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Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating rising unemployment is prompting consumers to boost savings. The 0.4 percent decrease followed a revised 1.3 percent drop in March that was larger than previously estimated, the Commerce Department said today in Washington. Excluding auto dealers, sales fell 0.5 percent.

Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for months if not years. As long as the biggest part of the economy is constrained, any recovery from the worst recession in at least half a century is likely to be subdued.

Home prices in the U.S. dropped the most on record in the first quarter from a year earlier as banks sold seized homes and foreclosures in California and Florida dominated sales.

The median price fell 14 percent to $169,000, the National Association of Realtors said today. Prices dropped in 134 of 152 metropolitan areas, with the deepest declines in Cape Coral-Ft. Myers, Florida, and the San Francisco and San Jose areas.

Analysts Turning Bearish on S&P 500 because rally has pushed 34 percent of the companies in the Standard & Poor’s 500 Index above analysts’ price targets for the next year. Caterpillar Inc., the largest maker of excavators, and Citigroup Inc., the bank rescued by $45 billion in U.S. taxpayer funds, are among 170 companies that trade above their average price estimates, data compiled by Bloomberg show.

With more than a third of the companies in the benchmark index for U.S. stocks overvalued compared with their price targets, the S&P 500’s fair value is 970.21, compared with its 929.23 close on May 8. That means it has to go down 4% to reach it’s fair value.

• Choose company that have great CEO. The company depends on the leadership of the CEO. He must serve as a
  motivator for his employees and strategist for the company. You can see the capability of the CEO from his track record. Does he can bring the company better previously? Look at their degrees and job experience. Where have they worked and for how long? Would you hire that individual to run your company? If the company have known politician to sit on its board, he will help the company with his experience on working in the government. Retired military officials are also very beneficial to companies if he is in the board.
• Companies that have over seas production can take advantage of lower cost. Lower cost can bring higher sales to more customers and a higher profit margin on each unit.
• Companies that operates over seas can enter in untapped market, this will usually bring more sales.
• Company must have competitive advantage from other company. If a company is selling the same product and service, then they are the same as other company. How can they beat other company if they don’t have any advantage from other company.
• Find companies which is expanding. One criteria of this is the company is hiring new employees.You can try speaking to the human resources human manager ask her if she is hiring. If the human resources manager tells you that they are hiring employees it is very important to find out for what positions. The position they are looking can tell you where the company is heading. You can ask him by telling that you are a prospect investor for the company and would like to know more about the company.
• Survey the company’s supplier. Ask them what they think about the company. Do they like doing business with them? Do they pay on time?
• Survey the company’s customer. Ask them what they think about the company. Do they like buying from the company?
• The company have reasonable debt. To measure the safety of a company, we use the debt to equity ratio (D/E). It is a financial ratio indicating the relative proportion of equity and debt used to finance a company’s assets. This ratio is also known as Risk or Gearing. It is equal to total debt divided by shareholders’ equity. The two components of debt and equity are often taken from the firm’s balance sheet, but the ratio may also be calculated using market values for both, if the company’s debt and equity are publicly traded, or using a combination of book value for debt and market value for equity.
  A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as the result of interest expense. If a lot of debt is used to finance increased operations, the company could potentially generate more earnings. If this earnings is greater than the debt cost (interest), then the shareholders will benefit. However, if the cost of this debt outweigh the return that the company generates on the debt through investment and business activities, the company can go bankrupt.
  The debt/equity ratio depends on the industry in which the company operates. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5.

The Federal Reserve determined that 10 U.S. banks need to raise a total of $74.6 billion in capital. The Federal Reserve’s Chairman Ben S. Bernanke said the result should reassure investors about the soundness of the financial system.

The results showed that losses at the banks under “more adverse” economic conditions could total $599.2 billion over two years. Mortgage losses present the biggest part of the risk, at $185.5 billion. Trading accounts were the second-largest vulnerability, with potential losses of $99.3 billion.

The number of Americans filing claims for unemployment insurance unexpectedly fell last week to the lowest level in three months, a sign the worst of the job cuts may be over.

Initial jobless claims decreased by 34,000 to 601,000 in the week ended May 2, the fewest since late January, from a revised 635,000 the prior week, the Labor Department said today in Washington. The number of people collecting benefits climbed to 6.35 million the prior week, the 14th consecutive record, showing companies are still not hiring even as staff reductions abate.

Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and GMAC LLC are among the companies judged to need additional capital according to results of regulators’ stress tests on the 19 largest U.S. banks.

Bank of America has the biggest shortfall, at $34 billion. Citigroup’s requirement for deeper reserves to offset potential losses over the coming two years is about $5 billion. Wells Fargo requires about $15 billion, while GMAC’s need is $11.5 billion.

Goldman Sachs Group Inc., Morgan Stanley, MetLife Inc., JPMorgan Chase & Co., Bank of New York Mellon Corp. and American Express Co. were deemed not to need additional funds, the results show.

April’s record rally in European stocks pushed market valuations to the highest level in more than four years as investors bet the first global recession since World War II is easing.

The 13 percent advance in the Dow Jones Stoxx 600 Index last month sent the measure to 16.2 times its companies’ earnings, according to data compiled by Bloomberg. Forecasts for 2009 profit growth in the gauge fell to 18 percent on May 1 from 22 percent a month earlier, the biggest drop this year, after earnings declined 40 percent in 2008, according to data and analysts’ estimates compiled by Bloomberg.