WASHINGTON (Reuters) – Tighter budgets at the Securities and Exchange Commission could mean killing vital technology upgrades needed to catch swindlers, the agency’s chief said on Friday in a blunt appeal for more funding.

With Republicans in Congress threatening to restrain her budget, SEC Chairman Mary Schapiro said the agency faces severe challenges in doing its existing job and in taking on new duties mandated under 2010′s Dodd-Frank market reform law.

SEC enforcement head Robert Khuzami said budget constraints are hurting the agency, but nevertheless defended its record against critics who say too few Wall Street financiers have been held accountable for the 2007-2009 financial crisis.

“Credit crisis cases continue to be a priority,” Khuzami said, citing cases brought against Goldman Sachs, Citigroup and former mortgage lending giant Countrywide Financial, which was acquired in 2008 by Bank of America Corp.

Schapiro said the SEC desperately needs resources to catch more bad guys.

Eliminating needed SEC budget increases could force “our market analysts to continue to use decades-old technology to recreate market events or to monitor trading that occurs at the speed of light,” Schapiro told the SEC Speaks conference.

“We need to ask ourselves if we want our chief securities regulator to have to pull the plug on data management systems and on a digital forensics lab needed to recreate the data that sophisticated fraudsters leave on hard drives and iPhones.”

WALL ST OUTSPENDS

Schapiro said some of the Wall Street firms regulated by the SEC spend more money on their technology budgets alone than the agency spends on its total operating costs.

Appointed two years ago to head the investor protection agency, Schapiro is caught between two powerful political forces. On the one hand, she must implement and enforce scores of market reforms that were approved last year after the worst financial crisis in generations. That costs money.

On the other, Republicans swept to power in November in the House of Representatives are demanding deep federal spending cuts, partly to address the budget deficit problem and partly to undermine the Dodd-Frank reforms that they opposed.

The SEC is scrutinizing stock-offering rules, Schapiro said, following the news that Goldman Sachs planned a special investment vehicle for clients to invest in Facebook, the red-hot online social network company.

Goldman last month said it would limit its private placement of Facebook shares to investors outside the United States, citing “intense media coverage.

In addition, Schapiro said the agency is working on reforms in response to the May 6 flash crash, when U.S. stock markets plunged about 700 points before staging a partial recovery, raising questions about computerized high-frequency trading.

“All of these tasks – all of these confidence-enhancing measures – require resources,” Schapiro told the conference hosted by the Practising Law Institute.

Because Congress has not approved a new budget, the government is running under a stop-gap measure.

That is imposing “a strain that is already having an impact on our core mission – separate and apart from the new responsibilities that Congress gave us to regulate derivatives, hedge fund advisers and credit rating agencies,” she said.

Keith Davis, principal and research analyst at Farr, Miller & Washington, said the agency’s new responsibilities necessitate funds, despite black marks like the SEC’s failure to stop Bernard Madoff’s estimated $65 billion Ponzi scheme.

“The fact that they’re already underfunded and consistently miss things like Madoff and others suggest that more resources should probably be devoted to them,” Davis said.

Then again, a good chunk of additional funds is going to issues such as consumer protection and pay reform, which distracts the SEC from its core business, said Gary Townsend, chief executive of Hill-Townsend Capital, in Chevy Chase, Maryland.

“If we are forcing regulators to utilize resources on things that are not as important as safety and soundness and the safety of markets, then we’re wasting taxpayers’ money.”

More details on the Republican fiscal hawks’ goals may come soon. House Republicans are expected next week, likely on Thursday, to unveil specific proposals for funding the SEC and the Commodity Futures Trading Commission.

DODD-FRANK TARGETED

The “Volcker rule” aimed at curbing risky bank trading and new limits on the derivatives market are being targeted for review by House of Representatives Republicans, according to a draft oversight plan obtained this week.

The SEC’s budget will also be examined, the document showed, by the House Financial Services Committee, which is now chaired by Representative Spencer Bachus.

House Capital Markets Subcommittee Chairman Scott Garrett told Reuters last week that budget restraint is just one way Republicans are trying to “throttle” parts of Dodd-Frank.

Unlike the Federal Deposit Insurance Corp and the Federal Reserve, both important regulators, the SEC has to ask Congress each year for its budget. The FDIC and the Fed pay for their own operations through fees they assess.

The SEC assesses fees, too, totaling more than enough to cover its budget. But the commission’s fee income goes into the general revenue coffers.

Congress must adequately fund the SEC or let the agency fund itself, SEC Commissioner Elisse Walter, a Democrat, said at the conference. “Cutting or freezing the commission’s budget … especially when the SEC generates enough revenue through transaction and registration fees to fund itself, puts markets and investors at risk,” she said.

Thomas Sporkin, chief of the SEC’s Office of Market Intelligence, did note, however, that the agency is already reaping enforcement benefits from the reform law, which gives whistleblowers a payout for tips that yield penalties.

The number of “high value” tips on fraud and other violations of securities law numbered about two dozen a year before the law. Since July, the agency has been receiving about one a day, Sporkin said at the annual conference.

Commissioner Luis Aguilar called for stiffer sanctions against companies that violate securities laws and suggested the agency consider forcing defendants to admit wrongdoing in settlements.

(Sarah N. Lynch and Dave Clarke; Writing by Kevin Drawbaugh; Editing by Tim Dobbyn)

A rally that pushed stocks up nearly 7 percent in December took a pause Tuesday as traders shrugged off a pickup in factory orders and a sharp rise in monthly sales from General Motors and Ford. Indexes started out with gains but mostly fell throughout the day.

The Dow Jones Industrial average rose 20.43 points, or 0.2 percent, to 11,691.18.

The S&P 500 index fell 1.69 points, or 0.1 percent, to 1,270.20.

The Nasdaq composite lost 10.27 points, or 0.4 percent, to 2,681.25.

For the week and year to date:

The Dow is up 113.67, or 1 percent.

The S&P is up 12.56, or 1 percent.

The Nasdaq is up 28.38, or 1.1 percent.

NEW YORK – Stocks are struggling to a mixed finish after weak earnings news from 3M and other companies weighed on the market.

The Dow Jones industrial average lost 17 points Thursday, but broader indexes posted gains.

3M gave a downbeat view on the economy and a lower forecast for full-year earnings. Avon’s results were hurt by higher spending on advertising and lower revenues from China.

According to preliminary calculations, the Dow fell 17, or 0.2 percent, to close at 11,110. It had been up 53 points earlier.

The S&P 500 rose just over 1 point to 1,184, while the Nasdaq rose 4, or 0.2 percent, to 2,507.

Gaining stocks narrowly outpaced declining ones on the New York Stock Exchange, where volume came to 1 billion shares.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stocks turned lower Thursday as investors dug through a raft of earnings reports that painted a mixed picture about the economy.

The Dow Jones industrial average fell about 20 points in afternoon trading. The market rose steadily in the opening moments of trading following a surprise drop in first-time claims for unemployment benefits.

3M Co. set a negative tone with a downbeat view on the economy and a lower forecast for full-year earnings. 3M’s dim assesstment of the U.S. and European economies was a sobering reminder that growth in many developed nations remains weak. The maker of everything from Post-It notes to Scotch Tape called growth in those regions “uninspiring.” Shares fell 6.3 percent.

Apple Inc. fell about 1 percent after warning in a regulatory filing that profit margins might narrow next year. Colgate-Palmolive Co. also said it expects sales growth to slow next year.

Not all the corporate news was bad. Eastman Kodak Co. rose 15 percent after saying more customers turned to home and office printers. Motorola Inc. said its phone division was profitable for the first time in three years as the company bets consumers will snap up more smart phones like the Droid X.

Avon Products Inc. sank 6.8 percent after reporting suprisingly poor results from emerging markets. The beauty products seller said weakness in Brazil and Russia hurt quarterly profits. Many companies have relied heavily on expansion in developing countries to offset lagging sales in the U.S. and Europe.

Mixed earnings over the past few days sapped energy from an upswing on the stock market, which has been on a nearly unbroken rise since early September.

Pharmaceutical companies Bayer AG and Sanofi-Aventis SA and automaker Hyundai Motor Co. kicked off earnings worldwide with upbeat results, sending stocks higher overseas before U.S. markets opened.

A surprise drop in claims for unemployment insurance provided the most encouragement about the economy. Claims fell to their lowest level in three months, bolstering hopes that companies might start ramping up hiring soon. First-time claims fell by 21,000 to 434,000 last week, while economists had expected a rise. Claims had been hovering around 450,000 throughout much of the year, which is considered a signal that employers aren’t firing many people, but not hiring many either.

The Dow fell 22.51, or 0.2 percent, to 11,103.77 in afternoon trading. It had been up 53 points earlier in the day.

The Standard & Poor’s 500 index fell 0.15, or 0.01 percent, to 1,182.30, while the Nasdaq composite index rose 2.63, or 0.1 percent, to 2,505.89.

Not even a falling dollar could provide support for the market. Stocks and commodities have been very sensitive to the movement of the dollar in recent weeks. A decline in the dollar makes riskier assets priced in the currency, such as gold, oil and domestic stocks, more attractive to investors.

The euro rose back above $1.39 Thursday. Gold rose $19.40 to $1,342.00 an ounce.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.66 percent from 2.72 percent late Wednesday.

NEW YORK – Stocks turned lower Thursday as investors dug through a raft of earnings reports that painted a mixed picture about the economy.

The Dow Jones industrial average fell more than 40 points in midday trading. The market rose steadily in the opening moments of trading following a surprise drop in first-time claims for unemployment benefits.

There was encouraging news in reports from Eastman Kodak Co., which got a lift as more customers turned to home and office printers, an area the company is ramping up to replace its faltering photographic film business. Motorola Inc.’s phone division was profitable for the first time in three years as the company bets consumers will snap up more smart phones like the Droid X.

But strong results at those companies were offset by disappointments at 3M Co. and Avon Products Inc. 3M’s grim view about the U.S. and European economies was a sobering reminder that growth in many developed nations remains weak. The maker of everything from Post-It notes to Scotch Tape called growth in those regions “uninspiring.”

In a reversal of recent global growth trends, it was emerging markets that disappointed Avon investors. The beauty products seller said weakness in Brazil and Russia hurt quarterly profits. Many companies have relied heavily on expansion in developing countries to offset lagging sales in the U.S. and Europe.

Rob Russell, president of financial planning company Russell & Co., said weak corporate outlooks also made for a disappointing batch of reports Thursday. 3M cut its full-year forecast. Colgate-Palmolive Co. said it expects sales growth to slow next year, while Apple Inc. warned in a regulatory filing that profit margins might narrow next year.

Mixed earnings over the past few days sapped energy from an upswing on the stock market, which has been on a nearly unbroken rise since early September.

Pharmaceutical companies Bayer AG and Sanofi-Aventis SA and automaker Hyundai Motor Co. kicked off earnings worldwide with upbeat results, sending stocks higher overseas before U.S. markets opened.

A surprise drop in claims for unemployment insurance provided the most encouragement about the economy. Claims fell to their lowest level in three months, bolstering hopes that companies might start ramping up hiring soon. First-time claims fell by 21,000 to 434,000 last week, while economists had expected a rise. Claims had been hovering around 450,000 throughout much of the year, which is considered a signal that employers aren’t firing many people, but not hiring many either.

The Dow fell 42.83, or 0.4 percent, to 11,083.45 in midday trading. It had been up 53 points earlier in the day.

The Standard & Poor’s 500 index fell 1.71, or 0.1 percent, to 1,180.74, while the Nasdaq composite index fell 7.57, or 0.3 percent, to 2,495.69.

Not even a falling dollar could provide support for the market some support. Stocks and commodities have been very sensitive to the movement of the dollar in recent weeks. A decline in the dollar makes riskier assets priced in the currency, such as gold, oil and domestic stocks, more attractive to investors.

The euro rose back above $1.39 against the dollar Thursday. Gold rose $19.40 to $1,342.00 an ounce.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.67 percent from 2.72 percent late Wednesday.

NEW YORK – Stocks have reversed course and given up their big gains in afternoon trading Thursday.

A strengthening dollar and profit-taking have helped drag stocks from the lofty levels they reached earlier in the day. The Dow Jones industrial average fell 38 points in afternoon trading. It had been up as much as 105 points in morning trading after index components Caterpillar Inc., Travelers Cos. and McDonald’s Corp. all beat earnings expectations and AT&T Inc. matched forecasts.

Once again Bank of America Corp. hurt the Dow as it continues to be dogged by worries about whether investors will force the bank to buy back mortgages it originated.

Caterpillar hit a high for the year early in the morning before pulling back. United Parcel Service Inc.’s profit jumped and the shipping company raised its outlook. But it too retreated after coming within $1.00 of hitting its high for the year.

JetBlue Airways Corp. also reported strong earnings only to see its stock approach its 2010 high and then fall.

A stronger dollar has put a crimp in investors’ appetite for riskier assets like stocks and commodities. Gold and oil prices tumbled.

The Dow fell 37.66, or 0.3 percent, to 11,070.31 in afternoon trading. The fall comes after the Dow briefly eclipsed its highest closing level of 2010. It closed at 11,205.03 on April 26.

The Standard & Poor’s 500 index fell 6.22, or 0.5 percent, to 1,171.95, while the Nasdaq composite index fell 20.51, or 0.8 percent, to 2,436.88.

Gold dropped $24.00 to $1,320.20 an ounce. Benchmark crude fell $2.21, or 2.7 percent, to $80.33.

JOB BOOST: Good news on private sector employment helped get the stock market back on an upward track. Payroll company ADP said private employers increased hiring last month.

BACK ON THE UPSWING: The 44 point gain in the Dow Jones industrials easily wiped out the 38 point loss from a day before, and seemed to restart the market’s upward momentum. The Dow has gained 10.3 percent since closing at its lowest level of the year on July 2.

LOOKING AHEAD: The market’s gains were held in check ahead of a key report due Friday from the Labor Department on monthly employment figures.

NEW YORK – The stock market began August with a huge rally after economic and earnings reports from around the world revived investors’ faith in the global recovery.

The Dow Jones industrial average jumped nearly 190 points in afternoon trading. Major stock indexes all rose more than 1.5 percent.

The market rallied at the opening bell on upbeat economic news from China and earnings reports from European banks. Then, shortly after trading began, investors got a surprisingly good report on U.S. manufacturing. The Institute for Supply Management said its manufacturing index slipped to 55.5 in July from June’s 56.2. Although the results showed a modest slowdown in growth, traders were pleased because they were higher than the 54.1 forecast by economists polled by Thomson Reuters. And any reading above 50 indicates expansion.

The market was encouraged by several key components of the index. Production and new orders both improved, as did companies’ willingness to hire new employees.

“Every component in ISM was greater than 50,” said Cort Gwon, director of trading strategies and research at FBN Securities. “To have all of them up is a good sign.”

Stock trading has been erratic for months because of signs the recovery was weakening. Strong earnings in July helped drive stocks to their best month in a year, but the rally was fading at the end of the month on new worries about the economy. The ISM report is significant because it is the first major reading of the economy from July and investors are trying to determine just how strong the recovery will be in the second half of the year.

Industrial and materials stocks, including 3M Co. and General Electric Co., rose after the report.

Investors largely dismissed renewed caution from Federal Reserve chairman Ben Bernanke. During a speech Bernanke said the economy still has a long way to go to recover. Bernanke’s comments before Congress a couple of weeks ago, calling the economy “unusally uncertain,” led to a sell-off in stocks.

In afternoon trading, the Dow Jones industrial average rose 189.52, or 1.8 percent, to 10,655.61. The Standard & Poor’s 500 index rose 21.76, or 2 percent, to 1,123.36, while the Nasdaq composite index rose 36.54, or 1.6 percent, to 2,291.24.

About five stocks rose for every one that fell on the New York Stock Exchange where volume came to 526.3 million shares.

Whether investors can hold on to their optimism will turn on the government’s July employment report, which is being released on Friday. Volume was also light Monday as many investors, following the strategy they used during July, decided to stay out of the market until they feel more confident that its gains will hold.

“The public is more cautious,” said Bruce McCain, chief investment strategist at Key Private Bank. “It’s more of a wait and see mode.”

McCain said it would take a string of economic reports that consistently beat expectations to bring more investors back into the market. That makes this week especially important with plenty of reports, including Friday’s jobs data and ISM’s service sector report, due out later this week.

With stocks rising sharply, bond prices fell. The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.95 percent from 2.91 percent late Friday. Its yield is often used as a benchmark to set interest rates on mortgages and other consumer loans.

Britain’s FTSE 100 gained 2.7 percent, Germany’s DAX index rose 2.3 percent, and France’s CAC-40 rose 3 percent. Japan’s Nikkei stock average rose 0.4 percent and Hong Kong’s Hang Seng jumped 1.8 percent.

Monday began with news out of China, where manufacturing data showed that the company’s industrial growth was moderate enough that government isn’t likely to take steps to slow the country’s economy. Investors have periodically sold stocks on concerns that China’s economy would slow and pull other economies down with it.

Meanwhile, a manufacturing report for the 16 countries that use the euro was revised higher for July and showed that the continent’s economy continues to recover faster than expected. The stock market’s spring plunge was triggered by concerns that rising government debt in Europe would stagnate the region’s economy and in turn affect other countries including the U.S.

Stocks also rose on strong earnings reports from banking giants HSBC and BNP Paribas, which reassured investors that the continent’s financial sector is not being hurt by the debt problems.

HSBC shares trading in the U.S. rose $2.64, or 5.2 percent, to $53.72.

Among U.S. stocks, 3M rose $1.90, or 2.2 percent, to $87.44, while GE rose 28 cents to $16.40.

Oil prices jumped on signs of manufacturing growth. That, in turn, drove stocks of energy companies higher. ExxonMobil Corp. rose $1.96, or 3.3 percent, to $61.64, while Chevron Corp. jumped $1.66, or 2.2 percent, to $77.87. Benchmark crude rose $2.46, or 3.1 percent, to $81.41 a barrel on the New York Mercantile Exchange.