KGET: Business News

Bad news at the grill as beef prices hit all-time high

Tue, 07 May 2013 13:33:00 -0700

Amy Langfield, NBC News

Outdoor chefs are in for an unhappy surprise as the summer grilling season approaches: The cost to fire up a backyard barbecue is going up.

The price of wholesale beef hit an all-time high Friday and there is no indication it will decline this year. While the price of beef alone is up at least 5 percent, that summer cookout is going to feel much more expensive to any serious barbecue aficionado buying good-quality meat.

“His meat has gone up. His buns have gone up. Everything’s gone up,” said Jim Early, the founder and president of the North Carolina Barbecue Society. Once you count all the fixins – ranging from brisket and chicken to barbecue slaw and salad – the price has doubled from just a few years ago. “The only thing that stayed the same is cabbage,” he said.

There are many causes for the increase, which has been edging up slowly. On Friday, the wholesale price of a USDA cut of choice beef reached $201.68 per 100 pounds. The previous high, $201.18, was set in October 2003. That was when all Canadian beef imports were prohibited after its first confirmed case of bovine spongiform encephalopathy, also called mad cow disease. That peak turned out to be a short-term blip and the prices dropped by 30 percent by the end of the year.

Now, “it’s a whole different scenario,” Kevin Good, a senior analyst with CattleFax, told NBC News.

The U.S. cattle and calf herd is at its lowest level since 1952 and cattle producers have been hard hit by poor pasture conditions, a poor hay crop, drought in the Southern Plains and late freezing weather, according to a USDA economist. Those problems will linger at least until the second half of 2014, he said. Until then, that tight supply means higher beef prices, particularly for better cuts of meat.

More of that U.S. meat is also going overseas as foreign demand rises.

Among the increasing costs to raise cattle is a doubling of corn prices due to its demand for use to produce ethanol. The use corn ultimately results in better barbecue if it is mixed into the cow’s diet, Early said. “That’s what they feed to the cows for the white fat, which is what we want,” Early said. ”If they feed them $8 corn, that’s going to run our prices up.”

Early said the price increases won’t be as obvious to anyone buying factory-raised meats, which often use growth hormones to speed the fattening process and cut other costs. But as the big farmers are better able to absorb the pitfalls, the smaller farmers get nudged out of the business, further tightening the supply of those most choice meats, Early said. “They can’t make it,” Early said of the small farmers. “All it takes is something like a drought like they’ve been having and the yields go down.”

Although everything’s going up, there are ways to make your dollar go farther even when you’re not springing for filet mignon. Early suggests finding a good butcher who knows how to cut the meat in a way to enhance flavor. Also, find recipes or take a class to learn how to get the most flavor out of the cheaper cuts, Early said.

“The public will adjust to it, like they have for $15 movie tickets,” Early said.

While the public is indeed paying for more expensive beef, there are also signs they are slowly making changes.“US consumers are eating less beef” than six years ago, Good said.

Tyson Foods on Monday said it sold 3.9 percent less beef in the quarter that ended March 31 compared with a year ago. Its beef prices went up 6.5 percent over that same period, the company said. “Consumers,” Tyson said in its quarterly report, “opted for the relative value of chicken.”

When it comes to grilling, hamburgers are still the No. 1 choice, according to the 24th annual Weber GrillWatch Survey. Hot dogs, steaks, chicken pieces were also popular. But the new trend of the past three years is the increasing use of vegetables in addition to meats, said Mike Kempster, the executive vice president at Weber grill maker.

People are becoming flexitarians and going meatless more often. Health and costs are factors, especially for women cooks, Kempster said. “The guys just want the beef,” Kempster said.

It’s not just at home where consumers will see the sticker shock. Overall restaurant menu prices have gone up, boosted in large part by the rise in beef, said B. Hudson Riehle, senior vice president of the research division for the National Restaurant Association.

Nationally, menu prices have gone up 2.3 percent over the first quarter of this year compared with the first quarter of 2012, Riehle said. At that same time, wholesale food prices went up 2.6 percent, meaning restaurant owners have been absorbing some of the costs and not passing it all on to the price-sensitive consumer.

A recent beef and pork survey by the Technomic food trend consultancy found that 46 percent of diners said they have noticed beef prices going up, but only 21 percent said they are already ordering less beef.

“Consumers aren’t changing their behavior,” said Kelly Weikel, a senior consumer research manager at Technomic. But it’s not going to take much more for them to order something different at a restaurant. When the price increase $1.50 to $2 more, 49 percent of beef-eaters said they’ll make a switch, according to the survey.

Dow Jones hits all-time high, closes above 15,000

Tue, 07 May 2013 13:03:56 -0700

By JeeYeon Park, CNBC

Stocks rallied Tuesday, with the S&P 500 extending its recent rally to a fresh high and the Dow surpassing the 15,000 milestone, boosted by better-than-expected economic data from Germany and a gain in Japan.

The Dow Jones Industrial Average crossed above 15,000 to hit an all-time intraday high of 15,013.43. Caterpillar and JPMorgan led the blue-chip gainers.

The S&P 500 and the Nasdaq also rallied. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 13.

So far this year, the Dow has surged an impressive 14 percent, while the S&P and Nasdaq have soared more than 13 percent each.

Among key S&P sectors, utilities and industrials led the gainers, while techs and financials turned lower.

"The market is still exhibiting good karma from last week's employment report," said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors. "Some of the news that's coming out of Europe has been a bit more positive as well – the German factory orders report was helpful."

In Europe, the financial sector rose after better-than-expected first quarter results from HSBC, Commerzbank and insurer Allianz. Shares of Societe Generale also climbed after the French bank announced a $1.2 billion cost-cutting plan.

Meanwhile, in Japan, the country's benchmark Nikkei index reached its highest level since the collapse of Lehman Brothers, topping 14,000.The rally was largely fueled by the weakening of the yen, which has lost more than 1 percent since Thursday.

"The U.S. economy and markets have led the way and now we're seeing better performance out of Europe and some of the Asian markets this month, so those things are all positive," added Albright. "Valuations are not overly stretched either, so from that perspective, it's not inappropriate to add to positions."

Widely-followed hedge fund manager David Einhorn said he had added to his investment position in Apple. The stock, however, turned negative following the news as investors took the announcement as an opportunity to cash in on the iPhone maker's recent run.

Other major tech giants including Google and Microsoft were also lower.

Among earnings, Discovery Communications posted better-than-expected quarterly results and forecast annual revenue above estimates.

DirecTV rallied after the satellite TV provider blew past Wall Street estimates, helped by better-than-expected growth in Latin America.

OfficeMax posted lower-than-expected earnings, hurt by continued weak sales of technology products and fewer customers. But shares gained after the office supply retailer announced a special dividend of $1.50 a share. The company is awaiting regulatory approval for its pending merger with Office Depot.

Dow component Walt Disney is scheduled to post results after the closing bell. Separately, the conglomerate said it is teaming up with video games publisher Electronic Arts to develop games based on the "Star Wars" movies. EA is also slated to report earnings after the closing bell, in addition to Symantec, WholeFoods and TripAdvisor.

More than 80 percent of S&P 500 companies have posted quarterly results so far, with 68 percent topping earnings expectations and 22 percent missing forecasts, according to Reuters. If all remaining companies post numbers in line with estimates, earnings will be up 5.1 percent on last year.

But on average, sales have come in 1 percent below estimates, with only 45 percent of companies beating their revenue projections.

On the economic front, the Federal Reserve will release its consumer credit report for March at 3 p.m. New York time. Economists polled by Reuters forecast a $15.0 billion gain, after an $18.4 billion increase in February.

And the Treasury is scheduled to auction $32 billion in 3-year notes with the results available shortly after 1pm ET.

The end of tax-free online shopping draws nearer

Wed, 24 Apr 2013 12:10:08 -0700

The days of tax-free online shopping could be numbered.

A bill to impose sales tax on Internet purchases took one step closer to being passed Wednesday, when the Senate voted 75-22 in favor of considering The Marketplace Fairness Act. A vote on passage could come this week.

The bill is supported by the White House and e-commerce giant Amazon.com and embraced by brick-and-mortar retailers, their trade association and the National Conference of State Legislatures. But it has been sharply criticized by online merchants led by eBay, as well as anti-tax advocates.

Despite the debate over the issue, experts say it won’t change the way most Americans use the Internet to shop.

“Ultimately, customers are used to paying taxes on goods they purchase, just not necessarily online,” said Clark Fredricksen, vice president of communications at eMarketer. “It wouldn’t be surprising to see some outcry but in fact very little impact on actual sales.”

“Consumers only care on big ticket items," said Tom Forte, Internet analyst at Telsey Advisory Group. "If you think about why people purchase from catalogs or e-commerce companies, selection and convenience are numbers one and two... Price is not as important."

“On an average basket size of $40 to $50 it’s not going to have an impact,” said Aaron Kessler, senior analyst at Raymond James & Associates.

Fredricksen said it also wouldn’t stop the pervasive practice of showrooming, where customers visit brick-and-mortar stores to see an item, then buy it somewhere else.

“Price comparison is only one component of why consumers showroom,” he said. “Showrooming is a broader phenomenon encouraged by rapid adoption of smartphones and growing use of mobile phones as purchasing and shopping devices.”

Even the National Retail Federation agreed that, sales tax or not, showrooming is probably here to stay. “I think retailers will adapt to it,” said David French, the group’s senior vice president of government relations. “What this will do is eliminate the built-in price advantage online retailers have,” he said.

But Brian Bieron, eBay’s senior director for global public policy, said the legislation would hurt small online retailers, and analysts like Forte agree that compliance would carry a cost burden.

Although eBay can’t quantify how many businesses the legislation would impact, Bieron said “far too many” would be affected. The NRF's French contends that it would be less than a few hundred.

Although Amazon already collects sales tax in some states, on the surface, its support for the measure is counterintuitive. Kessler said it has more to lose than eBay based on its merchandise mix.

“Amazon typically sells more commodity type items,” he said.

Amazon could lose sales to big-box retailers, although Forte estimated that only about 14 percent of Amazon’s retail sales come from big-ticket items like TVs.

“I think Amazon realized it was inevitable,” Kessler said.

The other reason behind Amazon’s support for Internet sales tax legislation is its growing brick-and-mortar footprint. Current law requires that a retailer with a physical presence in a state — like a store or warehouse — has to collect sales tax there. As Amazon has moved more aggressively into same-day delivery, it has expanded its network of facilities. And if it has to collect sales tax, it wants to make sure competitors like eBay have to, as well.

For shoppers, the upshot means paying taxes on purchases they might not have before. Technically, customers are supposed to self-report those taxes, but almost nobody does. The Marketplace Fairness Act replaces this broken honor system with one that puts the onus on the merchant.

Whether or not this will prove a windfall for state coffers, though, is unknown. Estimates of how much money is lost because people don’t self-report tax owed on online purchases range from $11 billion to around $24 billion annually, but evidence from California, which has had its own Internet sales tax rule in place since September, indicates that the amount might be even lower.

The other X-factor is whether or not the act can pass through the Republican-controlled House of Representatives. With a majority hostile to taxes of just about any kind, Forte suggested some sort of compromise — like matching sales tax revenue with equal cuts in aid to states or lowering corporate tax rates to compensate retailers for the administrative costs of collecting the tax — might have to be brokered for the Marketplace Fairness Act to see the light of day.

Economy pacing itself after getting out of the gate fast

Wed, 24 Apr 2013 12:06:33 -0700

by John W. Schoen, NBC News

Thanks to the Federal Reserve, the economy’s annual “spring slump” probably won’t become a spring stall.

If not for the central bank, which is pumping billions of dollars in cheap money into the economy, spending cuts set to kick in again for the next fiscal year likely would be having a larger impact on economic growth, hiring, business spending and consumer sentiment.

On Friday, the government will offer up the latest reading on the pace of growth in the first three months of the year with the release of its initial estimate of first quarter gross domestic product.

The performance is expected to be much stronger than the last three months of last year, when worries about the looming “fiscal cliff” paralyzed businesses and consumers and brought the economy to a near standstill. Most forecasters are expecting a first quarter growth rate of about 3 percent – up from the previous quarter’s dismal showing of just four-tenths of a percent.

That pickup in the economy came after the budget impasse in Washington was resolved at the start of the year and consumers and businesses made up for deferred spending, investment and hiring.

The growth spurt appears to be slowing now, although it’s not expected to stop short. The slower pace more likely simply reflects a return to the sluggish subpar growth that has been in place since the Great Recession ended in 2009.

“The fact that job growth fell below 100,000 a month in March is a bit worrying,” said Paul Ashworth, U.S. economist at Capital Economics. “But if you look at February and March together, you’ve still got gains of 170,000 a month because February was that big.”

Falling gasoline prices – down six percent since late February – are also helping to offset the burden consumers felt after a payroll tax cut expired at the start of the year. That should show up in next month’s data as a boost to consumer spending, said Ashworth.

Since the financial collapse of 2008, central banks around the world have been flooding the global financial system with cash to try to get more money flowing through the economy. The U.S. Federal Reserve has pumped more than $2 trillion of cash into the system and is increasing that amount by $85 billion a month.

Critics of the Fed’s unprecedented easy-money policy argue that it raises the risk of inflation and provides fuel for another ruinous bubble. But despite the Fed’s efforts to spur lending, much of the cash has been accumulating on banks’ books. In any case, there is little evidence of inflation; consumer prices remain stable and wages are flat.

The longer-term economic outlook depends heavily on whether government spending cuts, which are only beginning to take effect, deepen later this year.

“The effects are cumulative,” said Joel Naroff, chief economist at Naroff Economic Advisors. “It’s not going to happen right away, so it’s going to take time as the impact builds later this summer.”

Though there appears to be little progress on reconciling separate budget proposals from the White House, Senate and House, the political bickering that spooked businesses, consumers and investors late last year seems to have subsided.

“The rhetoric has toned down significantly,” Caterpillar CEO Doug Oberhelman told CNBC. “That's a big change from the last two years.”

So far, this year’s cuts seem to have had little impact on large U.S. companies’ hiring and spending plans, according to a survey released Monday by the recent National Association for Business Economics.

More than half the group said are rising sales, up from 37 percent in the fourth quarter, and some 29 percent said profit margins are improving.

“The economic news is a very bit brighter,” said Oberhelman. “I don't want to be overly optimistic here, but it certainly feels a little better than the last two springs.”

That optimism has been reflected in the gains in the stock market, which paused recently as investors took a closer look at the softer economic data. They’ll be getting a better read on the outlook in the next few weeks as companies report first quarter sales and profits.

While profits appear to be holding up for many big businesses, wages continue to stagnate for workers. Fewer than a third of companies surveyed by NABE said wages and salaries are rising. Only a fifth of the group said they’ve added new workers. Without pressure to hire more people, companies won’t feel compelled to raise wages and will likely try to do more with the workers they have.

If sales continue to rise, and managers hold the line on new hiring, corporate profits will likely continue to expand. At some point, though, employers may find they’ve stretched their workers to the breaking point. As the economy improves, said Naroff, the best workers may start looking elsewhere.

“They know they’ve been treated like trash for five years so anyone that can find another job is going to be looking for one,” he said. “That’s going to cause businesses to bid for the labor that they currently have and for new labor.”

That, in turn, will likely translate into faster wage growth and more powerful consumer spending, helping to boost economic growth further, said Naroff.

At the current level of weak job growth, it will likely take nearly two years to bring the unemployment rate down to levels that spark higher wages, according to most forecasters, including the Federal Reserve. At their latest policy meeting in March, U.S. central bankers tweaked their estimates for the jobless rate to show it falling to between 6.7 percent to 7 percent by the end of 2014 and to a range of 6 percent to 6.5 percent in 2015.

Bakersfield Women's Business Conference

Thu, 18 Apr 2013 09:20:22 -0700

BAKERSFIELD, CA - The Women's Business Conference strives to help women succeed by offering them the tools and guidance to do so. The 24th annual event takes place Thursday at the Rabobank Arena from 7:00 am to 4:30 pm.

The event is sold out. Organizers say they're expecting 1,500 guests.

This year three keynote speakers, along with other presenters, will address the group. Giuliana Rancic, co-host of E! News will speak Thursday afternoon at the luncheon, entrepreneur and author Lynda Resnick will open the conference, and award-winning television anchor and reporter Robin Mangarin-Scott will be the closing speaker.

Local couple makes custom coffins

Mon, 15 Apr 2013 06:51:09 -0700

BAKERSFIELD, CA - A local couple turned their hobby of woodworking into a full-time job, but they aren't making the ordinary pieces you might expect.

After hearing there was an interest in handmade caskets, a Bakersfield couple decided to take on the task. From hot pink and camo to the traditional design, they can do it all.

Owners of 18th Street Carpentry, Andrea Soler and her fiancé offer a unique style of something most people don't think of often, but is necessary.

Soler said, "We do round tops, we do flat tops, we do different styles of casket."

They build handmade wood caskets.

"Someone can literally walk in here and say, hey you know I would like a hot pink casket.' Not that that's probably very common, but, you know, 'I'd like something hot pink with a certain specific kind of interior' and we can provide that to them," said Soler.

The couple has been involved in woodworking for years but after their family brought up the idea, they decided to start a new business.

"We dropped everything we were doing and just started following this dream that people really are looking for this and that we can bring it to the public," said Soler.

Soler says building a casket is is much different than building other items.

"It's a lot more meticulous kind of work. There's not a lot of hammering and nailing going on in here it's all very, very fine, fine delicate work that he's doing."

Whether you're in the market for the traditional design or a unique casket, they're up for the challenge.

The price of a standard casket purchased online or through other retailers is about $1,000. Eighteenth Street Carpentry offers the basic design for $650.

Jury: Exxon owes $236 million for polluting groundwater in N.H.

Wed, 10 Apr 2013 10:44:06 -0700

By Allison Linn, TODAY

High school and college graduates are still being hobbled by years of weak economic growth and an extremely tight job market, and that difficult start in the job market could impact the class of 2013 for years to come, a new analysis finds.

“Graduating in a bad economy has long-lasting economic consequences,” said Heidi Shierholz, economist with the Economic Policy Institute, which prepared the report on young workers released Wednesday.

The liberal-leaning think tank looked at high school graduates between ages 17 and 20 who aren’t enrolled in further schooling, as well as college graduates between ages 21 and 24 who have a bachelor’s degree and aren’t seeking further education.

The analysis found that the unemployment rate for the high school grads who aren’t going to college has improved somewhat since hitting a high of 32.7 percent in 2010, but not enough to give young workers (and their parents) much comfort.

An average of 29.9 percent of high school grads between ages 17 and 20 who weren’t enrolled in further schooling were unemployed and actively looking for work between March 2012 and February of 2013, according to their analysis. That’s up from an average of 17.5 percent in 2007, when the job market was much stronger because the recession had not yet begun.

Getting a college degree still greatly improves people’s job prospects, but many young college graduates also continue to struggle to find a job after many years of high unemployment and dim job prospects.

The unemployment rate for young, recent college graduates who weren’t furthering their education stood at an average of 8.8 percent between March of 2012 and February of 2013, according to the EPI analysis. That’s down from an average of 10.4 percent in 2010, but still much higher than 5.7 percent in 2007.

The EPI report noted that more than half of young high school graduates were enrolled in a college or university, following a long-term trend toward more young Americans heading to college. Still, many are finding it difficult to finance the increasing cost of education, and the weak job market could make it hard for those young people to pay off their student loan debt.

That's especially true if they can’t land a well-paying job. The EPI analysis found that young high school grads were making an average of $9.48 an hour in 2012, while young college grads were earning an average of $16.60 an hour.

Both groups have seen wages fall in the past decade as the economy has weakened, according to EPI’s analysis. That could turn out to be a big problem for young workers because when you start out your career at a lower wage, it can take years and years to catch up.

According to EPI’s analysis, the class of 2013 could be earning less than they might have in a stronger economy for as long as 10 or 15 years.

Shierholz noted that the unemployment rate for young workers is always higher than average, and that’s especially true in times of economic distress. Now, she said, young workers are in a particularly tough place mainly because the overall job market has been so tough for so long.

“The unemployment rate of young workers is exactly what we would expect it to be just given the broader weakness in the labor market,” Shierholz said.

The overall unemployment rate fell to 7.6 percent in March, according to the Bureau of Labor Statistics. But economists weren’t cheered by the drop because it came as many Americans stopped looking for work and therefore were no longer counted in the tally. The unemployment rate only includes people who have actively looked for a job in the past four weeks.

Work perks disappear as hours expand

Wed, 10 Apr 2013 10:12:09 -0700

By Martha C. White, TODAY contributor

Is a pat on the back too much to ask?

Companies believe they’re doing a terrific job of motivating employees, but American workers don’t see it that way. After weathering the recession and being asked to do more with less, they’d like some kudos for their efforts.

“We found that employees with one foot out the door clearly feel recognition in their company is not frequent enough or fair enough,” Globoforce, a company that designs corporate rewards programs, said in its twice-yearly Mood Tracker survey last fall. About half of the employees who were looking for a new job said it was because they weren’t getting those “attaboys” for jobs well done.

When the economy was at its trough, employees didn’t mind giving up perks and working harder, because at least they still had jobs. But now things have changed: Corporations earned a record-high $1.75 trillion in the third quarter of 2012, and compensation for top executives has climbed even as wages for rank-and-file have stagnated.

A survey last fall of medium-sized and large companies conducted by the Society for Human Resource Management and Globoforce, found that although about three-quarters of respondents had programs in place to recognize employee achievements, this number slipped from the previous year.

That’s still a healthy majority, but there’s evidence that the decrease might be a longer-term trend dating back to the start of the recession. Surveys conducted every three years by the group WorldatWork found that recognition peaked in 2005 and 2008, when 89 percent of responding companies had recognition programs. In the group’s 2011 survey, that number slipped to 86 percent, and the amount they spent on these programs also dropped.

“There is an impact when things are taken away, particularly in this day and age when there are minimal increases in salary,” said Rodger Stotz, chief research officer with the Incentive Research Foundation. “The recognition becomes more valuable because it shows the organization values and appreciates the employee, and it has an emotional impact.”

Efforts to recognize good work and boost morale don’t have to be expensive, recognition experts say.

“My experience has been these programs don’t cost a lot of money, but there’s a lot of bang for the buck,” said Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management.

“It creates a culture of positivity,” Charlie Ungashick, CMO at Globoforce, said.

The problem is that the financial benefits of more motivated workers aren’t always evident. Much of the research conducted to assess results is attitudinal rather than quantitative, and the losses the come from dropping recognition efforts are similarly hard to quantify, said Frank Mulhern, associate dean of integrated marketing communications program at Medill School of Journalism Media and Integrated Marketing Communications at Northwestern University. “It’s hard for a CFO to see that.”

A little more than three-fifths of respondents in the SHRM survey said their company rewarded employees based on performance, but the people doing that hard work don’t see it that way. Just 37 percent of respondents in Globoforce’s Mood Tracker survey said people in their company were fairly rewarded according to their job performance.

More than half of workers say being “valued and rewarded” is what’s most important in choosing where to work, employee recognition program company Achievers found in a survey conducted last year, but a November Gallup poll found that slightly less than half of American workers are satisfied with the amount of recognition they get for the work they do.

Ungashick said companies were experimenting with new ways to give workers that pat on the back, like peer-to-peer recognition. And a growing number of managers are embracing benefits like flex time and working from home. But these “perks” are a double-edged sword: A Bureau of Labor Statistics study found that up to two-thirds of the time employees spend telecommuting is actually on top of the regular 40 hours they put in every week.

Industries with labor shortages see the most feel-good investment.

Elliott says Silicon Valley, where big tech firms fight for top talent in programming and engineering, is a hotbed of incentives and little extras. After becoming CEO at Yahoo last July, Marissa Mayer implemented free lunch and gave employees iPods. (She also demanded that employees work from the office.)

But this sort of lavish perk isn’t the norm in most workplaces. “This emphasis on engagement, much of that is being pioneered in the high tech industries where there’s such a high value placed on human capital,” Mulhern said.

It’s another story at the lower end of the labor-market spectrum, where many of the jobs lost in the recession have been recovered, he said. “It’s more like the cost benefit isn’t necessarily there... for employees where there’s a high turnover and they’re easily replaceable.”

Stocks jump; S&P tops all-time high set in 2007

Wed, 10 Apr 2013 10:04:10 -0700

JeeYeon Park, CNBC

The S&P 500 briefly surpassed its all-time high of 1,576.09 set in October 2007 shortly after the market opened Wednesday, boosted by upbeat economic news from China and after the Federal Reserve's latest meeting minutes.

The Dow Jones Industrial Average opened higher, led by Pfizer and IBM.

The S&P 500 set a record intraday high minutes after the market opened, topping its all-time high of 1,576.09 set in October 2007, The Nasdaq also gained at the open. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 13.

All key S&P sectors were in positive territory, led by health care and techs.

Minutes from the most recent Fed meeting suggested that a few policymakers expected to slow the pace of asset purchases by midyear and end them later this year, while several others expected to taper the rate a bit later and halt the program by year-end.

Under its current quantitative easing program, the Fed purchases $85 billion in Treasurys and mortgage-backed securities each month.

In addition, policymakers were worried about increased risks due to the central bank's aggressive monetary stimulus, though most saw those dangers as "manageable" for now.

The Federal Reserve released the minutes of its latest Federal Open Markets Committee Meeting several hours earlier than planned. The minutes were inadvertently released to about 100 Congressional staffers and trade lobbyists shortly after 2pm ET Tuesday, according to a Federal Reserve spokesperson.

Among earnings, CarMax edged higher after the used cars retailer posted a 13 percent gain in earnings, but comparable sales grew at a slower pace than the previous quarter.

After the closing bell, Bed Bath & Beyond is slated to report earnings, while Chevron is expected to post its interim results. Banking giants JPMorgan and Wells Fargo are scheduled to report on Friday.

S&P 500 earnings are expected to rise just 1.6 percent year-on-year in the first quarter, compared to 6.2 percent in the last quarter, according to Reuters. Negative warnings have been higher than usual in the first quarter, with 108 downward revisions for companies, compared to 23 positive revisions, the worst ratio for 12 years, said Reuters.

President Barack Obama will send his budget proposal to Congress on Wednesday. It's expected to include cuts to social security and other welfare programs in an effort to move closer to striking a deficit reduction deal with Republicans.

Meanwhile, U.S. Treasury Secretary Jack Lew wrapped up his visit to Europe on Tuesday, calling on his European counterparts to strike a balance between growth and austerity and to boost demand.

Small business confidence slips after 3 months of gains

Tue, 09 Apr 2013 11:15:00 -0700

Heesun Wee, CNBC

Small-business owners' confidence fell in March — halting a three-month winning streak, as entrepreneurs still aren't feeling optimistic about business or making substantial hiring plans.

That's the finding of a monthly survey by the National Federation of Independent Business. The group said Tuesday that its small-business optimism index edged down 1.3 points to 89.5 from 90.8 points in February.

"Virtually no owners think the current period is a good time to expand," said NFIB chief economist Bill Dunkelberg in a prepared statement. Plus, "over 75 percent think that business conditions in 6 months will be no better or worse than they currently are," he said.

Although housing and the energy sectors are forecast to add jobs, Main Street collectively has no plans to create new employment in the coming months, according to the monthly sentiment report.

The sentiment reading had ticked higher in December, January and February. But to describe that as a " 'run' is an exaggeration," Dunkelberg said.

Bottom line: As the recovery tries to gain traction, there may be only modest support from new Main Street jobs—a traditional driver of past recoveries.

Plans to create small-business jobs tumbled in March, falling 4 points to a net zero percent of small employers, who plan to increase total employment, according to NFIB data.

Turns out what's happening in the broader U.S. economy—an anemic employment picture—is playing out among mom and pops. Private sector job creation was considerably less than forecast for March. That report was released jointly by ADP and Moody's Analytics last Wednesday.

The report was a preview to Friday's nonfarm payrolls report, also weak. Job creation slowed to a crawl during March, with the U.S. economy adding just 88,000 positions though the unemployment rate fell to 7.6 percent. The number was a sharp decline from February's upwardly revised 268,000.

"Overall, it appears that there will be little growth coming from the small business half of the economy and as the world economy slows, maybe even less from big business," Dunkelberg said.

A factor in the jobs drag is mandatory federal spending cuts. "One reason is the sequester. I think that will start to kick in," Moody's economist Mark Zandi said last week on CNBC. "I think that will start to show up in jobs in the next few months. The other thing is health care."

For employers, there has been a heavy cloud of uncertainty about anticipated spending cuts and costs associated with Obamacare that go into effect in 2014.

But unlike larger private sector businesses, smaller employers usually don't have buffers such as large cash reserves to ride out federal budget cuts. Most smaller firms also can't quickly pivot business strategies to ride out a rough patch. So their strategy has largely been staying in a holding pattern—including hiring decisions.

Fred Deluca, the founder of privately held Subway Restaurants, said the government is simply out of touch with small-business owners. Policies including Obamacare discourage entrepreneurship and the American dream of owning your own business, Deluca told CNBC's "Squawk on the Street" in February.

Added NFIB's Dunkelberg, "For the sector that produces half the private GDP and employs half the private sector workforce—the fact that they are not growing, not hiring, not borrowing and not expanding like they should be, is evidence enough that uncertainty is slowing the economy."