Ex-Ireland envoy, EMC chairman Egan dies in Boston

Richard Egan, former ambassador to Ireland, EMC data storage firm co-founder, dies in Boston

BOSTON (AP) -- Richard Egan, who rose from street kid to the U.S. ambassador to Ireland after making millions of dollars founding data storage giant EMC Corp., died Friday after a battle with lung cancer.

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His family issued a statement Friday night saying the longtime suburban Hopkinton resident died at his Boston home after being diagnosed with Stage IV lung cancer in May. The family said he also suffered from emphysema, diabetes and high blood pressure.

"This is a great loss for our family, and we are terribly saddened," the family said in a statement announcing his death.

Egan, 73, was an electrical engineer and a former U.S. Marine Corps helicopter pilot who worked at Lockheed Martin, Honeywell and Intel before he co-founded data storage technology provider EMC in 1979. He sold most of his shares in the tech boom, shortly before the bubble burst.

The self-made billionaire, who raised seed money for his business by selling office furniture, was a key fundraiser for the Republican party and former President George W. Bush, becoming a Pioneer fundraiser for the president in 2000.

He stepped down as EMC chairman in January 2001, about three months before Bush nominated him to be the U.S. ambassador to Ireland.

Former Gov. Paul Cellucci mourned Egan late Friday, describing him as a good friend who served his country with honor and distinction as ambassador.

"More importantly, he was one of the finest and most entrepreneurial business leaders our state has seen for some time, creating tens of thousands of jobs and helping lead the commonwealth's economic recovery in the mid-1990s," the Republican said. "Dick was a good friend to me, and I will always appreciate his support and miss him."

EMC's President, CEO and Chairman Joe Tucci lamented the death of his mentor and friend.

"The world lost a great man and a great leader today. On behalf of more than 40,000 EMC employees from around the world, we extend our deepest condolences to Mrs. Egan and the entire family," Tucci said. "His legacy will live on through the tens of thousands of lives he affected in so many positive ways."

Egan got a bachelor of arts in science degree from Northeastern University and a master of science degree from the Massachusetts Institute of Technology. He was part of the MIT team that developed the Apollo Guidance Computer, which provided reliable real-time control for the Apollo spacecraft that carried U.S. astronauts to the moon.

Egan never forgot his hardscrabble roots and was a major donor to Northeastern University, where a research center is named in his honor.

Egan leaves behind a wife and five children.

The family did not announce funeral plans.

For Stocks, September May Be the Cruelest Month

September is fewer than three weeks away. Feeling nervous? Maybe you should be. For investors, the period between Labor Day and Halloween is proving an annual fright show. And no one knows why.

It was, of course, in September last year that Lehman collapsed and everything fell apart. But then it was also September-October 2002 that the last bear market plunged to its lows.

The 1998 financial crisis? It began late August, and rolled on for two months.

The famous crash of 1987 came in October. But most people have forgotten that the market actually started sliding downhill in late August.

That's almost exactly what happened in 1929 too. The big crash came in October, but the market peaked just after Labor Day. Prices began falling through September, then tumbled further still.

The worst month of the Depression? September, 1931, when the Dow fell about 30 percent.

It was also in September, 2000, that the bear market really got going.

The 9/11 crisis, of course, came in September. That was hardly caused by investors. But what is forgotten is that the stock market was already looking wobbly. In the two weeks before the terrorist attacks, the Standard & Poor's 500-stock index fell 7 percent.

The great panic of 1907? October. The great crash of 1873? September.

Yikes.

So is there really a September, or a Halloween, effect?

Since 1926, investors have lost nearly one percent on average during September, according to market data tracked by finance professor Kenneth French at Dartmouth's Tuck School of Business. It's the only month with a negative average return.. For each of the other 11 months, investors gained nearly one percent on average.

Other research takes the idea of an autumn dip even further. Georgia Tech doctoral student Hyung-Suk Choi studied the so-called "September effect" as part of his recent Ph.D. thesis. He looked at data for 18 developed stock markets around the world spanning up to 200 years, and found that in 15 of those markets, September brought red ink for investors.

Fund manager Sven Bouman and finance professor Ben Jacobsen concluded that investors in most world markets have historically fared poorly from May through October each year. They made their money between November and April.

Hence the old British investors' saying, "sell in May and go away, don't come back till St Leger Day." (But since St. Leger Day is in the middle of September, even that date may be premature.)

Some of the September or Halloween effect is caused by a few really bad years. But that's not the whole story. To reduce the influence of outliers I looked instead at the median result since 1926 instead of the statistical mean. The performance gap between September and the other months shrank from 2 percent to 1.4 percent. That's smaller, but it's still a difference. The median September saw losses of just 0.07 percent. But the median month for the rest of the year gained 1.37 percent.

As for the causes of a possible September effect, most are stumped.

"There haven't been any good academic stories to explain it," admits Michael Cooper, finance professor at the University of Utah's David Eccles School of Business. "One credible explanation is just luck."

It's been suggested that mutual funds drive down the market by selling their losing stocks before their October 31 year end. Or that third quarter profit warnings come in early September, raising fears about full-year results. Or that these autumn crashes used to be related to the harvest, as Midwestern banks withdrew capital from New York.

(Still another theory cites seasonal affective disorder. Investors simply get more risk-averse, and more prone to sell, as the days get shorter. That's the case argued by York University finance professor Mark Kamstra and others.

So what, if anything, should you do?

In practical terms, maybe not that much. For most people, even a performance difference of one or two percentage points isn't going to cover the transaction costs of selling before the end of August and re-entering the market a month later. And stock market patterns aren't ironclad. The market may even jump in September, as it did in 2006 and 2007.

Perhaps the best you can do is brace for turmoil.

Stocks drop as investors worry about consumers

Stocks retreat after 2 days of gains as investors worry consumers will hurt economy's recovery

NEW YORK (AP) -- The fear on Wall Street is that nervous consumers are going to short-circuit the economic recovery.

Stocks fell sharply Friday, taking the major indexes down about 1 percent, after investors were disappointed by reports that the Reuters/University of Michigan index of consumer sentiment fell significantly short of expectations for the first part of August. That's a sign consumers may well keep cutting back their spending as they worry about losing their jobs. Consumer spending is crucial for the economy to emerge from recession as it accounts for two-thirds of all U.S. economic activity.

The discouraging reading came a day after the Commerce Department reported an unexpected decline in retail sales. Investors were able to shake that off, but Friday's consumer sentiment number had them bailing out of stocks, jeopardizing a summer rally that had lifted the Standard & Poor's 500 index more than 15 percent in about a month. Still, the indexes finished well off their lows of the day, a sign that the mood on Wall Street isn't all that grim, and light volume likely skewed price changes.

Investors also sold off oil and other commodities and moved their money into the relative safety of the dollar and government bonds. Treasury prices jumped, sending their yields lower, while the dollar rose against other major currencies.

After rallying for months on expectations of an economic recovery, investors are worried that they have been too optimistic, given consumers' continuing reluctance to spend. Analysts are predicting that the market may be rocky for some time.

"Valuations were beginning to price in a sunnier a future, but not all the data is sunny yet," said Lawrence Creatura, portfolio manager at Federated Clover Capital Advisors, referring to stock prices. "There is still going to be a tug of war between good news and bad news as we move through the coming months."

The Dow Jones industrial average fell 76.79, or 0.8 percent, to 9,321.40 after falling as much as 165 points after the consumer sentiment survey was released.

The S&P 500 index fell 8.64, or 0.9 percent, to 1,004.09, while the Nasdaq composite index fell 23.83, or 1.2 percent, to 1,985.52.

The drop erased much of the market's advance of the last two days, and gave the big indexes their first losing week after four weeks of gains. The Dow was down 0.5 percent for the week, while the S&P 500 index fell 0.6 percent and the Nasdaq was off 0.7 percent.

About five stocks fell for every two that rose Friday on the New York Stock Exchange, where consolidated volume came to a light 5 billion shares, down from 5.3 billion a day earlier. Light volume can exaggerate the market's movements.

In other trading, the Russell 2000 index of smaller companies fell 11.29, or 2 percent, to 563.90.

Bond prices rose sharply. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.57 percent from 3.62 percent late Thursday. The drop in the 10-year yield is good news for consumers because it is closely tied to interest rates on mortgages and other loans.

On the New York Mercantile Exchange, gold and other metals prices fell, while oil prices sank $3.01 to $67.51 a barrel.

Stocks have had a difficult few days, falling in the early part of the week amid anxiety over what the Federal Reserve would say about the economy at the end of a two-day policy meeting. The market turned higher on Wednesday after the Fed reassured investors with a more positive stance on the economy than in the past. The market's gains spilled over into Thursday.

"This week was a great example of what will likely occur for the rest of the year," said Greg Reynholds, a vice president at Lenox Advisors. "Day by day, week by week, month by month we're going to have to try to find direction through this data jungle."

Investors have sent markets higher this summer encouraged by improvements in housing, manufacturing and corporate profits. But without the support of the consumer, the economy's recovery is in question.

"I think you're going to need to see a material stabilization in labor markets before you get meaningful and stable consumer confidence," said Stephen Wood, chief market strategist at Russell Investments. "And we're certainly not adding jobs and we're not even at a point where jobs are no longer being lost."

Stocks fell across the board Friday, with the biggest losses among financial, energy and material companies -- industries that posted some of the biggest gains in recent days. Losses weren't as steep in more defensive areas like consumer staples and utilities, which tend to hold up better when the economy is weak.

In other economic news Friday, the Labor Department said the Consumer Price Index was flat in July after a slight increase in June. That had little effect on stocks but did help bond prices. Wall Street also shrugged off a report showing a bigger-than-expected increase in industrial production as investors have come to expect an improvement in manufacturing.

Overseas, Asian markets were mostly higher, with Japan's main index hitting a ten-month high amid mounting optimism about a global economic recovery. The Nikkei stock average rose 0.8 percent.

European markets gave up early gains and finished lower. Britain's FTSE 100 dropped 0.9 percent, Germany's DAX index fell 1.7 percent, and France's CAC-40 lost 0.8 percent.

The Dow Jones industrial average closed the week down 48.67, or 0.5 percent, at 9,321.40. The Standard & Poor's 500 index fell 6.39, or 0.6 percent, to 1,004.09. The Nasdaq composite index fell 14.73, or 0.7 percent, to 1,985.52.

The Russell 2000 index, which tracks the performance of small company stocks, fell 8.50, or 1.5 percent, for the week to 563.90.

The Dow Jones U.S. Total Stock Market Index -- which measures nearly all U.S.-based companies -- ended at 10,240.52, down 175.74, or 1.7 percent, for the week. A year ago, the index was at 13,271.88.

U.S. Employers Grow More Optimistic

Major U.S. employers are growing more optimistic, with few planning additional layoffs and many planning to reverse course in coming months on cost-cutting initiatives such as salary freezes, according to a new survey. But recent cuts in health-care benefits may become permanent.

The survey of human-resource executives at 175 mostly midsize and large U.S. firms by consulting firm Watson Wyatt Worldwide Inc. found that 33% plan to unfreeze salaries within the next six months and 79% within the next year. In a similar June survey, only 17% of respondents planned to unfreeze salaries within six months. Roughly 60% of the companies responding to the new survey had frozen salaries.

Of the smaller group that cut salaries, 44% of respondents said they plan to restore those cuts in the next six months, and 66% in the next year. More than 70% of the employers with hiring freezes said they plan to resume hiring within the next year. Respondents said they plan to lay off fewer than 2% of their workers in the next year, down sharply from past surveys.

"This is further evidence that companies think the worst is behind them and they're starting to look forward again," says Laura Sejen, global practice director strategic awards at Watson Wyatt. "What we don't know is have they made firm commitments at the management level or have they communicated to employees they're going to unwind these programs. It could certainly change."

The survey, conducted online earlier this month, is in line with recent reports of slowing job losses. The U.S. Labor Department said Friday that employers eliminated 247,000 jobs in July, down from an average of 556,000 in the first six months of the year. The unemployment rate fell slightly to 9.4%, from 9.5%, though economists said that largely reflected a drop in the number of people looking for work.

The Watson Wyatt survey found employers will be slower to restore changes in benefit programs -- and many recent changes to health-care plans may become permanent. Roughly two-thirds of respondents that had increased employee health-care costs say they don't plan to reverse those increases. Forty-one percent of respondents increased deductibles, co-pays or out-of-pocket maximums, while 40% increased the percentage of premiums that employees pay. These changes are" looking more permanent," says Ms. Sejen.

The news for retirement programs was more mixed. Nearly half of respondents said they plan to restore cuts in company contributions to retirement programs in the next year, and 64% envision restoring those cuts within 18 months. Of those, 67% said they will restore contributions to their prior level, but 21% will vary contributions based on corporate profits.

Many employers see the recession as bottoming out, adds David Wise, a senior consultant at consulting firm Hay Group Inc. "Most companies want to go into fiscal 2010 with the layoffs and salary freezes behind them," he says. But he warns that companies will remain conservative. "The worst thing a company can do after tough times is loosen the reins before the horse is ready to run," he says.