My finance view

Despite a mixed performance on Friday, stocks booked the best monthly gain in a year, with the Dow Jones industrial average and S&P 500 both rising nearly 7% in July.

Stocks were supported this month by strong quarterly financial results from major U.S. companies. About 75% of the roughly 300 companies in the S&P 500 that have reported earnings so far have beat analysts’ estimates.

But the earnings optimism has been tempered by ongoing concerns about the economy, particularly worries that tepid job growth will eventually undermine corporate profits.

"Even though earnings and guidance have been better than expected, there’s still skepticism in the market because jobs have been missing in action," said Alec Young, an equity strategist at Standard & Poor’s.

Friday’s session was choppy, as investors weighed mixed reports on U.S. economic growth, consumer confidence and regional manufacturing activity.

The Dow Jones industrial average (INDU) fell 1 point, or less than 0.1%. The S&P 500 (SPX) index fell less than 1 point and the Nasdaq (COMP) composite gained 3 points, or 0.1%.

The rally this month came after stocks had drifted lower since April as investors grappled with concerns about the debt crisis in Europe and signs the recovery in the U.S. economy will be sluggish.

Stocks slipped Thursday as cautious comments from a regional Federal Reserve president about the health of the economy spooked investors.

Looking ahead, Young said the market could push higher late next week if the government’s July employment report comes in better than expected on Friday. Economists believe the report will show employers cut 160,000 jobs in July after a loss of 125,000 the month before.

Economy: Gross domestic product, the broadest measure of the nation’s economic activity, rose at a 2.4% annual rate in the second quarter, down from an upwardly revised 3.7% in the first quarter.

Economists surveyed by Briefing.com had expected GDP to show an annualized rate increase of 2.5%.

It was the fourth straight quarter of growth, and seemed to back some economists’ views that the recession that began in December 2007 ended at some point in the middle of 2009. But the report indicated that consumer spending, which drives the bulk of U.S. economic activity, remained weak.

Separately, the Reuters-University of Michigan Consumer Sentiment index fell to 67.8 in July from 76 the month before. While the index reflected how nervous consumers were about the economy and job market, the decline was slightly smaller than expected. Economists had expected the index to fall to 67.5.

The Chicago PMI, a regional reading on manufacturing, rose more than expected in July. The index rose to 62.3 this month from 59.1 in June. Economists were expecting a reading of 56.3.

Earnings: Chevron (CVX, Fortune 500) posted second-quarter results that topped forecasts and said profit tripled in the quarter. Shares rose about 0.1%.

Merck (MRK, Fortune 500) reported earnings per share that beat analysts’ expectations, even as net income fell 52% on acquisition costs. Sales growth, however, fell short of expectations. Shares fell 1.5%.

Companies: Walt Disney (DIS, Fortune 500) said early Friday it will sell Miramax Films for about $660 million to an investor group, Filmyard Holdings.

World markets: European stocks ended the day mixed. The CAC 40 in France fell 0.2%, while Germany’s DAX gained 0.2%. The FTSE 100 in Britain fell more than 1%.

Asian markets finished lower. The Shanghai Composite fell 0.4% and the Hang Seng lost 0.3%, while the Nikkei in Japan tumbled 1.6%.

Currencies and commodities: The dollar was up versus the euro, but down against the British pound and the Japanese yen.

U.S. light crude oil for September delivery rose 59 cents to $78.95 a barrel.

COMEX gold’s December contract gained $12.70 to $1,183.90 per ounce.

Bonds: Treasury prices rose, pushing the yield on the 10-year note down to 2.91% from 2.99% late Thursday. Bond prices and yields move in opposite directions.

How much of a hit did you take in the recent correction? Are you worried about a bear market? What changes have you made in your portfolio and what changes do you plan on making for the rest of the year? E-mail your story to realstories@cnnmoney.com and you could be featured in an upcoming article. For the CNNMoney.com Comment Policy, click here. 

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Citigroup said Thursday it would pay $73 million to settle charges by the Securities and Exchange Commission that the bank, as well as two of its executives, misled investors about the company’s exposure to the subprime mortgage market.

Wall Street’s top regulator said Citigroup repeatedly made misleading statements in investor presentations and in public filings about the actual size of assets it controlled that were backed by subprime mortgages.

Between July and mid-October 2007, the company maintained its holdings of what have now been dubbed "toxic assets", stood at $13 billion, when in fact the number was closer to $50 billion, according to the SEC.

"The rules of financial disclosure are simple — if you choose to speak, speak in full and not in half-truths," Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.

Also charged in the case were two Citigroup executives, including former chief financial officer Gary Crittenden and Arthur Tildesley, Jr., who currently serves as the head of cross marketing at the company.

Crittenden agreed to pay $100,000 to settle the charges while Tildesley, the former head of investor relations, agreed to pay $80,000.

In a statement issued Thursday, Citigroup stood behind the men, calling them both "highly valued" employees.

"We are pleased that we have reached agreement with the SEC to put this matter concerning certain 2007 disclosures behind us, and that the SEC is not charging Citi or any individual with intentional or reckless misconduct," the company said in a statement.

Citigroup neither admitted or denied the SEC’s allegations. But Thursday’s settlement is the federal agency’s latest attempt to crack down on fraud and misbehavior on Wall Street during the crisis.

Earlier this month, the SEC struck an agreement with Goldman Sachs (GS, Fortune 500). The company agreed to pay $550 million to settle charges that the company defrauded investors in the sale of an investment tied to subprime mortgages.

Citigroup (C, Fortune 500) stock edged higher in afternoon trading Thursday. 

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The manager of community affairs at Rackspace Hosting has decided to leave her high-tech employer to join the San Antonio Hispanic Chamber of Commerce.

Mari Aguirre will become the new chief of staff for the Hispanic Chamber. Currently, as manager of community affairs, Aguirre is also president of the Rackspace Foundation.

In her new role as chief of staff, Aguirre will oversee the Hispanic Chamber’s Leadership Foundation and lead 15 employees. Before joining Rackspace (NYSE: RAX), Aguirre worked for former San Antonio Mayor Phil Hardberger. In the mayor’s office, Aguirre worked on education and workforce initiatives, diversity issues, board and commission appointments and the Hurricane Katrina volunteer effort guaranteed cash advance.

“Mari is very talented, has a tremendous work ethic, has great passion for our small-business community, and we are very excited that she agreed to join our great organization,” says Hispanic Chamber President and CEO Ramiro A. Cavazos.

San Antonio-based Rackspace is the world’s leading information technology infrastructure hosting and cloud computing company.

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Planet Fitness has leased about 22,680 square feet of space at the Charlestown Shopping Center in Kernersville, marking the third company location in the Triad.

YOT Fitness Kernersville LLC, which conducts business as Planet Fitness, leased the space from Greenwood and Charles Inc. and joins Rite Aid and other tenants in the shopping center.

Raymond D. Collins Jr., of Collins Commercial Properties Inc., represented YOT Fitness/Planet Fitness in the Kernersville lease.

Ladd Freeman Jr low rate payday loans., of Freeman Commercial Real Estate, represented Greenwood and Charles Inc. as landlord in the lease.

Planet Fitness in Kernersville is slated to open in the fourth quarter with an initial 15 employees. Other Planet Fitness centers are located in Greensboro and High Point.

Martin Sinozich is principal and managing partner of the three Triad locations.

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NEW YORK — Simon Hallett, chief investment officer of Harding Loevner, knows a thing or two about international markets. The nearly 30-year investment-industry veteran manages two highly rated mutual funds, Harding Loevner International Equity, and Harding Loevner Emerging Markets. His firm manages more than $7.3 billion. Here are his views on the European debt crisis and the global economy:

With all the discussion about Greece and the decline of the euro, what’s on your mind?

All that we’re seeing now in Europe is a kind of a ripple effect from what began here three years ago.

We wrote to our mutual fund shareholders in October, and talked about the twin big risks that the world faced. One is the risk of higher inflation resulting from the massive expansion of monetary supplies.

That helped finance the other big risk: the contraction in assets that came as a result of terrible lending by the banks. So there’s this kind of tradeoff between inflationary pressures in the future, and massive deflationary pressures now.

We don’t know what policy is going to enable us to steer between these two monsters. There is a tremendous risk of policy errors at a time when government involvement is much, much greater. But we basically said, deflationary pressures are the ones that are going to win out over the coming years, and that has some implications for the kind of companies in which we should invest.

What can we expect now?

We’re seeing a contraction in bank assets because they made stupid loans. And equity markets, in particular, seem to be very short-sighted about where the strains are going to emerge next. Governments in Europe have too much leverage. Not just in terms of their balance sheets, but also in terms of their unfunded commitments, such as welfare benefits, and unemployment benefits. In order to fix the credit problems that the banks have, governments have to generate more revenue, so they have to push tax rates up and that threatens the economic growth. So I think we’re going to continue seeing strains on government finances, strains on the finances on anybody who has too much debt.

What kind of companies can best operate in this kind of environment?

Our philosophy is to make sure that balance sheets are strong, cash flow is strong, that management is capable, and that the competitive position is invulnerable — or at least as strong as you can possibly assure. And that this is the kind of company that can eke out fairly modest amounts of growth wherever they can find it. They’re not reliant upon very strong economies.

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Wall Street’s key measure of volatility skyrocketed on Thursday, as all major stock indexes plummeted on concerns about the European debt crisis.

The CBOE Volatility (VIX) index, or the VIX, jumped 31.2% to 46.35, after surging as high as 46.37 earlier in the session.

Stocks fell sharply, with the Dow Jones industrial average (INDU) plunging more than 200 points, or 2.7%, after sinking as much as 328 points earlier in the session.

Year to date, the VIX has risen 114%. It’s up more than 73% over the past five days alone. Just four weeks ago, the VIX was at a three-year low.

A VIX reading higher than 30 is considered a sign that investors are getting worried. But even at Thursday’s highs, the VIX is still way below the peak level of almost 90 hit in October 2008 — after Lehman Brothers collapsed.

Concerns about European debt have battered global stocks and spilled over into U.S. markets. The European Union and International Monetary Fund hammered out a $1 trillion European aid package, but that has failed to assuage worries payday loan lenders in states.

Some investors fear that even the massive bailout won’t be enough to contain debt problems from spreading throughout Europe. Earlier this month, riots in Greece turned deadly with protesters enraged over severe new government austerity measures.

Other countries, including Portugal and Spain, also announced budget cuts to avoid problems seen in debt-choked Greece — but investors worry that could hamper fragile recovery. Those fears sent the euro spiraling to a four-year low, which set off alarm bells for market participants.

European shares also felt the blow Thursday, closing lower to extend the previous session’s sharp drop. Britain’s FTSE 100 was down 2%, France’s CAC 40 fell 4.2% and Germany’s DAX lost 2%. 

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Homeowners seeking relief under the Obama administration’s mortgage aid program will be required to provide proof of their incomes upfront, a significant reversal for the problem-plagued effort to stem the foreclosure crisis.

Borrowers had been able to state their income verbally and provide documentation later. Mortgage companies, however, said many borrowers didn’t return the documents.

Only about 66,500 borrowers, or 7 percent of those who signed up, had completed it as of December.

Lenders will now be required to collect two recent pay stubs at the start of the process, the Treasury Department said Thursday. Borrowers will have to give the IRS permission to provide their most recent tax returns, rather than submitting the returns themselves.

The changes become mandatory for loan modifications made starting June 1.

The change in policy came after officials concluded that mortgage companies such as GMAC Mortgage and Ocwen Financial Corp. were delivering better results. They had always required documents up front.

Under the new rules, participating mortgage companies must acknowledge receipt of a borrower’s application within 10 days and approve or deny the application within 30 days. After that, borrowers will still be required to make three months of trial payments before the modification becomes permanent.

While the changes should help, the lack of penalties for companies who don’t comply disappointed some experts. "There’s no teeth to that obligation," said Andrew Jakabovics, associate director for housing at the Center for American Progress, a liberal think tank.

Many consumer groups, meanwhile, have been calling for more dramatic changes. They want to help homeowners who have lost their jobs and those who owe the bank more than their homes are worth.

Treasury officials said they are studying ways to aid unemployed homeowners but offered no details.

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General Motors Co’s board of directors, citing a need to chart a new course, dismissed Chief Executive Fritz Henderson on Tuesday, a person with direct knowledge of the proceedings said.

GM Chairman Ed Whitacre will become interim chief executive as the automaker begins an immediate search for a replacement.

Henderson, a career GM executive, became CEO eight months ago, vowing to reform the slow-moving culture that contributed to the automaker’s collapse. The announcement of his departure came after a meeting of GM’s 13-member board in Detroit.

Henderson became CEO in March after his predecessor, Rick Wagoner, was forced out by the Obama administration as part of the U.S. government-funded restructuring of GM.

“The board decided — and Fritz agreed — that given where we are, it was time to make some changes,” GM spokesman Chris Preuss said at a hastily arranged news conference.

Whitacre, a former AT&T chief executive, became chairman of GM in July as part of a new board vetted by the U.S. Treasury and intended to safeguard the government’s $50 billion investment in the automaker.

The U.S. government has a majority stake in GM, but the Obama administration has repeatedly said that it is leaving oversight of the company to Whitacre and the board.

Preuss said the White House had been notified of Henderson’s departure, but was not part of the decision.

Whitacre appeared briefly before reporters at GM’s headquarters in Detroit but did not take questions on why the board had chosen to part ways with Henderson.

Reading from a prepared statement, Whitacre said Henderson, who helped GM through its July bankruptcy, had “done a remarkable job in leading the company through an unprecedented period of challenge and change.”

“While momentum has been building over the past several months, all involved agree that changes needed to be made,” Whitacre said.

With the appointment of Whitacre, all three U.S. automakers are now headed by outsiders to Detroit.

Ford Motor Co CEO Alan Mulallly left Boeing Co in 2006. Chrysler is now headed by Fiat SpA CEO Sergio Marchionne.

(Reporting by David Bailey, writing by Kevin Krolicki; editing by Patrick Fitzgibbons and Matthew Lewis)

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Federal Reserve officials on Tuesday struck a cautious note on the U.S. economy, citing high unemployment, heavy reliance on government support and commercial real estate woes as hurdles to recovery.

Speaking less than a week after the Fed left interest rates unchanged at near zero, a trio of top officials — San Francisco Federal Reserve Bank President Janet Yellen, Atlanta Fed chief Dennis Lockhart and Boston Fed President Eric Rosengren — said the economy was still vulnerable.

“The strength and durability of the expansion is in question,” Yellen said in Phoenix, Arizona. “High unemployment, weak job growth and paltry wage increases are a recipe for sluggish consumer spending growth and a tepid recovery.”

The Fed chopped overnight interest rates to near zero in December and it has pumped more than $1 trillion into the economy to spur a recovery from the deepest downturn since the Great Depression.

Last week, it reaffirmed its commitment to keep borrowing costs ultra-low for “an extended period,” and financial markets will be listening to Fed officials closely to try to gauge when they may finally move to withdraw their economic support.

The latest remarks eased investor’s worries about higher interest rates, helping support prices for U.S. government debt.

Yellen and Lockhart are among the voters this year on the Fed’s policy panel, while Rosengren will move into a voting slot in 2010. While Yellen and Rosengren are seen as Fed “doves” on inflation, Lockhart is considered more of a hawk.

“It’s a question of timing,” Rosengren told a seminar in London when asked how the Fed planned to exit from its extraordinarily supportive policies no credit check payday loans. “We’re not there yet.”

SELF-SUSTAINING RECOVERY QUESTIONED

Yellen said it remains to be seen whether the private sector can carry the load once supportive fiscal and monetary policies fade. Meanwhile, Lockhart said that while a recovery was under way, growth would be “relatively subdued” in the medium term.

“The situation is much improved, but there are sobering aspects of the economic picture,” he told a conference in Atlanta, adding data on bank failures, foreclosures, unemployment and personal income “continue to disappoint.”

The U.S. economy grew at a 3.5 percent annual rate in the third quarter, snapping four consecutive down quarters and likely ending the recession that began in December 2007.

But labor market conditions remain dismal. The unemployment rate surged to a 26-1/2-year high of 10.2 percent in October, and a Reuters poll on Tuesday showed economists expect it to hit 10.5 percent in mid-2010 before subsiding.

High unemployment is one factor expected to keep the Fed on the sidelines. The central bank said last week that economic slack, subdued inflation trends and stable inflation expectations argued for a prolonged period of low rates.

“At this juncture, it’s hard to be encouraged about a fast rebound in job growth,” Lockhart added. 

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European Union-led plans to conclude a number of accords with Liechtenstein and other non- EU countries to fight tax fraud may stumble over resistance from two of the bloc’s smaller members, Luxembourg and Austria.

Sweden, which holds the rotating presidency of the 27- nation EU, seeks to get political backing from the region’s finance ministers meeting in Luxembourg today for several tax- cooperation deals that it says would enhance transparency. Luxembourg today said it will veto such plans because they go against agreements earlier this year that information exchange on tax matters should occur only on a case-by-case basis.

Leaders of the Group of 20 nations have agreed to clamp down on countries that don’t comply with global tax standards as part of efforts to battle the economic crisis. At the behest of the G-20, the Organization for Economic Cooperation and Development published a “gray list” that identified Austria, Luxembourg and Belgium, among others, as countries that haven’t implemented internationally agreed tax standards.

“At the G-20 meeting, it was agreed that there should be information exchange upon request in Europe,” Luxembourg Finance Minister Luc Frieden told reporters today before the ministers’ meeting. “What’s on the agenda today, however, would mean automatic information exchange for Austria, Belgium and Luxembourg. We think this is not the right way.”

Austria’s Finance Ministry said yesterday that the country would veto any deal that would force the country to join a system of automatic exchange of tax information while failing to shed light on anonymous trusts. Sweden said it seeks political agreement to sign an EU treaty with Liechtenstein and also to get backing for similar EU accords with Andorra, Monaco, San Marino and Switzerland.

‘Full Transparency’

“We need full transparency also as regards financial products to prevent individual states from hiding behind certain products — even while agreeing to information exchange — by saying there are products where we have no information about who the owner is and who is the beneficiary,” Austrian Finance Minister Josef Proell said today before the meeting.

Luxembourg is in favor of fighting tax fraud, “but we’re not in favor of having two different systems inside and outside Europe,” Frieden said in Luxembourg. “That’s why we will contribute constructively to today’s discussion, but we won’t agree to the proposed treaties with Liechtenstein and the mandates for negotiations with other countries.”

Luxembourg, Austria and Belgium have been taken off the OECD gray list after their governments signed a series of bilateral double-tax treaties in line with G-20 demands.

“We have to adhere to the conclusions of the Group of 20 nations, which concluded that information exchange should happen on request,” not automatically, Frieden said. “We can’t now say that the G-20 was wrong and we have to change the rules of the game.”

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