Philadelphia Manufacturing Index Sinks After Plosser Opposes Fed Measures

The Federal Reserve Bank of Philadelphia sent a signal about renewed recession risks just one day after its president said the U.S. economy is growing and doesn’t need exceptional measures.

Philadelphia Fed President Charles Plosser said two days ago his policy-making colleagues at the central bank painted a picture that was “more negative than justified” last week. Yesterday, Plosser’s regional bank said its manufacturing index plunged to the lowest level in 2 1/2 years, helping to push stocks down as much as 5 percent.

“He did say business leaders he talked to were pessimistic on growth, although he thought the economy would continue to expand,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, referring to Plosser. “But he didn’t realize his index the next day would signal recession? That’s the irony here.”

The mixed messages from Philadelphia provide one more dose of uncertainty to markets already dealing with Europe’s debt crisis and the aftermath of Standard & Poor’s downgrade of the U.S. credit rating. Fed policy makers said Aug. 9 they expect a “somewhat slower pace of recovery” than they foresaw previously.

Gold Jumps to Record in Longest Rally Since 2007

Gold rose to a record above $1,860 an ounce, poised for the longest run of weekly gains since April 2007, as escalating concern the global economy is slowing drove equities lower and spurred demand for a haven.

The metal is set for a seventh weekly advance as worse- than-expected U.S. economic data and Europe’s debt crisis boost speculation growth will falter. Asian stocks extended a global rout today after a Philadelphia-area manufacturing index sank to the lowest level since 2009, U.S. jobless claims rose and existing home sales fell. Morgan Stanley and Deutsche Bank AG this week cut forecasts for China’s growth.

Commodities Led By Oil Head for Fourth Weekly Drop; Gold Rises to Record

Commodities dropped, heading for a fourth weekly loss, as oil and grains tumbled on concern slower economic growth will curb demand. Gold advanced to a record for the second day as investors sought a haven.

Swiss Franc, Yen Gain as Growth, Contagion Concerns Fuel Refuge Demand

The Japanese yen and Swiss franc advanced against most of their major counterparts on demand for the safest assets, as stocks extended a worldwide rout amid speculation European banks lack sufficient capital.

Grassley-SEC, EU Bank Scrutiny, Aquino, German Steel Probe: Compliance

U.S. Senator Charles Grassley asked the Securities and Exchange Commission to answer allegations that the agency destroyed files from initial investigations of firms including Goldman Sachs Group Inc. (GS), SAC Capital Advisors LP and Bernard Madoff Investment Securities LLC.

Grassley, the top Republican on the Senate Judiciary Committee, made the request in a letter to SEC Chairman Mary Schapiro dated Aug. 17, citing claims by an agency employee that more than 9,000 such files have been purged. The Iowa lawmaker asked Schapiro to explain whether the SEC routinely destroys documents related to so-called matters under investigation that don’t progress beyond the initial phase.

Wall Street Sweats Stress in 106-Degree Yoga That Soothed Nixon

Corina Cotenescu teaches the 40-year-old branch of the ancient discipline conducted in heat and humidity that has found a niche on Wall Street and Hollywood and grown into a $365 million-a-year business, based on the practice's own figures.

The night before the Standard & Poor’s 500 Index took its biggest drop in two years, futures trader Corina Cotenescu said she sensed something coming. So she spent 1 1/2 hours in a muggy, 106-degree room, stretching and contorting her body.

Fortress, Cerberus Said to Raise Property Funds as Fees Squeezed

Fortress Investment Group LLC (FIG), Colony Capital LLC and Starwood Capital Group LLC are among a record number of private-equity firms raising real estate funds, according to people familiar with the process, driving down fees in a business reeling from earlier losses.