefferson City lawmakers who say the historic tax credit, which is awarded to any rehab that qualifies, is gobbling up too much of the state budget.

The $91 million already approved this fiscal year is a bit higher than the full-year cap proposed in tax credit bills last fall — and well above the $75 million limit that a state tax credit panel endorsed in 2010. At this pace, authorizations would hit even the $140 million cap set on the program in 2009, before demand dried up in the recession.

A big reason for the surge is simple economics. Commercial real estate is starting to pick up. Building projects – including tax-credit funded rehabs – are moving again.

The activity also has Fred Lafser’s phone ringing. Lafser, a redevelopment consultant in Creve Coeur, does a lot of front-end tax-credit work, such as getting a building listed on the National Register of Historic Places and filing the historic credit application with the state.

“During the recession, people just weren’t calling with new projects. We went from the phone ringing all the time to the phone not ringing at all,” he said. “In the last six to nine months we’re getting a lot more phone calls.”

A company like Lafser’s will often start working nine months or a year before the state actually OKs a tax credit award, making him an early indicator, of sorts, for historic redevelopment. If Lafser is busy, the pipeline of tax credit projects likely will grow.

Still, it’s not clear that the state will hit its $140 million cap by July. Of the $90.8 million in authorizations through December, $3.9 million went to small projects that are exempt from the cap. And nearly two-thirds went to just two buildings: $31.3 million to turn the old Federal Reserve Bank of Kansas City into a hotel; and $27.5 million over four phases to renovate the Railway Exchange Building in downtown St. Louis. If no more large rehabs win authorization, there should be funds to spare.

Urban appeal

Of the 66 projects authorized for credits, just two – one each in Columbia and Boonville – were located outside the St. Louis or Kansas City metropolitan areas. In the 12 months ending last June 30, 15 of 125 recipients were outside the state’s two largest metropolitan areas, with much of the money going to two big projects in Springfield.

That urban-rural split helps to explain divisions in the General Assembly about the future of the historic tax credit. While The credits enjoy strong support from urban lawmakers – and House Speaker Steven Tilley, R-Perryville – Senate budget hawks, particularly from outstate districts, have long targeted them for cuts.

After last fall’s failed special session, few in Jefferson City expect anything to happen on the topic in this election year spring. Still, some are trying. Sen. Jason Crowell, R-Cape Girardeau, has filed a bill that would halt historic tax credit authorizations entirely for a year, and another that would place a one-year stop on redemptions of them.

In a recent hearing on the bills, Crowell blasted the credits, and the developers who use them, noting they consume more than $100 million a year from the state budget while funding for education gets cut.

“Our priorities are all screwed up,” he said. “If the No. 1 priority is rehabbing old buildings, and the hell with the children, it’s shameful.”

The historic program’s many supporters see it differently. They point to studies saying the credit drives enough investment to recoup its cost, and – coupled with schools and businesses – it has rebuilt both downtowns and neighborhoods across the state.

That’s what Brent Crittenden is trying to do.

An architect and developer, he was approved last year for about $1.6 million worth of historic tax credits to rehab 11 buildings in McRee Town, a long-battered neighborhood just north of the Missouri Botanical Garden. The biggest building is a new home for the City Garden Montessori school, and the rest will be rehabbed townhouses, with some infill new construction mixed in.

The townhouses are priced between $165,000 and the mid-$200,000s, which is comparable to similar-sized rehabs in many parts of south St. Louis. Absent the credits, Crittenden said, they would cost much more, too much to sell in this market. The project wouldn’t happen.

“It just wouldn’t make sense,” he said.

Where the money goes

Historic tax credit authorizations, July 1 - Dec. 31, 2012

County           Number         Value

STL City          50                $49.2 million

Jackson            9                $35.5 million

Clay                 3                $4.7 million

Boone              1                $1.2 million

STL County       1                $250,000

Cooper             1                $25,475

St. Charles       1                $17,500

Source: Mo. Dept. of Economic Development

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Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.

Bookings (DGNOCHNG) for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey.

The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year. At the same time, a strengthening auto industry may help keep factories at the forefront of the expansion that began in June 2009.

Oil prices hit a new nine-month high Thursday as the dollar fell and gas pump prices climbed closer to $4 a gallon across much of the country.

Benchmark crude prices rose by $1.55 to end the day at $107.83 per barrel in New York. That’s the highest price since May 4 of last year. Brent crude increased by 72 cents to finish at $123.62 per barrel in London.

The rise in oil prices has helped push retail gasoline prices to record levels for this time of year. Benchmark crude has increased 9 percent so far in 2012, and gas pump prices are up about 5 percent.

Retail gasoline prices added another 3 cents Thursday for a national average of $3.61 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has already topped $4 in California, Hawaii and Alaska. Gasoline is nearly $3.90 per gallon in New York and Connecticut. Analysts think we could see a national average of $4.25 a gallon by April.

The ongoing tension between western nations and Iran is continuing to drive oil prices higher.

Iran, the world’s third-biggest oil exporter, already has cut off shipments to Britain and France, and it may halt exports to other European countries. Iran also has threatened to close the Strait of Hormuz, a crucial waterway in the Persian Gulf through which one-sixth of the world’s seaborne exports flow every day.

Experts doubt Iran will try to dramatically cut shipments, given its dependence on oil sales. About half of the country’s revenue comes from crude. But many investors are snapping up oil contracts in case tensions escalate further.

“The Iranian influence remains as a major driver” in oil prices, independent analyst and trader Jim Ritterbusch said.

In addition to an oil embargo set to start this summer, European Union leaders said Thursday that the EU is preparing regulations that will put further financial pressure on Iran by keeping its banks from using a major financial clearinghouse no fax cash advances.

Oil prices got an extra boost Thursday afternoon as the dollar fell against the euro and other major currencies. Oil is priced in U.S. currency and tends to rise as the dollar falls and makes crude cheaper for investors with foreign money.

Oil prices are higher even though U.S. petroleum demand has been tanking compared to a year ago. The Energy Information Administration said Thursday that demand has dropped 6.7 percent for oil, and 6.1 percent for gasoline. The U.S. remains the world’s biggest oil consumer, but government data show that demand is growing the most overseas in developing countries like China.

Meanwhile, the price of natural gas fell after the government said supplies remain significantly higher than average for this time of year. Natural gas futures on Thursday fell by 2 cents to finish at $2.62 per 1,000 cubic feet in New York.

A boom in North American shale drilling has filled underground storage facilities across the country. The Energy Information Administration says supplies are more than 40 percent higher than the five-year average.

Major natural gas producers recently cut back on production, as prices linger around a 10-year low. But analysts say they’re not doing enough to reduce the glut.

“There’s still an avalanche of gas available right now,” said Gene McGillian, a broker and oil analyst at Tradition Energy.

In other energy trading, heating oil rose 2 cents to finish at $3.29 per gallon and gasoline futures rose by 3 cents to end at $3.11 per gallon.

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I did a double take when I recently saw a pile of blank VHS tapes for sale at a local Blockbuster store that was closing.

Granted those videotapes were only a tiny sliver of the store’s inventory being liquidated. But it seemed to me an irresistible metaphor for the anachronism that bricks-and-mortar video rental stores have become in the age of Redbox and Netflix.

Now movie rental chain stores are becoming an even rarer breed in St. Louis.

I made a round of calls to local Blockbuster stores this week and found that 10 out of 26 locations — including stores in Collinsville, St. Ann, and O’Fallon, Mo. — are in the process of closing.

Dish Network, which bought Blockbuster at a bankruptcy auction last year, has been fairly quiet about this current wave of store closings. When it first took over, Dish said it would keep open about 1,500 stores — or about 90 percent of the outlets.

But last month, the company told Reuters that it would shutter more stores than originally planned with some of those locations becoming customer-service points for Dish’s satellite TV services.

The company would not provide a list or a number of the stores that are closing.

“We remain committed to maintaining only those stores that we believe we will be able to operate profitably,” Danielle Johnson, a Dish spokeswoman, wrote in an email. She added that the company continues to focus on its mail rental service and a streaming service package available to satellite customers.

Of course, it should come as no surprise that physical movie rentals are on the decline as video on demand and streaming subscription services such as Netflix continue to gain traction.

According to the Digital Entertainment Group, movie rental sales in bricks and mortar stores plummeted 29 percent last year.

“My guess is at some point you’ll just have a kiosk model and the digital model and they will have a peaceful coexistence,” said Russ Crupnick, an analyst with the research firm The NPD Group.

But in the meantime, he expects there to continue to be a market — albeit a shrinking one — for DVD rentals. Redbox will pick up a lot of that demand. But Blockbuster can still be a player with its more extensive in-store selection compared to Redbox’s limited titles, he said.

“I think we’ve all stared at a kiosk and said, ‘Gee, there’s nothing here I want to watch,’” he said. “But at Blockbuster, you can always go in and say, ‘OK, I’ll watch ‘The Bodyguard’ again.’”

Among those perusing the store closing sale at the Blockbuster location on Lindell Boulevard earlier this week were St. Louis University seniors Tim Hoffman and Arthur Hermann.

Hermann used to regularly rent movies at Blockbuster until he and his friends started using Netflix’s streaming service about a year ago.

“That’s the only way I watch movies now,” he said.

Hoffman said he would miss Blockbuster’s movie sales, but he didn’t seem too heartbroken about the store’s demise. After all, he added, there are two Redbox locations just around the corner.

END IS NEAR FOR CRESTWOOD SEARS

The red and yellow “inventory blowout” signs are up around the Sears store in Crestwood Court.

This store is one of 80 nationwide that Sears said in December that it would shutter amid struggling sales. Still to come is the announcement of another 20 to 40 stores that the company will close.

Sears recently filed a notice with the state that the Crestwood store’s 102 employees could be laid off as soon as April 15. But Kim Freely, a Sears spokeswoman, said that a store closing date has not yet been set and that it could be later than that.

“When the store closes will be based on the needs of the liquidator and the needs of the store,” she said.

Earlier this week, sale prices around the store ranged from 15 percent off most appliances to 30 percent off clothing. But you can bet the discounts will get sweeter as the closing date nears.

Meanwhile, the fate of the rest of Crestwood Court remains unknown. The mall, of course, is mostly vacant. Many of the artists who have filled some of the empty storefronts in the last couple of years have to leave by the end of the month.

And now the mall’s website notes that it will be limiting hours and access to several areas starting March 1 because of the “pending redevelopment.”

But it’s unclear where those redevelopment efforts stand. The mall’s owner — Centrum Properties — had indicated it would present redevelopment plans to the city at the end of 2011 or early 2012, said Petree Eastman, Crestwood’s city administrator. But she said this week that she hasn’t heard a peep of late about when those plans might be presented to the city.

“I believe the Sears’ closure has changed the game a little bit and has probably affected how their numbers are working out,” she said.

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