NEW YORK – U.S. companies are on track to post record profits this year. Stocks are cheap by some measures. And now even the hot IPO is back, handing riches to a lucky few and filling the rest of us with two emotions necessary for any bull market — envy and greed.

It’s enough to make you think stocks might recapture their April highs soon. But don’t bet on it.

Angie’s List Inc., the consumer review site, rose 25 percent in its public debut Thursday, more than double the average first-day gain for initial public offerings. It was the highlight of one of the busiest weeks for IPOs this year, a welcome break after almost no offerings for three months as companies pulled plans because of wild swings in the stock market.

“IPOs have recovered from their summer doldrums,” says Jay Ritter, a finance professor at the University of Florida and IPO expert. “Good companies can go public again.”

Most investors couldn’t care less, however. The Standard & Poor’s 500 fell 3.8 percent this past week, the worst since September.

In addition to Angie’s List, seven companies made public debuts this week including Delphi Automotive PLC, a once-bankrupt auto parts maker, which slipped 3 percent on its first day. On Friday, Mattress Firm Holding Corp., a mattress retailer, had a first-day gain of 16 percent. Those sales followed a hot initial offering this month by Groupon Inc., the online coupon company.

The question now: Will a few successful offerings help convince companies that have delayed IPOs to go ahead?

A.B. Mendez, a stock analyst at the research firm Greencrest Capital, is hopeful. He notes that shares of Angie’s List rose despite the fact that the company has yet to turn a profit and generated only $59 million in revenue last year.

“They’ve stoked excitement,” he says of the recent offerings. “The bar for IPOs has come down.”

While making it easier for iffy outfits to sell shares might sound bad, it could help break the logjam of planned offerings. Some companies are small with little or no profits, too.

The backlog totals 179 companies, according to Dealogic, a research firm. The companies hope to raise $30 billion selling stock. That’s about as much as IPOs raised in the last six months of 2007, when the economy was still expanding and stock offerings were booming.

In the past, a hot IPO during dry spell has helped kick-start the market. In the summer of 1998, stocks tumbled after Russia defaulted on its government debt and stock offerings ground to a halt. Then, in September, a much-anticipated IPO of Ebay Inc. set the market afire. On its first day trading, shares of the online auctioneer nearly tripled.

By the end of 1998, 284 firms had gone public — less than half the record 675 in 1996 but better than in most years. The S&P 500 rose 27 percent that year.

Earlier this year, 2011 was shaping up as the best year for IPOs in a decade. In April, Zipcar Inc., the popular online car rental firm, rose more than half on its first day of trading. The next month, LinkedIn Corp., the online professional network, doubled on its first day. Other popular offerings included Pandora Media Inc., the internet radio company, and Zillow Inc., the real estate website, whose stock rose 79 percent in its July debut.

In August, the IPO market collapsed. Stocks fell sharply as investors braced for a possible default by the U.S. government. That didn’t happen, but then it began looking more likely that Greece might default. In September, no company went public. Even in the worst months of the credit crisis three years earlier, one or two companies managed to have initial public offerings.

For all the buzz surrounding IPOs, they may reflect optimism in the market more than they feed it. Ritter, the IPO scholar, argues that IPOs are bit players in the stock market, at least in terms of dollars they control. He notes that even in the boom years of the late 1990s, IPOs never raised more than $100 billion annually — less than 1 percent of the total value of publicly traded U.S. companies.

His conclusion: Stocks are moved by larger forces than IPOs.

For now, that means Europe. On Thursday, as Angie’s List was soaring, investors were selling nearly everything else. They were focused on news that government lenders were bolting from Spain, sending borrowing costs there higher. The S&P 500 fell 1.7 percent.

Still, there’s no harm in hoping.

Among the companies that have filed paperwork with regulators to go public: Toys R Us, which hopes to raise $800 million, and online games creator Zynga Inc., which is aiming for $1 billion. And as Angie’s List was soaring Thursday, another consumer review site generated excitement with a filing of its own. Yelp Inc. says it hopes to raise $100 million.

NEW YORK – Stocks rallied Monday as investors bet that European finance ministers would take action soon to prop up the region’s unstable economies.

European officials pledged over the weekend to take bolder steps to fight Europe’s debt problems, which threaten to slow the global economy.

German leaders want banks and private institutions that hold Greek bonds to take a bigger loss on those holdings to slash the country’s debt. European officials have also talked about increasing the $595 billion European rescue fund by allowing it to take loans from the European Central Bank.

The Dow Jones industrial average rose 168 points, or 1.6 percent, to 10,939 at noon Eastern time.

The Standard & Poor’s 500 rose 12.9, or 1.1 percent, to 1,149. The Nasdaq composite rose 9, or 0.4 percent, to 2,492.

Investors have been on edge about Europe’s debt problems for months. The Dow fell 6.4 percent last week, its biggest drop since the week ended Oct. 10, 2008 at the height of the financial crisis.

Greece is at risk of defaulting on its debt next month if it does not receive the next installment of a bailout package. If that happens, banks that hold Greek bonds would lose money. Analysts also worry that the economies in Europe and the U.S. could slip into another recession.

News that sales of new homes in the U.S. fell to a six-month low briefly sent indexes lower in morning trading, but by midday Eastern the Dow, S&P and Nasdaq were all higher.

The government reported that new home sales fell for the fourth straight month in August. The decline is the latest of many signs that the weak housing market is holding back the U.S. economy. In addition to worrying about a global economic banking crisis, investors fear that the U.S. could be enter another recession.

Boeing Co. rose 3.9 percent after the company delivered its first 787 aircraft to Japan’s All Nippon Airways. An analyst said the company’s earnings should rise for the next few years if the company is able to maintain steady production.

Berkshire Hathaway’s Class B shares rose 6.3 percent after the company announcing a plan to repurchase stock for the first since 1965.

Clorox Co. fell 4.8 percent after Carl Icahn withdrew his slate of directors. That suggested the activist investor was unable to find a buyer for the consumer products company.

NEW YORK (Reuters) – Investors may have been relieved there was a Washington debt deal but they weren’t impressed enough to celebrate on Monday — and that may not bode well for stock prices for the rest of the year.

Rather than a relief rally, U.S. stocks ended modestly lower on Monday as ugly economic data and some lingering concerns about whether the deal would get through Congress dominated trading. But even when the House of Representatives voted to pass the plan late in the day there was little reaction from U.S. stock index futures.

The deal agreed to by Republican and Democratic leaders will raise the government’s borrowing ceiling while cutting spending by at least $2.1 trillion over 10 years. All of the burden could fall on spending cuts with no guarantee of steps to lift tax revenues.

Rather than perceiving it as a meaningful effort at tackling the United States’ huge debt problem, investors worried about the impact of austerity on an economy already hit by souring business and consumer confidence.

Plans for such a significant fiscal retrenchment, even though most of the impact will be in the latter years of the program, come at a vulnerable time for the world economy. Recession risks are rising in the United States, the European economy remains entwined in its own debt crisis, and China’s supercharged economy could slow.

“Risk markets may rally temporarily, but until economic growth and job creation is addressed, there can be no sustained rally,” Bill Gross, the co-chief investment officer of PIMCO, which manages more than $1.2 trillion, said in an interview.

Eight months ago, economists and investors were expecting a strong rebound in global growth, given the massive liquidity flooding world financial systems, partly thanks to a bond buying program by the U.S. Federal Reserve. But economic headwinds have made a recovery elusive — with the U.S. economy growing at an anemic rate in the first half of the year.

Data on second-quarter gross domestic product published on Friday showed the world’s largest economy expanded at just a 1.3 percent annual rate in the April to June period. More worrying, revisions to the first quarter left annualized GDP growth at just a 0.4 percent pace — perilously close to a contraction.

JOB CUTS

And on Monday, figures from the U.S. Institute of Supply Management showed that the U.S. manufacturing sector grew at the slowest pace in two years in July. [nN1E7700HA]

The figures prompted some analysts to wonder whether market forecasts for an unspectacular gain of 90,000 jobs in July may be overly optimistic, following truly dismal readings for May and June. The jobs report is due on Friday.

Corporate America’s recent announcements haven’t helped the outlook.

Europe’s biggest bank, HSBC (HSBA.L), announced Monday it will cut as many as 30,000 jobs worldwide by 2013. And on Friday, Merck & Co. Inc. (MRK.N), the second largest U.S. pharmaceutical company, announced it was cutting 13,000 jobs.

There are many signs of a profit slowdown, said Thomas Doerflinger, strategist at UBS. In contrast to the first quarter

earnings season, company commentary from such firms as 3M Co (MMM.N), United Parcel Service Inc (UPS.N), Illinois Tool Works (ITW.N) and Emerson Electric Co. (EMR.N) suggests business activity slowed in June and July, he said. “Budgetary wrangling in Washington could exacerbate this trend,” he added.

On Monday, the Dow Jones industrial average (.DJI) declined more than 145 points during the day before recouping most of those losses to end the day down only 10.75 points.

The more notable movement, however, is in the benchmark 10-year U.S. Treasury note. Reflecting the lack of risk appetite in global markets, the T-note was yielding 2.75 percent and is now down more than 80 basis points since early spring when it was yielding 3.58 percent.

EUROPEAN RISK

It isn’t as if China and Europe are providing much comfort.

China’s manufacturing sector slowed further in July as Beijing cooled an overheated economy and demand for exports weakened amid Europe’s debt crisis and sluggish U.S. growth, two surveys showed Monday.

China has been the engine of growth throughout the year and a slowdown could have repercussions for other countries that are looking to rapid Chinese expansion to drive demand for everything from iron ore to factory machinery and consumer goods.

In Europe, concern is growing that Spain, the euro zone’s fourth-largest economy, will fail to put its finances in order and need a Greek-style bailout.

“I see more risk from the European Union than the U.S. right now,” said Aray Gustavo Feldens, a financial consultant in Porto Alegre, Brazil.

It all provides U.S. Federal Reserve Chairman Ben Bernanke with plenty of reasons for anxiety.

“In a remarkable parallel to last year, Fed officials head into their August meeting amidst weak growth and questions about the possibility of further monetary easing,” economists at Goldman Sachs wrote last week.

Gross said Bernanke will likely hint at a third round of bond purchases, which inject money into the economy and are known by the term quantitative easing, at its annual retreat at Jackson Hole in Wyoming later this month.

If that happens it could give stocks a fillip, as it did last year, though Bernanke may run into major opposition from within the Fed if he wants to embark on a QE3 program close to the $600 billion in QE2. A sustained rally, though, may be too much of a stretch, investors say.

(Reporting by Jennifer Ablan; Editing by Martin Howell)

NEW YORK (Reuters) – NYSE Euronext (NYX.N) and Deutsche Boerse AG (DB1Gn.DE) agreed to pay roughly $900 million of dividends to settle U.S. shareholder lawsuits challenging their roughly $10 billion merger to create the world’s largest exchange operator.

According to an agreement filed on June 17 with the Delaware Chancery Court, the companies would pay shareholders 2 euros (US$2.85) per share outstanding of the combined holding company after the planned merger is completed.

The agreement requires court approval, and would end shareholder lawsuits in New York and Delaware state courts. It essentially reflects the special dividend that the companies announced on June 7, and which would be paid once a merger closes.

Shareholders had sued NYSE Euronext shortly after that company announced its planned sale to its German counterpart in February. They complained that the takeover price was too low, and that the company should have courted other bidders.

According to the agreement, the exchange operators denied wrongdoing, and the shareholders settled to avoid delays and uncertainties from continued litigation.

The combined company would operate in the United States and across Europe. Shareholders of Deutsche Boerse would own roughly 60 percent.

NYSE Euronext shareholders are scheduled to vote on the merger on July 7. Deutsche Boerse shareholders would have until July 13 to tender their shares. A closing is expected by year end.

The cases are In re: NYSE Euronext Shareholders Litigation, Delaware Chancery Court, No. CA6220; and In re: NYSE Euronext Shareholder Litigation, New York State Supreme Court, New York County, No. 773000/2011.

(1 euro = $1.427)

(Reporting by Jonathan Spicer and Jonathan Stempel, editing by Bernard Orr)

A lot of people got whipsawed in the bear market of 2008-2009. They had money in stocks, but panicked when prices kept falling and sold most or all of their stocks or stock funds. Since hitting bottom at 676 on March 9, 2009, the S&P 500 index has almost doubled.

Some people didn’t get back in the market because they couldn’t figure out the best time to buy, and they were still afraid of losing money. That lack of confidence and sitting on the sidelines not only prevented investors from recovering money that was lost as stocks rebounded, it kept them from earning potential gains from new investments.

Here are a few ways you can stay calm and be a more confident investor:

[See 5 Reasons Investors Shouldn't Bail on Japan.]

Understand your investments. Some investors don’t understand their investments and how to invest. Unfortunately, the financial services industry has deliberately made investing seem more complicated than it really is. If you get a 100-page prospectus for a product you’re considering, it’s likely to be filled with jargon and disclosures that are hard to understand. It almost feels like financial companies are forcing you to rely on them and pay for their advice.

In addition, financial firms have developed complicated securities that are probably not suitable for most investors. For example, auction-rate preferred securities were sold as a safe alternative to money market funds. While these securities worked fine for many years during normal market conditions, they turned very risky when the credit crisis hit in 2008. While investors were looking for extra yield, they didn’t expect money in these accounts would be frozen for a few months when market conditions turned against the auction-rate securities.

[See Investors Continue to Chase Short-Term Performance.]

If you don’t understand how an investment works, avoid it. Don’t be tempted by “new and improved” investments or complicated strategies using exchange-traded funds, options, or other securities if you’re not comfortable with them. Think of it this way: If a pair of beautiful boots or four-inch heels hurt your feet when you try them on, would you buy them anyway just because they look good? The same holds true for your portfolio–skip the products with bells and whistles and only buy investments that you understand and know will help you reach your financial goals.

Don’t be emotional about your money. Whenever there’s turmoil in the markets, many people let fear take over and make bad decisions. Investors should accept that prices do fall from time to time, and figure out how to stay calm when the market swings.

[See 4 Ways to Cure Emotional Investing.]

Everyone reacts differently to volatility in their portfolio. When you’re setting up your financial plan, determine your ability to tolerate risk and how you would react to swings in prices in your accounts. For instance, ask yourself what you would do if the value of your portfolio fell 10 percent in one month. If you think you would sell everything, then you probably don’t like to see volatility. If you say you’d be concerned and just monitor your investments, you’re probably more calm and would not take any action right away. If you think this would be a great buying opportunity, you can handle swings more easily and are willing to take more risk.

When you understand your emotional response to volatility, you can choose investments you’ll be comfortable with. If your feelings about price swings change over time, you should re-evaluate your tolerance for risk.

[See What Happens After QE2 Ends?]

Establish an asset allocation. Once you’ve figured out your appetite for price swings and risk, you need to diversify your portfolio by asset class. Generally, stocks are considered the growth part of your asset allocation, while fixed-income and cash investments are safer and provide stable income. If you’re not comfortable picking the best mutual funds and other investments by asset class on your own, hire a fee-based investment adviser.

Many people have collected various investments in different accounts over the years. Review each investment and decide if you should continue to own it. Also, set up a proper account for each of your goals. For example, house your retirement savings in an individual retirement account (IRA), Roth IRA, or 401(k), rather than in a taxable account or savings account at your bank that offers little or no interest.

[See Is Your 401(k) Riskier Than You Think?]

Also, make sure your holdings fit in the asset allocation you’ve established to meet your investment goals. Most people should check their accounts twice a year to maintain their desired allocation. Adjustments may be necessary when your desired allocation changes and when market or investment performance has moved your investments from their desired weightings.

Stay disciplined and stick with your financial plan. Now that you’ve considered your tolerance for risk and established your asset allocations for each of your accounts and goals, you have to stick with your plan. Sure, it’s hard to tune out the noise of the markets, especially when there’s a big news event that’s affecting prices. Try not to check your accounts every day. That will tempt you to make unnecessary changes. If there’s a significant change in your life, like losing your job or serious illness in your family, you can modify your plan. Otherwise, stay focused and continue putting money into your retirement accounts and other investments. Over time, your well-planned investment strategy and discipline will pay off.

Adam Bold is the founder of The Mutual Fund Store, which provides fee-only investment advice with locations coast-to-coast. He’s also host of The Mutual Fund Show, a call-in radio program broadcast across the country. Bold is author of the book The Bold Truth about Investing (April 2009). Bold is Chief Investment Officer of The Mutual Fund Research Center, an SEC-registered investment adviser, which provides mutual fund and asset allocation recommendations, and research to stores in The Mutual Fund Store system.

NEW YORK (Reuters) – News that computer hackers had infiltrated the operator of the Nasdaq Stock Exchange is the latest blow for Wall Street as it works to repair an image with investors and traders dented by last year’s “flash crash.”

Nasdaq OMX Group said on Saturday that it found “suspicious files” on its U.S. computer servers, but said there was no evidence hackers had accessed or acquired customer information or that its trading platforms were compromised.

The news comes as flows into U.S. equity mutual funds show signs of recovering after years of outflows following the financial crisis and the debilitating experience of the “flash crash” last May that sent U.S. indexes plunging.

“There have been a number of events over the last few years that have damaged investor confidence and this could certainly be another one,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

Just last week, an unexplained hour-long glitch locked the prices of two key indexes — the widely followed Nasdaq Composite and the Nasdaq 100.

Given that about 21 percent of all U.S. cash equity trading was matched on one of Nasdaq OMX’s exchanges last year — second only to Big Board parent NYSE Euronext — the integrity of its marketplace is closely aligned with the smooth functioning of U.S. markets in general.

The timing is poor as a stocks rally from last year has started to draw retail investors back into equities and away from bond funds.

The last three weeks of January saw back-to-back inflows into domestic equity mutual funds amounting to $10.3 billion, the longest streak of inflows in 1-1/2 years, according to data from the Investment Company Institute.

Individual traders also returned in force to U.S. equity markets in January, helping drive volumes to their highest levels since the “flash crash” last May.

Daily trading among retailers, including active “day traders” who drive much of the volume, jumped some 25 percent from December to January, Sandler O’Neill analyst Richard Repetto wrote in a note estimating market activity.

Although this event in itself is unlikely to have an impact on that trend, maintaining confidence is key at a time when regulators are concerned about the stability of the electronic marketplace and many retail investors believe the odds are against them.

“In general, investors have become increasingly concerned about some of the movements in the market … and things like this just serve to undermine confidence,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

Meckler said Nasdaq needed to release more information about the security breach.

“Just entering a system is a lot different from using a system to profit from it,” he said. “That distinction is yet to be made.”

Jim Awad, Managing Director at Zephyr Management New York, said investors were reserving judgment until Nasdaq released more information.

“People are nervous that there was a hacking but until they know who it was and what the motive was I don’t think they will take it tremendously seriously,” he said.

Nasdaq OMX said the suspicious files were found in a Web application called Directors Desk. The FBI and outside forensic companies helped conduct an investigation, which is continuing with the help of securities regulators.

Sang Lee, a managing partner specializing in market structure at Boston-based consultant Aite Group, said the lapse would be unlikely to see brokerages move to alternative trading venues at this stage.

“It appears that the break-in happened in an area which seems to be a very minor part of their overall business,” he said. “I would not equate this to hackers going after the transaction business, for example.”

The majority of trading in the United States is now done electronically and the market is competitive and fragmented.

“I think the ultimate fallout from this could be a wake-up call for all of the exchanges and financial services firms to carefully reassess their security policy,” said Lee.

(Additional reporting by Jonathan Spicer; Reporting by Edward Krudy; Editing by Chris Sanders and Maureen Bavdek)

BOSTON (Reuters) – Hedge fund manager Chris Shumway told investors on Friday that he is returning all of their money in a few weeks, becoming the latest prominent stock picker to essentially shut down his firm.

The 45-year-old manager, who got his start working for hedge fund industry legend Julian Robertson’s Tiger Management, told investors in Shumway Capital Partners that he will continue to oversee his own money.

Noting that his decision was very difficult, Shumway wrote to clients that “after nine great years, I have decided to return all external capital back to you, our partners, by the end of the first quarter of 2011.” A copy of the letter was obtained by Reuters.

The move was first reported by Bloomberg.

Shumway now joins a growing list of middle-aged managers who surprised their investors by suddenly returning capital. Last year Stanley Druckenmiller, best known for engineering Soros Fund Management’s famous bet against the British pound, quit. Before him, well-known technology investor Dan Benton shut down his firm.

Only a few months ago Shumway said he was stepping down as chief investment officer from the $8 billion fund firm, appointing Tom Wilcox to run the day-to-day operations. Wilcox, he wrote to clients in November, was the “single most profitable individual in our firm’s history and has been critical to our success.”

The move unnerved investors and clients asked for billions of dollars back. More recently, though, some said they were reassured that Shumway said he was reinvigorated by focusing on big issues.

Since 2002, the firm has returned an average 17 percent a year, 14 percent above those for the S&P 500 through multiple market cycles, Shumway told investors.

Only a year ago Goldman Sachs’ (GS.N) Petershill Fund, which buys equity stakes in hedge funds, took a stake in Shumway.

Shumway has long been celebrated as a talented stock picker, but his performance suffered some last year, people familiar with his returns said.

(Reporting by Svea Herbst-Bayliss, editing by Gerald E. McCormick, Dave Zimmerman)

MOSCOW (Reuters) – Russian stock markets and the ruble weakened on Monday after news that at least 31 people were killed and more than 100 injured in a suicide bomb blast at Russia’s biggest airport Domodedovo.

Below is a selection of comments about the investment implications of the incident:

ROLAND NASH, VERNO CAPITAL

“It is the terrible reality of our generation, and one to which Russia is as susceptible as any country globally. I’m sure it will have a short-term impact on business travel, but it is, unfortunately, not something new. Maybe some people will link it to the upcoming election season, but if they do, then they are missing the point.”

ALEXEY SUROV, TRADER, BANK ZENIT

“Based on previous experience with the Russian market falling after terrorists attacks, I don’t think the market will stay down on the news for more than several days.

Aeroflot shares are down because investors are afraid the company’s revenue will go down, as strengthened security measures will lead to fewer flights and fewer people flying to and out of Moscow.”

JOHN WINSELL DAVIES, LEAD FUND PARTNER, WERMUTH ASSET

MANAGEMENT

“The Russian RTS (index) traded higher just five days after the Nord Ost hostage crisis. The RTS straight-line rallied 7.5 percent in the month of September following the Beslan school tragedy. Moscow does not believe in tears.”

ZSOLT PAPP, UBP ASSET MANAGEMENT, ZURICH

“If it was a terrorist attack then the timing was well chosen, but I don’t think any major investor will be deterred by a bomb attack from investing in any major Russian company. Russia is politically a stable country, remarkably stable, and other factors such as the oil price, play a much bigger role. For the kind of privatization that the government is lining up — medium to long-term players — I don’t think this will have an impact.”

YEVGENY GONTMAKHER, INSTITUTE OF MODERN DEVELOPMENT

“This tragic event will in no way influence Russia’s business climate, which is (already) unfavorable. The business climate is determined by more stable circumstances such as corruption and state interference with business, not by one-off events like this”

ALEXEI BACHYURIN, TRADER, RENAISSANCE CAPITAL

“It (the blast) is moving the market in the short term, but there is no fundamental reason for the market to fall. If you remember, the market didn’t react strongly to (previous blasts).

It is negative for airlines as it is clear that the rules will be tightened. The market went down as it was ready to go down — a lot of long positions were opened. All depends now on the United States. If they close up, we will open normally.”

FOREX TRADER AT MAJOR RUSSIAN BANK

“If it had been the Kremlin, it would have been a problem (for markets). But when it’s a social building like Domodedovo, it is perceived like a separatists’ act. It’s our reality. Our financial markets do not react to this.”

YAROSLAV LISSOVOLIK, CHIEF STRATEGIST, DEUTSCHE BANK

“I don’t think there will be a long term effect… We are already seeing some negative impact (on markets), but in the long run there will increased safety measures on flights and in airports. Gradually this negative impact will disappear, as we saw in past episodes of such events.”

VLADIMIR BRAGIN, ANALYST, ALFA BANK

“The blast, and the measures the government undertakes, will affect everything: first the transport industry, then infrastructure as a whole, which will in turn affect the oil sector. Additional security measures that may be introduced will probably scare some investors.”

ILYA MAKAROV, ANALYST, ATON

“The market reaction was negative. We had fallen by 1.3 percent (before the blast), and now by around 2.2 percent. The market was down because of Sberbank and Aeroflot, which are both state companies and always react first on such news. There are a lot of emotions.”

(Reporting by Moscow Newsroom)