STOCKS NEWS US-Caterpillar slides after sales data

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1039 ET 18June2009-Caterpillar slides after sales data
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Caterpillar Inc (CAT.N) shares fell on Thursday after the company said that
retail sales of machines had declined at a faster pace in May. [ID:nN18388033]

The heavy machinery maker said world sales, including Cat Japan, fell 43
percent in the three months ended in May from the prior year versus a 39
percent decline for the three-month period ended in April.

Sales in North America slumped 57 percent, compared with a 51 percent drop
for the three-month period ended in April.

Shares slid 2.4 percent to $33.98 as the top drop on the Dow industrials.

Reuters Messaging:rm://Charles.mikolajczak.reuters.com@reuters.net
1028 ET 18June2009-Baird downgrades a trio of auto suppliers
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Robert W. Baird on Thursday downgraded three auto supplier companies,
citing lowered expectations for a potential recovery.

Both Johnson Controls Inc (JCI.N), the third largest North American
supplier and Gentex Corp (GNTX.O) were downgraded from "outperform" to
"neutral," while Harman International Industries Inc (HAR.N) was dropped from
"neutral" to "underperform".

Baird said that it does not expect a return to trend demand for the
industry until 2013.

For details, see [ID:nBNG413925]

Shares of Johnson Controls fell 3.2 percent to $20.30 while Gentex tumbled
8.5 percent to $11.56 and Harman dropped 3.8 percent to $18.51. The Dow Jones
U.S. AutoParts index .DJUSAP was down 1.5 percent to 102.03.

Reuters Messaging: rachel.chang.reuters.com@reuters.net
1016 ET 18June2009-Markets extend gains after data
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The Dow industrials and the S&P 500 added to gains while the Nasdaq turned
positive on Thursday after a reading of business conditions in the U.S.
Mid-Atlantic region came in much better than expected, suggesting a more stable
manufacturing sector.

The Dow Jones industrial average .DJI rose 0.9 percent to 8,572.65 while
the S&P 500 .SPX gained 1 percent to 919.65 and the Nasdaq .IXIC was up 0.3
percent to 1,812.82.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1014 ET 18June2009-May leading index increase largest in 5 years
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A forward-looking measure of the U.S. economy in May increased for the
second consecutive month, a private research firm said on Thursday.

The index of leading indicators, which is supposed to forecast economic
trends six to nine months ahead, rose 1.2 percent in May after a revised 1.1
percent increase in April, the New York-based Conference Board said.

The May increase was the largest since a 1.4 percent rise in March 2004.

"The recession is losing steam," said Ken Goldstein, a Conference Board
economist. "Confidence is rebuilding and financial market volatility is
abating."

Wall Street economists had forecast a rise of 0.9 percent after an initial
1.0 percent April increase.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1011 ET 18June2009-Philly Fed factory slump eases in June
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Manufacturing in the U.S. Mid-Atlantic area contracted in June for the
ninth consecutive month but much less severely than expected and far less than
in the previous month, a regional Federal Reserve survey released on Thursday
showed.

The Philadelphia Federal Reserve Bank said its business activity index rose
sharply to minus 2.2 in June from minus 22.6 in May. That was the highest
reading since September 2008, the report said.

That was well above economists' expectations of minus 17, based on the
median of forecasts among economists polled by Reuters.

For details, see [ID:nN18266955]

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1004 ET 18June2009 Equity market volatility expected to fall further-Goldman
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Volatility is expected to decline as the macro economy improves in second
half of 2009, said Goldman Sachs derivative strategists in a note. While the
CBOE Volatility Index .VIX has been falling, the longer-dated S&P 500 options
are forecasting extreme volatility of 30+ for the next five years.

Given their view that equity market volatility should fall dramatically,
they recommend selling longer-dated options to fund core views, the note said.
"S&P 500 options are forecasting extreme volatility of 30+ for the next five
years; however, at this point in the business cycle volatility, which is
anticipatory, is typically near its long-run average of 16," they said.

For volatility investors, they suggest selling forward variance to capture
volatility falling. For those looking for leveraged upside, they advise
calendar call spreads. "Looking globally, we would sell S&P 500 options to fund
upside in China or EEM," they said. "Investors looking to hedge should consider
put spread collars and calendar put spreads for low/no upfront cost hedges, the
note said.

Reuters Messaging: doris.frankel.reuters.com@reuters.net