(Reuters) – Confidence among small businesses rose in February as owners shrugged off a tightening in fiscal policy and raised plans to increase capital spending and restock their warehouses.

The National Federation of Independent Business said on Tuesday its optimism index increased 1.9 percentage points to 90.8 last month, continuing to recover from a 2-1/2 year plunge in November.

The improvement in sentiment came even as small businesses braced for about $85 billion in across the board government spending cuts that started to take hold on March 1.

A two percent payroll tax cut expired on January 1 and tax rates for wealthy Americans went up.

Capital spending plans gained four points, while plans to increase inventories climbed six points last month. The share of owners viewing inventories as too low rose two points.

Owners’ outlook for business conditions in the next six months also improved two points.

Their perceptions of labor market conditions also improved, with the modest gains in the shares of owners planning to add jobs and those saying job openings were hard to fill.

Small business owners’ views of sales and credit conditions also improved last month.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

(Reuters) – A measure of future economic growth edged higher last week, though the annualized growth rate faltered, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 129.9 in the week ended March 8 from a revised 129.5 the previous week. That was originally reported as 129.3.

The index’s annualized growth rate edged down to 6.3 percent from 6.4 percent a week earlier. It was the lowest level in eight weeks.

(Reporting by Leah Schnurr; Editing by Chizu Nomiyama)

(Reuters) – The doctor who cured an HIV infected baby for the first time is happier talking to children than to adults and is finding all the attention since the news came out a little overwhelming.

Dr. Hannah Gay and colleagues Dr. Katherine Luzuriaga of the University of Massachusetts and Dr. Deborah Persaud of Johns Hopkins University in Baltimore reported on the child’s case at a medical meeting in Atlanta on Sunday.

“The breakthrough has been exciting and I’m very hopeful that that’s going to lead to future research that will give us some answers,” said Gay, a Mississippi pediatrician and soft-spoken mother of four adult children.

But the attention is difficult for a woman “much more comfortable talking to children than adults,” said her husband, Paul Gay. “She didn’t anticipate this kind of explosion of attention.”

Dr. Gay, a 59-year-old native of Jackson, Mississippi, likes to spend time designing needle points, singing in her church choir and reading theology or medical literature when she’s not working 12-hour days treating patients, in a state with the nation’s highest poverty rate.

“She is the most unlikely person in the world to be getting this kind of international attention, really,” said Jay Richardson, her former pastor at the Highland Colony Baptist Church. “You don’t ever hear her talking about herself or trying to promote herself in any way. She’s a quiet, humble person. Extremely intelligent. Very committed to her faith. Very involved in her church. Very committed to teaching children the bible.”

Except for six years working in Ethiopia as a missionary, Dr. Gay has spent the bulk of her academic and professional career at the University of Mississippi, where she received her undergraduate and medical degrees and met her husband of 37 years. She has worked the better part of her career at the university’s medical center serving the state’s youngest victims of HIV.

During that time, Dr. Gay has published several articles about ways to keep mothers from passing HIV infection to their babies and participated in the federally sponsored Pediatric AIDS Clinical Trials Group, which studied the use of the aggressive treatment of children who are at high risk of infection.

Her daughter Ruth Gay Thomas says as an AIDS specialist her mother has had to fight the battles of her patients, overcoming access to healthcare and the stigma that comes along with being infected with HIV in the United States.

“She practices compassion and huge, unimaginable amounts of patience with her patients and their families,” Thomas said. “She really has to embody a whole lot more than just the smart doctor that knows the right medications to give.”

To treat her own rheumatoid arthritis, Dr. Gay takes medicine that affects her immune system. “She has that in common with her patients, but it’s been a problem because with her compromised immune system, she can’t have as much of a hands-on touching of her patients that was always so satisfying for her,” her husband said.

When a rural hospital in Mississippi delivered a premature baby girl in July 2010 from a mother who had just tested positive for HIV during labor, it was only natural that they would turn to Dr. Gay. The child’s mother had not received any prenatal care, nor had she gotten any treatment for her HIV infection, putting the baby at high risk of becoming infected.

Dr. Gay chose to start the baby on the full treatment regimen of three potent drugs when she was just 30 hours old, even before the child’s infection was confirmed.

It was a bold move. Most babies exposed to HIV in the womb or during labor would have been given a six-week course of one or two drugs intended to reduce the risk of acquiring infection until tests could confirm she was infected.

“The doctor made a judgment call that the risks for this baby were so high that they were going to assume the baby was infected,” said Dr. Anthony Fauci, director of the National Institutes of Allergy and Infectious Diseases, a part of the National Institutes of Health or NIH.

Some critics have questioned Dr. Gay’s decision, which may have exposed the child to the risk of toxic medications without confirmation of her infection.

“This was a gutsy call that turned out to be correct,” said Fauci, adding that if it had turned out that the baby was not infected, they could have withdrawn the drugs. “They made the right guess.”

Dr. Gay continued to treat the child until January 2012, when she was 18 months old and her mother stopped bringing the child in for appointments. Gay’s team tracked her down in the fall of 2012, but the mother had not given her child any HIV medication since January.

Before restarting treatment, Gay did several tests, fully expecting that the virus had come roaring back. But none of the tests detected the virus. That’s when she brought in colleagues Luzuriaga of the University of Massachusetts and Persaud of Johns Hopkins University in Baltimore, who did a series of ultrasensitive tests. They were only able to find trace amounts of genetic material from the virus, but nothing capable of rekindling the infection.

The child, now 30 months old, remains off medication and continues to fare well. “We can’t find any virus to treat at this point,” Dr. Gay said.

She said it is not clear what the child’s story will mean in the wider scheme of HIV research, but she hopes it may lead to a cure for other babies infected at birth.

“I guess the message that I want to get across to the public very strongly is, we don’t know yet if we can create the same outcome in other babies.” she said. “It’s far too early to draw too many conclusions. There’s not a cure in sight this week.”

Dr. Gay said she is glad that this is happening in Mississippi and hopes it boosts the state’s reputation.

“But it’s a whole lot bigger than this one child, the University Medical Center or the state,” she said. “It may take a long time, but I hope it will point us in the right direction to come up with a cure we can consistently apply to other babies worldwide.”

Colleagues at the medical center are planning a celebration for Dr. Gay to “let her know how proud we are,” said Amy Smith, a nurse practitioner who works with the doctor. “She’s the type that wouldn’t want a big fuss made about her, but we’re going to do it anyway.”

(Reporting by Julie Steenhuysen and Emily Le Coz; Editing by Jilian Mincer and Claudia Parsons)

(Reuters) – A measure of future economic growth rose in the latest week although the annualized growth rate weakened, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index increased to 129.3 in the week ended March 1 from a revised 128.4 the previous week. That figure was originally reported as 128.5.

The index’s annualized growth rate softened to 6.2 percent from 6.8 percent a week earlier.

(Americas Economics and Markets Desk)

(Reuters) – The number of Americans commuting by public transportation rose to the second highest level on record last year, as more people returned to work, according to an annual survey released by the leading U.S. transit association on Monday.

The growth in ridership would have been even stronger, if Superstorm Sandy had not stranded people and shut down transit along the East Coast, where public transportation is most concentrated, American Public Transportation Association President Michael Melaniphy said.

Altogether, U.S. transit ridership rose 1.49 percent, with passengers taking 10.52 billion trips on trains, buses and commuter rail in 2012.

The increase was universal across the different modes of transit.

There were 1.42 percent more trips on heavy rail such as subways, 4.47 percent more on light rail, and 0.52 percent more on commuter rail than in 2011. Meanwhile, bus ridership grew 1.2 percent. Some of the light rail rise came from cities expanding or creating lines.

In the final quarter of the year, though, transit use was lower than in the fourth quarter of 2011, a reflection of Superstorm Sandy hitting in the fall. In November, New York and New Jersey, the states struck most by the storm, lost at least 41,600 jobs.

Rising fuel prices and a dislike of traffic contributed to the largest transit ridership since 2008, which was the highest year on records dating back to 1957, Melaniphy said.

Nonetheless, he added, nearly 60 percent of all transit trips are taken by people going to work.

“You can’t get people back to work unless you can get them to work,” Melaniphy said.

While the U.S. unemployment rate is stuck above the 6.5 percent that most economists consider healthy, it has been dropping for more than a year. The rate ended 2012 at 7.8 percent, well below where it ended 2011, 8.5 percent, according to Labor Department statistics.

The association points to places such as Seattle, Washington, where transit rides rose 11.8 percent over the year as the metropolitan area added more than 30,000 jobs.

At least 15 transit systems experienced record ridership last year, according to APTA. While some were in cities with well-established public transportation, such as Boston, Massachusetts, others were in areas associated more with freeways and commuting by car – namely Riverside and San Bernardino, California.

The question hanging over the industry is whether transit can meet mounting demand. Traditionally, fares only represent part of the agencies’ capital and operating budgets, with federal, state and local governments providing a hefty share.

Melaniphy points to voter initiatives to raise taxes for transit that passed last year – 49 out of 62 measures placed on ballots. The association has not seen such a high passage rate for transit funding initiatives since 2000.

Places where Sandy damaged the infrastructure are borrowing to bring transit back on-line. New York’s Metropolitan Transportation Authority, which carried 11 million bus and train passengers each day, has approved selling up to $2.5 billion of short-term bond anticipation notes for Sandy costs.

At the same time, the U.S. Congress in 2012 passed a long-awaited authorization for funding surface transportation. It includes loan, financing and grant programs that systems will be able to use for repairs or new equipment. The account, supplied by gas tax revenues used to fund federal transportation, was put off-limits from the $85 billion in spending cuts known as “sequestration.”

(This story corrects a figure in the third paragraph to billion, not million)

(Reporting by Lisa Lambert; Editing by Jackie Frank)

(Reuters) – Has “South-by” lost its direction?

For several years running, that question has hovered over the iPhone-clutching tech cogniscenti who made the annual springtime pilgrimage to the mecca of geek- and hipster-dom in Austin, Texas.

In 2007 the South by Southwest Interactive festival – the five-day digital offshoot of SXSW, the two-week-long gathering for music and film lovers – solidified its reputation as the place for entrepreneurs and tech investors to see and be seen after the conference helped boost a then-little-known service called Twitter to prominence.

Since then, the interactive festival’s popularity and its ticket prices have skyrocketed — and so have complaints from the geeks that it has become too big, too crowded, too expensive and too hopelessly awash in corporate sponsorship money.

The anxieties hit new highs this year as app makers largely eschewed using the event as a launching pad, even while marketing dollars from consumer brands such as Oreo, American Airlines AAMRAQA.UL and General Motors’ (GM.N) Chevrolet seemed to flow as freely as company-expensed margaritas.

Greg Cohn, a Los Angeles entrepreneur who recently launched Burner, an iPhone messaging app, decided to forgo the festival for the first time since 2005, saying he felt the conference had become overwhelmed by large advertisers and was increasingly irrelevant for startups jostling to get their name out.

“It’s a lot less intellectually stimulating, a lot less organic and authentic,” said Cohn, who opted to attend a new conference in Portland, Oregon, called XOXO, started this year by disaffected SXSW veterans. “It feels like SXSW has gone bankrupt, and it needs a new start.”

In Silicon Valley – where embracing the new and ditching the old can sometimes be a serious sport – more than a few sniffed at SXSW.

“It’s jumped the shark,” said Mike Volpi, a partner at Index Ventures, who stayed home.

Eric Eldon, co-editor of startup blog-of-record Techcrunch, reluctantly said he was headed for Texas – “but only for Music and Film,” he quickly added. (Techcrunch later published a post headlined: “No Hot SXSW App This Year? Here’s Why.”)

The startup world may have cooled on Austin, but the five-day festival, which ends on Tuesday, is still plenty hot. Almost two decades after it began, SXSW Interactive has grown vastly more diverse in subject matter and more mainstream, with dozens of do-it-yourself workshops and “meetups” to accompany the panels. This year it is on track to break the 25,000 attendance record it set last year, organizers said.

OREOS AND VIDEOS

Above all, it was the brand marketers who were this year’s stars, evidenced by Oreo Cookies’ mascot strolling through the Austin Convention Center and the “grab-and-go” cookie packs the company gave away. Chevrolet offered rides in cars equipped with voice-recognition software and parked two model cars in front of the convention center, while Target (TGT.N) transformed the rear of a restaurant into a “Tarcade” hall filled with videogames. American Airlines and AT&T (T.N) held a joint “hackathon.”

Hugh Forrest, a former alternative newspaper journalist who has organized SXSW Interactive since its inception in 1994, said he “frequently hears criticism” about the festival’s evolution but noted that it now offers a head-spinning 800 panels and events to choose from, compared with just 16 two decades ago.

“Is there a larger presence of corporate sponsors? Yes,” Forrest said. “But also there are more smaller, indie, bootstrapped things as well. Sponsors help us out with a lot of things we couldn’t do before.”

Sitting in a “Gold Lounge” with Doritos and a dozen other logos plastered on the wall inside the Austin Convention Center — an irony he pointed out with a chuckle — Forrest noted that the advertising-supported business model should be something many app makers at SXSW understand well.

“We’d be silly and naïve to think marketing is not a big part of new media and culture and business at this point,” Forrest said. “That’s how many, many things get paid for.”

As SXSW’s programming has ballooned in recent years, its offerings have been fleshed out by a surging number of sub-topics, such as health and medicine or public service and activism. Even the startups sphere has expanded, there have been an increasing number of advanced design-related programs.

Since it was introduced in 2010, the news and media track has in particular become a cornerstone of the festival’s programming, as digital outlets and traditional news organizations alike flock to Austin to discuss their fast-changing industry, said Jennifer 8. Lee, a former newspaper reporter and volunteer SXSW organizer.

Lee noted that with the growing corporate presence, the festival’s culture has become more free-spending in recent years, even though she argued that its overall quality is still rising.

“The difference is that this once was a place where people paid their own way, or you somehow got a badge by doing a panel,” said Lee, as she doled out drink tickets Saturday night to a party crowd that included CNN Digital Managing Editor Meredith Artley and New York Times Executive Editor Jill Abramson. “Now you come with a bunch of co-workers and expense it,” Lee said. “It’s like spring break for adults.”

MEETING AND GREETING

One of the companies with a big presence was the advertising agency JWT, the WPP Group (WPP.L) subsidiary, which flew more than 60 ad execs from its offices around the world.

The agency started what it called a five-day “pop-up” ad agency that took several dozen pitches from startups in Austin and offered its marketing services for free to a chosen winner.

David Eastman, the chief executive of JWT North America, said firms like his relished a lucrative marketing opportunity like SXSW, though he saw the irony in his presence.

“The bad side of all this is that SXSW used to be indie, for the folks who didn’t want to be mainstream,” Eastman said. “When the brands arrive, the money arrives as well.”

Still, the cynicism wasn’t nearly so pervasive among the younger generation, especially the enthusiastic attendees on their first or second trips.

“I haven’t seen any new startups make their big launch here, but it’s been great for meeting people and making new friends,” said Sahil Lavingia, the 20-year-old founder of Gumroad, a fast-growing online payment-processing startup backed by venture capital firm Kleiner Perkins Caufield & Byers.

Then there were those who shrugged off SXSW’s fading appeal – then showed up anyway.

Then there were those who just showed up for – what else? – the parties.

Nick Denton, the Gawker Media founder, pondered the matter as he ducked into a downtown hotel elevator Saturday night.

“People have been asking that for a while,” Denton said with a smirk. “So maybe the question’s jumped the shark.”

(Reporting By Gerry Shih; Editing by Douglas Royalty)

(Reuters) – Wall Street stocks edged up on Monday, approaching a 5-1/2-year high, on optimism about the U.S. economy and easy monetary policy from the Federal Reserve, while U.S. oil prices rebounded after falling due to disappointing Chinese industrial data.

Fitch Ratings’ cut in Italy’s credit rating late on Friday spurred some selling in European shares and Italian government bonds while supporting safe-haven bids for gold, U.S. and German government debt and other perceived lower-risk assets.

The dollar clung to gains from the payrolls data, trading near a 3-1/2-year high against the yen and a 3-month peak versus the euro. <FRX/>

The benchmark Standard & Poor’s 500 stock index .SPX was on track to extend its winning streak to seven sessions and touched its highest intraday level since October 15, 2007. Wall Street overcame early losses on worries about China and Italy.

Friday’s surprisingly strong U.S. jobs report, along with encouraging data on the housing market, reinforced the appetite for stocks and views of the market posting further gains with help from the Fed.

“There’s real belief in this rally,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. “There are lots of investors out there looking for opportunities to put more money to work in equities, and they’re using these little pullbacks we’ve had – and there haven’t been many – as purchasing opportunities.”

Nonetheless, a closely watched fear indicator was in rapid retreat.

Wall Street’s “fear gauge,” the CBOE Volatility Index, also known as the VIX .VIX, fell to the lowest level since April 2007, shedding 5.5 percent to 11.90.

The resilience on Wall Street and a 0.53 percent gain in Tokyo shares .N225 helped MSCI’s world equity index .MIWD00000PUS to rise 0.37 percent to 361.42, near its mid-2008 highs.

In midafternoon trading, the Dow Jones industrial average .DJI was up 36.06 points, or 0.25 percent, at 14,433.13. The Standard & Poor’s 500 Index .SPX was up 4.16 points, or 0.27 percent, at 1,555.34. The Nasdaq Composite Index .IXIC was up 5.82 points, or 0.18 percent, at 3,250.18.

Europe’s broad FTSEurofirst 300 index .FTEU3 closed off 0.05 percent at 1,194.64, down from September 2008 peaks hit last week, as the Italy rating cut and weak Chinese factory output data undermined sentiment.

China reported over the weekend that annual industrial production for January and February combined rose 9.9 percent, the lowest since October 2012, while its consumer price index jumped more than expected last month.

Fitch on Friday cut Italy’s debt to BBB-plus from A-minus and gave the rating a negative outlook, raising the risk its next ratings change will be a further downgrade.

Anxiety over further deterioration in the euro zone’s third-biggest economy pushed 10-year Italian government bond yields up 7 basis points to 4.66 percent.

“I think the Italian downgrade is acting as a bit of a wake-up call,” said Alastair Winter, chief economist at investment bank Daniel Stewart & Co in London.

The benchmark 10-year U.S. Treasury note traded in a narrow range and was last down 3/32 in price with a 2.0504 percent yield. <US/>

Safe-haven gold posted modest gains, last up 0.2 percent at $1,580.11 an ounce. Gold bullion was seen staying within a range of $1,560 to $1,590. <GOL/>

OIL FALLS, DOLLAR FIRM

In addition to Italy’s downgrade, the slower-than-expected growth in Chinese factory output briefly crimped investor sentiment on oil, copper and other raw materials.

U.S. oil futures settled up 11 cents or 0.12 percent at $92.06 a barrel, erasing an early loss of more than $1.

But Brent crude fell 73 cents or 0.66 percent to $110.12 a barrel, after ending last week marginally higher to snap three straight weekly losses. <O/R>

Three-month copper on the London Metal Exchange closed at $7,755 a metric tonne, up from a previous close of $7,740, having earlier hit a one-week low of $7,667 a tonne.

In the foreign exchange markets, the dollar added to gains it made against most major currencies after Friday’s strong payrolls data boosted hopes of a steady U.S. economic recovery this year.

The data has also fueled speculation the U.S. Federal Reserve could back off from its ultra-loose monetary policy sooner than anticipated, and this added to the currency’s appeal as traders speculated about looser policies by other major central banks ahead.

The dollar dipped 0.1 percent at 82.59 against a basket of major currencies .DXY, not far from the seven-month high of 82.92 hit on Friday. The currency has risen nearly 5 percent since early February.

The euro was flat at $1.3035, not far from a three-month low of $1.2955 also hit on Friday, while the yen managed a 0.2 percent rise against the greenback at 96.23 yen.

(Additional reporting by Angela Moon and Wanfeng Zhou in New York and Richard Hubbard, David Brett, Anooja Debnath, and Clara Denina in London; Editing by Chizu Nomiyama and Dan Grebler)

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