Wall Street Drifts Higher

Wall Street Drifts Higher 

Wall Street

Stocks edged higher on Tuesday, with Home Depot at a record high and buoying the blue chips, while investors awaited Congressional testimony from the Federal Reserve chairman, Ben S. Bernanke, on Wednesday. By afternoon the Standard & Poor’s 500-stock index had gained 0.2 percent, the Dow Jones industrial average rose 0.3 percent and the Nasdaq composite was 0.2 percent higher. The housing market recovery helped Home Depot report higher quarterly sales and earnings, prompting the world’s largest home improvement chain to boost its sales outlook for the year. Its shares rose 2.8 percent to $78.92 after hitting a record of $79.40. Housing will continue to be a tail wind for stocks and an engine for economic growth in the foreseeable future, according to Jack De Gan, chief investment officer at Harbor Advisory Corp. in Portsmouth, N.H. The United States economic calendar is thin and the market will continue to be vulnerable with the S.&P. and Dow industrials near record highs. However, the expectation of continuing accommodative monetary policy from the Federal Reserve should continue to lend support to equities. “There’s not strong enough evidence one way or another to change monetary policy,” Mr. De Gan said, adding that with all the support the Fed has given to equities there are also “fundamental reasons” driving the market. The small- and mid-cap Russell 2000 continued to face technical resistance at the 1,000 point level but was within two pints of its all time closing high. Goldman Sachs said in a note to clients dated May 20 that it expects the S.&P. 500 to be at 1,750 points by the end of the year, a 5 percent advance from Monday’s close, and predicted a 12-month rally to 1,825. The bank’s economists forecast above-trend growth in 2014 in the gross domestic product, for the first time in six years. The Carnival Corporation sharply reduced its full-year earnings outlook for the second time in less than three months. The company said it expected lower revenue because it has lowered ticket prices to attract passengers after a string of prominent mishaps. Its United States shares dropped 5.6 percent. Best Buy, the consumer electronics chain, reported weaker-than-expected quarterly sales and warned that investments to win back shoppers could squeeze earnings in the near term. Its shares fell 5.1 percent. Shares of JPMorgan Chase rose 2 percent on reports that shareholders had defeated a proposal to strip the bank’s chairman and chief executive, Jamie Dimon, of his chairman title. Apple’s chief executive, Timothy D. Cook, testify before Congress after a Senate report on the company’s offshore tax structure said it had kept billions of dollars in profits in Irish subsidiaries to pay little or no taxes to any government. Apple shares fell 0.1 percent. The medical device maker Medtronic reported a better-than-expected quarterly profit driven by strong international sales and its shares rose 5 percent. The Eurofirst 300 index of top European shares ended the trading day up 0.1 percent, as traders took the uncertainty over central banks’ stimulus policies as a cue to lock in some of the recent sharp gains. Earlier in the day, Japan’s Nikkei share index crept to a five-and-a-half-year high. The yen shed some of Monday’s gains after Japan’s economy minister said his comments the previous day that the government was satisfied with the level of the currency had been misinterpreted. A recent downward slide in precious metals also resumed. Gold was down 1.1 percent, at $1,368 an ounce, as the stronger dollar left it facing its eighth fall in nine sessions. Silver dropped as much as 2.2 percent to trade near the two-and-a-half-year lows hit during a 6 percent slide on Monday, when an unidentified investor sold off a large holding. While low inflation prospects have dulled demand for traditional hedge gold, silver has fallen out of favor with investors recently as demand from the solar energy sector has sagged and silver mining has increased. “The market was caught horribly short yesterday,” said David Govett, head trader at Marex Spectron, “so there was some buying this morning. But the dollar started to get stronger and gold didn’t manage to break above $1,400, so sales started again.”

source link: www.nytimes.com

Internet sales taxes

Cracks in objections to Internet sales taxes

Some say collecting and remitting sales taxes would be too complicated and expensive for smaller businesses. But that doesn't seem to be the case.

ebay

FORTUNE -- Taxes on Internet sales have been talked about since the birth of e-commerce. In those early Web days, one major objection was that taxes would be impossible to collect, given all the various local and state sales-tax regimes. Forcing merchants to adhere to the laws of thousands—or dozens if only state sales taxes are considered—of jurisdictions would have made it impossible for even the largest online store to do business.
Developments in software and services have long since solved that problem, but you wouldn't know it from the protestations of eBay (EBAY) CEO John Donahoe. He claims that the Marketplace Fairness Act—passed by the Senate on Monday and now on its way to the House—is unfair because of the burden it would put on small businesses. By that he means businesses with less than $10 million in revenue or fewer than 50 employees. He's OK with enabling states to collect taxes from companies larger than that.
 The bill would exempt retailers with less than $1 million in annual revenue, which would include most eBay merchants. The bill provides a framework for sellers to collect and pay the taxes. While many jurisdictions already require that consumers pay taxes on Internet purchases, those requirements are usually ignored.
 MORE: Stocks are too expensive 
Ebay is pretty much alone among big companies in opposing the tax, ever since Amazon (AMZN) recently signed on. Before that, the non-taxation of Internet sales was often referred to as "the Amazon loophole," so strongly did the company oppose such taxes. Big retailers like Wal-Mart (WMT) and Target (TGT) of course support the legislation, as it would put them on a more-equal footing with online merchants. Donahoe told NPR on Monday that remitting taxes to all those different jurisdictions would be too burdensome for those "small" companies. "If it's allowed to play out things will still sell in eBay marketplace," he said, "but it will be larger and larger sellers that are doing the selling in the small guy will, over time, slowly be squeezed out." Unlikely. The "small guy" will have access to all kinds of help, including from services like TaxCloud, Avalara, Exactor and others, often at low cost or even no cost. In an open letter to Donahoe, the Marketplace Fairness Coalition, composed of retailers like Best Buy (BBY), Target, and Amazon, noted that "basic software currently available in the marketplace today makes it easy for sellers to calculate any state's sales tax with a simple click-of-the-button and the Marketplace Fairness Act requires states to provide such software to businesses free-of-charge." The bill would also limit liability for those merchants using such software. The New York Times' Andrew Ross Sorkin noted last month that the bill could create "a cottage industry of companies that will offer services to collect the tax, including eBay, which has made a reputation trying to streamline the selling process for merchants." The Senate passed the bill on a bipartisan vote of 69-27, but it faces a challenge in the House, where "taxes bad" is the extent of many Republican lawmakers' thinking. The effort in the House to pass a similar measure was introduced by a Republican, Steve Womack of Arkansas (home of Wal-Mart), and has the support of lawmakers on both sides of the aisle. But Tea Party-backed Republicans such as Bob Goodlatte of Virginia have voiced objections over the bill's "complexity." Majority Leader Eric Cantor, also of Virginia, hinted that he might move to make big changes to the Senate version, but it's not yet clear what those changes might be. He hasn't yet set a date for a vote.

Source Link: http://tech.fortune.cnn.com