The Dow and S&P 500 extended losses on Wednesday, dropping nearly 3 percent after a sharp snap-back rally in the last session as investors fretted about the economy and high levels of public debt.
The Dow Jones industrial average tumbled 328.66 points, or 2.92%, at 10,911.11. The Standard & Poor's 500 Index was down 32.41 points, or 2.76%, at 1,140.12. The Nasdaq Composite Index slid 71.77 points, or 2.89%, at 2,410.75.
Wall Street stocks fell sharply on Wednesday on fears over possible trouble in the French banking sector that has large exposure to shaky peripheral European debt.
Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Thursday, August 11, 2011
Wednesday, November 5, 2008
US STOCKS-S&P 500, Dow futures rise as Obama's lead grows
S&P 500 and Dow equity index futures turned higher on Tuesday after Democrat Barack Obama took a commanding lead in the U.S. presidential vote tally.
S&P 500 futures SPc1 rose 0.80 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 climbed 16 points, and Nasdaq 100 NDc1 futures were little changed.
With network television projections in from states whose polls have closed, the latest tally of projected electoral votes showed Obama with 200 votes by 9:54 p.m. (1454 GMT), while rival Republican John McCain had 121. A candidate must get 270 electoral votes to win the presidency
S&P 500 futures SPc1 rose 0.80 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 climbed 16 points, and Nasdaq 100 NDc1 futures were little changed.
With network television projections in from states whose polls have closed, the latest tally of projected electoral votes showed Obama with 200 votes by 9:54 p.m. (1454 GMT), while rival Republican John McCain had 121. A candidate must get 270 electoral votes to win the presidency
Friday, October 31, 2008
Ugly October ends with an upbeat day on Wall St
U.S. stocks ended one of their worst months on record, but signs of further thawing in credit markets lifted battered shares on Friday.
Hammered by worries over the extent of the damage the credit crunch has inflicted on the global economy, the Dow Jones industrial average logged its biggest monthly decline in a decade, while the S&P 500 had its worst month since the October 1987 market crash.
Financial shares, led by a gain of almost 10 percent in JPMorgan Chase, lifted Wall Street as the interest rate that banks charge each other for short-term loans continued to ease.
The decrease in overnight interbank borrowing costs prompted hopes that global efforts to bolster confidence in credit markets are taking hold following the Federal Reserve's interest-rate cut earlier this week and spurred investors to search for bargains.
"It seems like you have some continued mild improvement in the credit markets and that seems to be buoying hopes but people should know, conditions may have improved, but they're improving slowly," said Chip Hanlon, president of Delta Global Advisors Inc, in Huntington Beach, California.
The Dow Jones industrial average gained 144.32 points, or 1.57 percent, to 9,325.01. The Standard & Poor's 500 Index rose 14.66 points, or 1.54 percent, to 968.75. The Nasdaq Composite Index climbed 22.43 points, or 1.32 percent, to 1,720.95.
Friday's rally resulted in stocks clocking in a higher finish for two sessions in a row -- the first consecutive gains in over a month.
For the week, the Dow gained 11.3 percent, its best one-week percentage gain since October 1974. The S&P 500 rose 10.5 percent, its best weekly percentage gain since at least January 1980. The Nasdaq advanced 10.9 percent, its best weekly percentage gain since April 2001.
October, though, was a different story. The Dow lost 14.06 percent, its worst one-month percentage drop since August 1998, while the S&P 500 lost 16.83 percent, its worst one-month percentage slide since October 1987.
Pension funds bought stocks to rebalance their portfolios, also lending support to the market, traders noted.
JPMorgan said it is making changes to about $110 billion in mortgages and is temporarily halting foreclosures while it alters the loans. The bank's stock, a Dow component, shot up 9.7 percent, or $3.63, to $41.25 on the New York Stock Exchange.
Among other financial shares, Morgan Stanley rose 8.6 percent to $17.47., while the S&P Financial Index gained 5.5 percent.
But economic data on Friday that showed U.S. consumers are tightening their belts offered more evidence of a deep slowdown, though the market appeared to shrug it off.
U.S. consumers cut their monthly spending for the first time in two years during September, according to a U.S. Commerce Department report.
On Nasdaq, video game publisher Electronic Arts Inc shed 17.9 percent to $22.78 after it chopped its full-year profit forecast due to slowing demand.
After trading on both the up and down side of Friday's ledger, Chevron Corp ended up 0.6 percent at $74.60 on the NYSE after it reported quarterly profit that beat expectations. The price of oil, which had slipped earlier and pressured the stock, also rebounded. U.S. crude gained $1.85 to settle at $67.81 a barrel on the New York Mercantile Exchange, but recorded its biggest monthly drop ever. In October, the price of NYMEX crude fell a record 32.62 percent.
Shares of Express Scripts Inc jumped 5.3 percent to $60.61 on Nasdaq after the pharmacy benefit manager reported quarterly profit that beat expectations after Thursday's closing bell.
In other economic news, an index of consumer sentiment suffered its steepest monthly drop on record, according to the Reuters/University of Michigan Surveys of Consumers' final reading for October.
And the Chicago Purchasing Management Index showed that business activity in the Midwest came to a halt in October as production and new orders plummeted.
Trading was moderate on the New York Stock Exchange, with about 1.57 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.50 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on both the NYSE and the Nasdaq by a ratio of nearly 3 to 1.
Hammered by worries over the extent of the damage the credit crunch has inflicted on the global economy, the Dow Jones industrial average logged its biggest monthly decline in a decade, while the S&P 500 had its worst month since the October 1987 market crash.
Financial shares, led by a gain of almost 10 percent in JPMorgan Chase, lifted Wall Street as the interest rate that banks charge each other for short-term loans continued to ease.
The decrease in overnight interbank borrowing costs prompted hopes that global efforts to bolster confidence in credit markets are taking hold following the Federal Reserve's interest-rate cut earlier this week and spurred investors to search for bargains.
"It seems like you have some continued mild improvement in the credit markets and that seems to be buoying hopes but people should know, conditions may have improved, but they're improving slowly," said Chip Hanlon, president of Delta Global Advisors Inc, in Huntington Beach, California.
The Dow Jones industrial average gained 144.32 points, or 1.57 percent, to 9,325.01. The Standard & Poor's 500 Index rose 14.66 points, or 1.54 percent, to 968.75. The Nasdaq Composite Index climbed 22.43 points, or 1.32 percent, to 1,720.95.
Friday's rally resulted in stocks clocking in a higher finish for two sessions in a row -- the first consecutive gains in over a month.
For the week, the Dow gained 11.3 percent, its best one-week percentage gain since October 1974. The S&P 500 rose 10.5 percent, its best weekly percentage gain since at least January 1980. The Nasdaq advanced 10.9 percent, its best weekly percentage gain since April 2001.
October, though, was a different story. The Dow lost 14.06 percent, its worst one-month percentage drop since August 1998, while the S&P 500 lost 16.83 percent, its worst one-month percentage slide since October 1987.
Pension funds bought stocks to rebalance their portfolios, also lending support to the market, traders noted.
JPMorgan said it is making changes to about $110 billion in mortgages and is temporarily halting foreclosures while it alters the loans. The bank's stock, a Dow component, shot up 9.7 percent, or $3.63, to $41.25 on the New York Stock Exchange.
Among other financial shares, Morgan Stanley rose 8.6 percent to $17.47., while the S&P Financial Index gained 5.5 percent.
But economic data on Friday that showed U.S. consumers are tightening their belts offered more evidence of a deep slowdown, though the market appeared to shrug it off.
U.S. consumers cut their monthly spending for the first time in two years during September, according to a U.S. Commerce Department report.
On Nasdaq, video game publisher Electronic Arts Inc shed 17.9 percent to $22.78 after it chopped its full-year profit forecast due to slowing demand.
After trading on both the up and down side of Friday's ledger, Chevron Corp ended up 0.6 percent at $74.60 on the NYSE after it reported quarterly profit that beat expectations. The price of oil, which had slipped earlier and pressured the stock, also rebounded. U.S. crude gained $1.85 to settle at $67.81 a barrel on the New York Mercantile Exchange, but recorded its biggest monthly drop ever. In October, the price of NYMEX crude fell a record 32.62 percent.
Shares of Express Scripts Inc jumped 5.3 percent to $60.61 on Nasdaq after the pharmacy benefit manager reported quarterly profit that beat expectations after Thursday's closing bell.
In other economic news, an index of consumer sentiment suffered its steepest monthly drop on record, according to the Reuters/University of Michigan Surveys of Consumers' final reading for October.
And the Chicago Purchasing Management Index showed that business activity in the Midwest came to a halt in October as production and new orders plummeted.
Trading was moderate on the New York Stock Exchange, with about 1.57 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.50 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on both the NYSE and the Nasdaq by a ratio of nearly 3 to 1.
Wednesday, October 29, 2008
US STOCKS-Market opens lower
U.S. stocks fell at the open on Wednesday as investors locked in profits after Tuesday's steep gains and retailers' shares fell as oil prices rose, eclipsing optimism about a possible interest-rate cut.
The Dow Jones industrial average .DJI fell 53.29 points, or 0.59 percent, to 9,011.83, while the Standard & Poor's 500 Index .SPX slid 6.21 points, or 0.66 percent, to 934.30. The Nasdaq Composite Index .IXIC was down 11.56 points, or 0.70 percent, at 1,637.91
The Dow Jones industrial average .DJI fell 53.29 points, or 0.59 percent, to 9,011.83, while the Standard & Poor's 500 Index .SPX slid 6.21 points, or 0.66 percent, to 934.30. The Nasdaq Composite Index .IXIC was down 11.56 points, or 0.70 percent, at 1,637.91
US STOCKS-Profit-taking likely to lead to flat open
* Investors pause after Tuesday's surge, before Fed
* Federal Reserve expected to cut interest rates
* Signs of thawing credit markets offer positive spur
* Energy stocks up on higher oil price; airlines drop (Recasts first paragraph, adds details, update prices)
By Ellis Mnyandu
NEW YORK, Oct 29 (Reuters) - U.S. stocks headed for flat open on Wednesday as profit-taking and concerns about rising oil prices offset optimism about a possible interest-rate cut and signs of a thaw in credit markets.
A day after after Wall Street roared to its second-best advance ever, investors paused to gauge if the market would continue to bounce back from its lowest levels in more than five years.
Tuesday's surge on Wall Street helped fuel an advance in other stock markets, with Asia up sharply overnight, and European benchmark indexes up about 5 percent on Wednesday.
There remain worries about the severity of a global recession, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. In addition, higher oil prices looked set also to give investors pause, with U.S. crude up 6 percent at $66.53 a barrel
"We are going to see some profit taking and people will wait for the Fed news. Yesterday's move was driven by expectations that the Fed will do something," he said.
"At the same time, yesterday's rally may make some people to pause and ask if this isn't the time to actually get out. That mind-set is still out there."
S&P 500 futures SPc1 edged up 0.3 point and were about even with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures DJc1 fell 29 points, and Nasdaq 100 NDc1 futures shed 6.75 points.
The Federal Reserve is widely expected to cut its benchmark fed funds rate by at least 50 basis points from the current 1.5 percent. Its decision is expected around 2:15 p.m. (1815 GMT).
"What the Fed says on the economic outlook, I think is what's going to dictate the market's next move," added Bakhos.
Energy shares, including Exxon Mobil Corp (XOM.N: Quote, Profile, Research) , were expected to rise with oil prices. But higher energy costs also were likely to create headwinds for retailers and airlines, with Delta shares (DAL.N: Quote, Profile, Research) off 3.3 percent at $7.89 before the bell.
U.S. stock futures had briefly added to gains before the open on a government report that showed a surprise increase in new orders for long-lasting manufactured goods in September.
* Federal Reserve expected to cut interest rates
* Signs of thawing credit markets offer positive spur
* Energy stocks up on higher oil price; airlines drop (Recasts first paragraph, adds details, update prices)
By Ellis Mnyandu
NEW YORK, Oct 29 (Reuters) - U.S. stocks headed for flat open on Wednesday as profit-taking and concerns about rising oil prices offset optimism about a possible interest-rate cut and signs of a thaw in credit markets.
A day after after Wall Street roared to its second-best advance ever, investors paused to gauge if the market would continue to bounce back from its lowest levels in more than five years.
Tuesday's surge on Wall Street helped fuel an advance in other stock markets, with Asia up sharply overnight, and European benchmark indexes up about 5 percent on Wednesday.
There remain worries about the severity of a global recession, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. In addition, higher oil prices looked set also to give investors pause, with U.S. crude up 6 percent at $66.53 a barrel
"We are going to see some profit taking and people will wait for the Fed news. Yesterday's move was driven by expectations that the Fed will do something," he said.
"At the same time, yesterday's rally may make some people to pause and ask if this isn't the time to actually get out. That mind-set is still out there."
S&P 500 futures SPc1 edged up 0.3 point and were about even with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures DJc1 fell 29 points, and Nasdaq 100 NDc1 futures shed 6.75 points.
The Federal Reserve is widely expected to cut its benchmark fed funds rate by at least 50 basis points from the current 1.5 percent. Its decision is expected around 2:15 p.m. (1815 GMT).
"What the Fed says on the economic outlook, I think is what's going to dictate the market's next move," added Bakhos.
Energy shares, including Exxon Mobil Corp (XOM.N: Quote, Profile, Research) , were expected to rise with oil prices. But higher energy costs also were likely to create headwinds for retailers and airlines, with Delta shares (DAL.N: Quote, Profile, Research) off 3.3 percent at $7.89 before the bell.
U.S. stock futures had briefly added to gains before the open on a government report that showed a surprise increase in new orders for long-lasting manufactured goods in September.
Wall St scores 2nd-best day ever on rate-cut hopes
NEW YORK (Reuters) - Wall Street marked its second-best day ever on Tuesday as investors, convinced that central banks worldwide will cut rates even more, scooped up stocks that had been driven down to their lowest prices in more than five years.
A big catalyst for the late-day surge was a huge drop in the Japanese yen after a news report that the Bank of Japan may cut interest rates later this week. A sudden strengthening of the yen during the past week had been destabilizing stock markets around the world, and Tuesday's reversal of that trend was greeted with relief by investors.
The Federal Reserve is expected to cut its benchmark fed funds rate by at least 50 basis points on Wednesday when it concludes a two-day meeting that began this afternoon.
Shares of capital-hungry companies such as telecoms posted the day's sharpest gains, including Verizon Communications, up over 14 percent, and AT&T, up over 13 percent.
Big oil companies gave the Dow its biggest boost after British major BP Plc reported a record quarterly profit, beating expectations. Exxon Mobil and Chevron both rose more than 13 percent.
Shares of Boeing jumped 15.5 percent to $48.91 after the aircraft manufacturer reached a tentative agreement with its largest union to end a strike and stop revenue losses estimated at $100 million a day.
Typically when the market gets to oversold extremes, stocks see a bounce back, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
"If you believe that governments around the world are going to be successful in reengerizing financial markets and gradually bringing back confidence and stability in the weeks and months ahead, then you probably want to be more of a buyer than a seller," Sheldon said.
The Dow Jones industrial average jumped 889.35 points, or 10.88 percent, to 9,065.12. The Standard & Poor's 500 Index surged 91.59 points, or 10.79 percent, to 940.51. The Nasdaq Composite Index ran up 143.57 points, or 9.53 percent, to 1,649.47.
It was the second-biggest point gain ever for the Dow and the S&P. These advances were surpassed only by the rally on Oct. 13, when the Dow jumped 936.42 points and the S&P 500 climbed 104.13 points after governments pledged to pour cash into struggling banks and a Japanese banking group completed its investment in Morgan Stanley.
The yen's recent rally forced an unwinding of the so-called "carry trade" -- a phenomenon of Japan's low interest rates, in which investors borrowed yen to finance investments in high er-yielding assets, such as U.S. stocks.
On Tuesday, the dollar achieved its biggest gain against the yen since 1974, according to Reuters data.
Wall Street also got a lift as investors moved to readjust their stock portfolios as a rough month for stocks draws to a close.
Wal-Mart's stock rose after the world's largest retailer stuck to its 2009 sales growth forecast, saying it will weather the economic turmoil now and could come out even stronger than its rivals when the economy rebounds. Wal-Mart shot up 11.1 percent to $55.17 on the New York Stock Exchange.
The rally came despite an economic picture that remained gloomy after data showed U.S. consumer confidence tumbled to a record low in October as the financial crisis made Americans anxious about their jobs and pessimistic about the future.
The gains were widespread, including shares of home builders that rose even in the face of data that showed prices of U.S. single-family homes plunged a record 16 .6 percent in August from a year earlier. D.R. Horton Inc climbed 9.8 percent to $5.16.
Even the Dow Jones index of home builders' shares finished up 6.01 percent.
Verizon ended at $31.65, up 14.6 percent, and AT&T finished at $27.61, up 13.2 percent, in NYSE trading.
In the oil sector, Exxon climbed 13.3 percent to $74.86, while Chevron soared 13.5 percent to $70.02. The big energy producers' shares gained even as front-month U.S. oil futures slipped 49 cents to settle at $62.73 a barrel.
Whirlpool Corp tumbled 8.3 percent to $45.87 after the world's biggest appliance maker said it would cut 7 percent of its workforce and slashed its 2008 earnings outlook amid weakening demand.
Trading was moderate on the New York Stock Exchange, with about 1.73 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion. Most of the volume came in the last hour of trading.
On Nasdaq, about 2.77 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by about 4 to 1 while on the Nasdaq, slightly more than two stocks rose for every one that fell.
A big catalyst for the late-day surge was a huge drop in the Japanese yen after a news report that the Bank of Japan may cut interest rates later this week. A sudden strengthening of the yen during the past week had been destabilizing stock markets around the world, and Tuesday's reversal of that trend was greeted with relief by investors.
The Federal Reserve is expected to cut its benchmark fed funds rate by at least 50 basis points on Wednesday when it concludes a two-day meeting that began this afternoon.
Shares of capital-hungry companies such as telecoms posted the day's sharpest gains, including Verizon Communications, up over 14 percent, and AT&T, up over 13 percent.
Big oil companies gave the Dow its biggest boost after British major BP Plc reported a record quarterly profit, beating expectations. Exxon Mobil and Chevron both rose more than 13 percent.
Shares of Boeing jumped 15.5 percent to $48.91 after the aircraft manufacturer reached a tentative agreement with its largest union to end a strike and stop revenue losses estimated at $100 million a day.
Typically when the market gets to oversold extremes, stocks see a bounce back, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
"If you believe that governments around the world are going to be successful in reengerizing financial markets and gradually bringing back confidence and stability in the weeks and months ahead, then you probably want to be more of a buyer than a seller," Sheldon said.
The Dow Jones industrial average jumped 889.35 points, or 10.88 percent, to 9,065.12. The Standard & Poor's 500 Index surged 91.59 points, or 10.79 percent, to 940.51. The Nasdaq Composite Index ran up 143.57 points, or 9.53 percent, to 1,649.47.
It was the second-biggest point gain ever for the Dow and the S&P. These advances were surpassed only by the rally on Oct. 13, when the Dow jumped 936.42 points and the S&P 500 climbed 104.13 points after governments pledged to pour cash into struggling banks and a Japanese banking group completed its investment in Morgan Stanley.
The yen's recent rally forced an unwinding of the so-called "carry trade" -- a phenomenon of Japan's low interest rates, in which investors borrowed yen to finance investments in high er-yielding assets, such as U.S. stocks.
On Tuesday, the dollar achieved its biggest gain against the yen since 1974, according to Reuters data.
Wall Street also got a lift as investors moved to readjust their stock portfolios as a rough month for stocks draws to a close.
Wal-Mart's stock rose after the world's largest retailer stuck to its 2009 sales growth forecast, saying it will weather the economic turmoil now and could come out even stronger than its rivals when the economy rebounds. Wal-Mart shot up 11.1 percent to $55.17 on the New York Stock Exchange.
The rally came despite an economic picture that remained gloomy after data showed U.S. consumer confidence tumbled to a record low in October as the financial crisis made Americans anxious about their jobs and pessimistic about the future.
The gains were widespread, including shares of home builders that rose even in the face of data that showed prices of U.S. single-family homes plunged a record 16 .6 percent in August from a year earlier. D.R. Horton Inc climbed 9.8 percent to $5.16.
Even the Dow Jones index of home builders' shares finished up 6.01 percent.
Verizon ended at $31.65, up 14.6 percent, and AT&T finished at $27.61, up 13.2 percent, in NYSE trading.
In the oil sector, Exxon climbed 13.3 percent to $74.86, while Chevron soared 13.5 percent to $70.02. The big energy producers' shares gained even as front-month U.S. oil futures slipped 49 cents to settle at $62.73 a barrel.
Whirlpool Corp tumbled 8.3 percent to $45.87 after the world's biggest appliance maker said it would cut 7 percent of its workforce and slashed its 2008 earnings outlook amid weakening demand.
Trading was moderate on the New York Stock Exchange, with about 1.73 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion. Most of the volume came in the last hour of trading.
On Nasdaq, about 2.77 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by about 4 to 1 while on the Nasdaq, slightly more than two stocks rose for every one that fell.
Thursday, September 25, 2008
us Stocks end mostly lower as markets await details of lifeline for banks; credit remains tight
NEW YORK (AP) -- Tension grew in the financial markets Wednesday, sending most stocks moderately lower as investors worried about the effectiveness of a still-emerging government plan to rescue banks from crippling debt. The credit markets also showed added strain, with demand rising for short-term Treasury bills, considered the safest of investments.
Wall Street was calmer than during the first two days of this week, with stocks meandering in and out of positive territory while investors tried to determine what shape the $700 billion plan might take. But the atmosphere was uneasy enough to erode the market's initial enthusiasm over investor Warren Buffett's decision to invest $5 billion in Goldman Sachs Group Inc.
Investors focused on broader concerns that the dealmaking in Washington could produce less potent medicine than proponents say is necessary to aid moribund credit markets. Fear about bad debt on the books of financial companies has led to tightness in credit markets. That, in turn, has made it harder and more expensive for businesses and consumers to borrow.
Treasury Secretary Henry Paulson told the House Financial Services Committee that he agreed to limit the pay of Wall Street executives whose companies might benefit from the proposed measure.
Paulson appeared with Federal Reserve Chairman Ben Bernanke before Congress for a second day to brief lawmakers. Their appearance on Capitol Hill Tuesday unnerved investors, who began questioning whether lawmakers were doubting the necessity and form of the government bailout.
The waiting was clearly wearing on the credit markets, raising concerns again about liquidity in the banking system.
Demand for short-term government Treasuries increased as investors again sought safe places to keep cash. The yield on the 3-month Treasury bill, considered the safest short-term financial asset, was at 0.49 percent late Wednesday, down from 0.79 percent late Tuesday. Last week, demand spiked so high that the yield briefly dipped into negative territory; investors were so focused on putting their money in safe assets that they have been willing to accept small and at times even negative returns.
In other Treasury trading, the yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.81 percent from 3.80 percent late Tuesday.
"I think you're seeing a lot of tough talk from politicians who don't want to seem like they're rolling over for Wall Street and, normally, people would see that for what it is. But right now investors are exceptionally nervous," said Stephen Massocca, co-chief executive of Pacific Growth Equities in San Francisco.
The Dow Jones industrial average fell 29.00, or 0.27 percent, to 10,825.17. The decline leaves the Dow down more than 560 points, or about 5 percent, for the week.
Broader stock indicators were mixed. The Standard & Poor's 500 index slipped 2.35, or 0.20 percent, to 1,185.87, and the Nasdaq composite index rose 2.35, or 0.11 percent, to 2,155.68.
The dollar, whose struggles earlier this week contributed to extreme volatility in other markets, was mixed. Meanwhile, gold prices rose.
Light, sweet crude for November delivery fell 88 cents to settle at $105.73 a barrel on the New York Mercantile Exchange.
"I think the quiet in the market is essentially the collective breath being held by investors and unfortunately they can't hold their breath forever," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. "We need Congress to do something."
Shares of Goldman Sachs Group Inc. rose $4.95, or 4 percent, to $130 Wednesday after Buffett's Berkshire Hathaway Inc. said late Tuesday it was investing at least $5 billion in Goldman -- a move Wall Street took as a sign of support for the independent investment bank model. Besides buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock.
Goldman also said it will sell $5 billion worth of common stock to the public; the company and Morgan Stanley earlier this week were granted approval to become bank holding companies, which would help them strengthen their balance sheets.
Beyond Goldman, investors put money into defensive areas like health care and utilities. Merck & Co. rose 72 cents, or 2.3 percent, to $31.47, while CenterPoint Energy Inc. rose 29 cents, or 2 percent, to $14.53.
Investors appeared unfazed by a larger-than-expected drop in sales of existing homes in August as their focus remained on the bailout. The National Association of Realtors said sales fell by 2.2 percent; sales had been expected to fall by 1.6 percent, according to economists surveyed by Thomson/IFR. The number of unsold homes on the market dropped by 7 percent from a record set in July, marking the steepest drop in inventory since December 2006.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to a relatively light 4.66 billion shares, compared with 5.11 billion traded Tuesday.
The Russell 2000 index of smaller companies fell 11.42, or 1.61 percent, to 697.77.
Overseas, Japan's Nikkei stock average rose 0.20 percent. Britain's FTSE 100 fell 0.79 percent, Germany's DAX index fell 0.26 percent, and France's CAC-40 fell 0.61 percent.
Wall Street was calmer than during the first two days of this week, with stocks meandering in and out of positive territory while investors tried to determine what shape the $700 billion plan might take. But the atmosphere was uneasy enough to erode the market's initial enthusiasm over investor Warren Buffett's decision to invest $5 billion in Goldman Sachs Group Inc.
Investors focused on broader concerns that the dealmaking in Washington could produce less potent medicine than proponents say is necessary to aid moribund credit markets. Fear about bad debt on the books of financial companies has led to tightness in credit markets. That, in turn, has made it harder and more expensive for businesses and consumers to borrow.
Treasury Secretary Henry Paulson told the House Financial Services Committee that he agreed to limit the pay of Wall Street executives whose companies might benefit from the proposed measure.
Paulson appeared with Federal Reserve Chairman Ben Bernanke before Congress for a second day to brief lawmakers. Their appearance on Capitol Hill Tuesday unnerved investors, who began questioning whether lawmakers were doubting the necessity and form of the government bailout.
The waiting was clearly wearing on the credit markets, raising concerns again about liquidity in the banking system.
Demand for short-term government Treasuries increased as investors again sought safe places to keep cash. The yield on the 3-month Treasury bill, considered the safest short-term financial asset, was at 0.49 percent late Wednesday, down from 0.79 percent late Tuesday. Last week, demand spiked so high that the yield briefly dipped into negative territory; investors were so focused on putting their money in safe assets that they have been willing to accept small and at times even negative returns.
In other Treasury trading, the yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.81 percent from 3.80 percent late Tuesday.
"I think you're seeing a lot of tough talk from politicians who don't want to seem like they're rolling over for Wall Street and, normally, people would see that for what it is. But right now investors are exceptionally nervous," said Stephen Massocca, co-chief executive of Pacific Growth Equities in San Francisco.
The Dow Jones industrial average fell 29.00, or 0.27 percent, to 10,825.17. The decline leaves the Dow down more than 560 points, or about 5 percent, for the week.
Broader stock indicators were mixed. The Standard & Poor's 500 index slipped 2.35, or 0.20 percent, to 1,185.87, and the Nasdaq composite index rose 2.35, or 0.11 percent, to 2,155.68.
The dollar, whose struggles earlier this week contributed to extreme volatility in other markets, was mixed. Meanwhile, gold prices rose.
Light, sweet crude for November delivery fell 88 cents to settle at $105.73 a barrel on the New York Mercantile Exchange.
"I think the quiet in the market is essentially the collective breath being held by investors and unfortunately they can't hold their breath forever," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. "We need Congress to do something."
Shares of Goldman Sachs Group Inc. rose $4.95, or 4 percent, to $130 Wednesday after Buffett's Berkshire Hathaway Inc. said late Tuesday it was investing at least $5 billion in Goldman -- a move Wall Street took as a sign of support for the independent investment bank model. Besides buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock.
Goldman also said it will sell $5 billion worth of common stock to the public; the company and Morgan Stanley earlier this week were granted approval to become bank holding companies, which would help them strengthen their balance sheets.
Beyond Goldman, investors put money into defensive areas like health care and utilities. Merck & Co. rose 72 cents, or 2.3 percent, to $31.47, while CenterPoint Energy Inc. rose 29 cents, or 2 percent, to $14.53.
Investors appeared unfazed by a larger-than-expected drop in sales of existing homes in August as their focus remained on the bailout. The National Association of Realtors said sales fell by 2.2 percent; sales had been expected to fall by 1.6 percent, according to economists surveyed by Thomson/IFR. The number of unsold homes on the market dropped by 7 percent from a record set in July, marking the steepest drop in inventory since December 2006.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to a relatively light 4.66 billion shares, compared with 5.11 billion traded Tuesday.
The Russell 2000 index of smaller companies fell 11.42, or 1.61 percent, to 697.77.
Overseas, Japan's Nikkei stock average rose 0.20 percent. Britain's FTSE 100 fell 0.79 percent, Germany's DAX index fell 0.26 percent, and France's CAC-40 fell 0.61 percent.
Wednesday, September 24, 2008
Wall Streets heads for higher open on Buffett's $5 billion investment in Goldman Sachs
NEW YORK (AP) -- Financial markets showed some signs of stabilizing Wednesday as investor Warren Buffett's $5 billion bet on Goldman Sachs Group Inc. renewed confidence that U.S. financial firms will survive the credit crisis. Stock futures pointed to a higher opening, although the credit markets, waiting for further news on the government's bank rescue package, were still restrained.
Buffett's Berkshire Hathaway Inc. said Tuesday it was investing at least $5 billion in Goldman -- a move Wall Street took as strong sign of support for the independent investment bank model.
Besides buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering; the company and Morgan Stanley earlier this week were granted approval to become bank holding companies, which would help them strengthen their balance sheets.
Though Buffett's move soothed nervous investors, it could also lead to new questions from lawmakers for Treasury Secretary Henry Paulson, a former co-CEO of Goldman Sachs. He and Federal Reserve Chairman Ben Bernanke are scheduled to appear before Congress for a second day Wednesday to brief lawmakers on a $700 billion bailout measure for financial services firms.
Their appearance on Capitol Hill Tuesday unnerved stock investors, who questioned whether lawmakers were beginning to doubt the necessity and form of the government bailout.
The Dow Jones industrial average futures rose 97, or 0.89 percent, to 10,951. The Dow fell more than 160 points on Tuesday.
The Standard & Poor's 500 index futures rose 13.20, or 1.11 percent, to 1,200.20, and the Nasdaq 100 index futures rose 19, or 1.15 percent, to 1,669.50.
In the bond market, demand for short-term government Treasuries remained strong as investors again sought safe places to keep cash. The yield on the 3-month Treasury bill, considered the safest short-term financial asset, was at 0.71 percent early Wednesday, down from 0.79 percent late Tuesday. In other Treasury trading, the yield on the benchmark 10-year Treasury note fell to 3.78 percent from 3.80 percent late Tuesday.
The dollar, whose weakness earlier this week contributed to intense volatility in the markets on Monday, was up against the euro and Japanese yen.
Light, sweet crude for November delivery rose $1.92 to $108.53 a barrel premarket electronic trading on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average rose 0.20 percent. Britain's FTSE 100 was up 0.24 percent, Germany's DAX index was up 0.37 percent, and France's CAC-40 was up 0.11 percent.
Buffett's Berkshire Hathaway Inc. said Tuesday it was investing at least $5 billion in Goldman -- a move Wall Street took as strong sign of support for the independent investment bank model.
Besides buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering; the company and Morgan Stanley earlier this week were granted approval to become bank holding companies, which would help them strengthen their balance sheets.
Though Buffett's move soothed nervous investors, it could also lead to new questions from lawmakers for Treasury Secretary Henry Paulson, a former co-CEO of Goldman Sachs. He and Federal Reserve Chairman Ben Bernanke are scheduled to appear before Congress for a second day Wednesday to brief lawmakers on a $700 billion bailout measure for financial services firms.
Their appearance on Capitol Hill Tuesday unnerved stock investors, who questioned whether lawmakers were beginning to doubt the necessity and form of the government bailout.
The Dow Jones industrial average futures rose 97, or 0.89 percent, to 10,951. The Dow fell more than 160 points on Tuesday.
The Standard & Poor's 500 index futures rose 13.20, or 1.11 percent, to 1,200.20, and the Nasdaq 100 index futures rose 19, or 1.15 percent, to 1,669.50.
In the bond market, demand for short-term government Treasuries remained strong as investors again sought safe places to keep cash. The yield on the 3-month Treasury bill, considered the safest short-term financial asset, was at 0.71 percent early Wednesday, down from 0.79 percent late Tuesday. In other Treasury trading, the yield on the benchmark 10-year Treasury note fell to 3.78 percent from 3.80 percent late Tuesday.
The dollar, whose weakness earlier this week contributed to intense volatility in the markets on Monday, was up against the euro and Japanese yen.
Light, sweet crude for November delivery rose $1.92 to $108.53 a barrel premarket electronic trading on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average rose 0.20 percent. Britain's FTSE 100 was up 0.24 percent, Germany's DAX index was up 0.37 percent, and France's CAC-40 was up 0.11 percent.
US hedge fund Paulson bets big against UK banks
LONDON (Reuters) - World stocks steadied on Wednesday and safe-haven government bonds rose after Warren Buffett's investment in Goldman Sachs failed to calm anxiety over the prospects for Washington's $700 billion bank bailout.
Billionaire investor Buffett's Berkshire Hathaway Inc will invest $5 billion in Goldman, a major boost for the Wall Street bank whose shares fell 50 percent from their 2007 record high in this month's market turmoil.
However, the news failed to significantly boost risky assets after the U.S. government's push for quick congressional approval of its financial rescue plan hit a wall of opposition on Tuesday among senators who said the plan puts taxpayers at risk.
Federal Reserve chairman Ben Bernanke testifies again later, after warning lawmakers on Tuesday that a failure to act could doom the economy to a recession.
"The market is still nervous about the outcome of the proposed U.S. plan as politics seems to be making the deal more complicated," said Ryuji Shimai, market analyst at Shinko Securities in Tokyo.
The FTSEurofirst 300 index erased early gains to stand flat on the day while the MSCI world equity index was broadly steady.
U.S. stock futures were up more than 1 percent, pointing to a stronger start on Wall Street later.
"Buffett's legendary status as a value investor gives the bulls reason for optimism, as some will see his move as a sign to call the bottom of the recent declines," said Chris Hossain, senior sales manager at ODL Securities.
The December bund future rose 30 ticks as jittery investors sought safety in government bonds.
Strains in the interbank money market lingered, with overnight dollar rates rising 195 basis points above the Fed's target rate at one point, before falling to stand around 30 bps above the rate.
The Fed moved for the second time within 24 hours to provide liquidity, acting in concert with Australia and Scandinavia, while the euro zone, Britain, Japan and Australia injected billions of dollars into their banking systems.
Once a byword for safety and liquidity, the short-term lending market where banks lend to each other has repeatedly seized up in the financial crisis because of increasing worries over the creditworthiness of borrowers.
The dollar was steady against a basket of major currencies while the euro stood unchanged on the day at $1.4654 .
Emerging sovereign spreads tightened 3 basis points while emerging stocks rose 0.4 percent on the day.
U.S. light crude rose 1.6 percent following forecasts of a drop in U.S. crude stocks. Gold rose edged lower to $887.80 an ounce.
Billionaire investor Buffett's Berkshire Hathaway Inc will invest $5 billion in Goldman, a major boost for the Wall Street bank whose shares fell 50 percent from their 2007 record high in this month's market turmoil.
However, the news failed to significantly boost risky assets after the U.S. government's push for quick congressional approval of its financial rescue plan hit a wall of opposition on Tuesday among senators who said the plan puts taxpayers at risk.
Federal Reserve chairman Ben Bernanke testifies again later, after warning lawmakers on Tuesday that a failure to act could doom the economy to a recession.
"The market is still nervous about the outcome of the proposed U.S. plan as politics seems to be making the deal more complicated," said Ryuji Shimai, market analyst at Shinko Securities in Tokyo.
The FTSEurofirst 300 index erased early gains to stand flat on the day while the MSCI world equity index was broadly steady.
U.S. stock futures were up more than 1 percent, pointing to a stronger start on Wall Street later.
"Buffett's legendary status as a value investor gives the bulls reason for optimism, as some will see his move as a sign to call the bottom of the recent declines," said Chris Hossain, senior sales manager at ODL Securities.
The December bund future rose 30 ticks as jittery investors sought safety in government bonds.
Strains in the interbank money market lingered, with overnight dollar rates rising 195 basis points above the Fed's target rate at one point, before falling to stand around 30 bps above the rate.
The Fed moved for the second time within 24 hours to provide liquidity, acting in concert with Australia and Scandinavia, while the euro zone, Britain, Japan and Australia injected billions of dollars into their banking systems.
Once a byword for safety and liquidity, the short-term lending market where banks lend to each other has repeatedly seized up in the financial crisis because of increasing worries over the creditworthiness of borrowers.
The dollar was steady against a basket of major currencies while the euro stood unchanged on the day at $1.4654 .
Emerging sovereign spreads tightened 3 basis points while emerging stocks rose 0.4 percent on the day.
U.S. light crude rose 1.6 percent following forecasts of a drop in U.S. crude stocks. Gold rose edged lower to $887.80 an ounce.
US Stocks extend fall as Street weighs bailout plan
NEW YORK (AP) -- Financial markets extended their declines Tuesday as investors worried that lawmakers were beginning to doubt the necessity of a broad government bailout for financial institutions as a way to revive ailing credit markets.
Top economic officials updating Congress about efforts to work out a $700 billion financial rescue plan faced a greater degree of second-guessing from lawmakers than some investors had expected. The Dow Jones industrials, which had been higher for the first half of the session ended at the lows of the day, tacking a 161-point loss onto a steep drop from Monday.
Still, trading appeared more orderly than Monday, when investors rushed into hard assets like oil and gold. Meanwhile, demand remained high for 3-month Treasury bills, considered the safest short-term financial asset, while the dollar regained some ground after being hard hit Monday.
After days of intense gyrations in financial markets, investors are anxious about whether the plan to absorb bad mortgages and other risky assets will help steer the economy onto more solid footing -- and also about resistance to the plan in Congress.
Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox testified before lawmakers, who are working alongside others in the Bush administration to complete the details of the bailout.
Traders grew nervous, and sent the stock market lower, as the officials faced questions about whether the government's planned response was appropriate. Sen. Chuck Schumer, D-N.Y., for example, asked whether $150 billion might be adequate to get the program started if investors were told more money could be added if necessary.
The market remains uncertain about how long it will take for the bailout plans to take effect, and assuming they do, how effective they will be.
"There's skepticism about whether the $700 billion number is the right number," said Jim Herrick, manager and director of equity trading at Baird & Co.
Bernanke told the Senate Banking Committee Congress risks triggering a recession if it doesn't act on the plan. He said inaction could leave a range of businesses unable to borrow the money while consumers could find it impossible to finance big purchases like cars and homes.
While financial markets showed uneasiness as investors listened to the testimony, there wasn't the level of fear and volatility that dominated Monday's trading.
Demand for short-term Treasurys remained high. The yield on the 3-month T-bill fell to 0.79 percent from 0.88 percent on Monday; last week, it was around zero after investors flooded money into T-bills as the credit markets seized up. That spurred government officials to propose a debt buyout plan.
The yield on the benchmark 10-year Treasury note, which trades opposite its price, fell to 3.80 percent from 3.85 percent late Monday.
The dollar, whose decline Monday drove some of the frenetic trading in other markets, regained some of its lost ground against the euro, while gold prices declined after starting the week with a big advance.
The Dow fell 161.52, or 1.47 percent, to 10,854.17 after having risen more than 125 points in the early going and then falling by more than 180. With Monday's 370-point decline, the blue chips are down 534 points, or 4.69 percent, for the week.
Broader stock indicators also fell Tuesday. The Standard & Poor's 500 index fell 18.87, or 1.56 percent, to 1,188.22, and the Nasdaq composite index fell 25.67, or 1.18 percent, to 2,153.34.
Investors also were watching oil prices after anxiety over the government bailout and a huge short-covering rally pushed crude to the biggest one-day gain.
Light, sweet crude for November delivery fell $2.76 to settle at $106.61 on the New York Mercantile Exchange. The October contract, which expired Monday, surged as much as $25.45 to $130 before falling back to settle at $120.92, an advance of $16.37. While that gain was due to technical market dynamics, the price of oil has moved higher over the past week amid increasing concerns about the U.S. financial system.
"We're going to see this volatility for a while even after this package passes because I think we're still facing a fundamental slowdown in the economy worldwide which is going to have some impact on earnings," said J. Stephen Lauck, chief executive and portfolio manager at Ashfield Capital Partners.
Financial stocks finished mixed as some investors worried that the government's plan could prove inadequate to save some banks. Should the government pay too little for assets some banks might be forced to book ruinous write-offs and risk going under.
Bank of America Corp. fell 85 cents, or 2.5 percent, to $33.30, while Washington Mutual Inc. fell 13 cents, or 3.9 percent, to $3.20.
Some energy names lost ground as oil declined. Occidental Petroleum Corp. fell $4.08, or 5 percent, to $77.16 and XTO Energy Inc. declined $1.14, or 2.2 percent, to $51.30.
In addition, some industrial stocks slid as investors worried about the well-being of the global economy. Aluminum maker Alcoa Inc. fell $1.21, or 4.5 percent, to $25.59. Seed company Monsanto Co. fell $4.85, or 4.2 percent, to $112.14.
Some technology stocks advanced as investors looked for areas outside the financial, energy and industrial sectors. Computer chip maker Intel Corp. rose 13 cents to $18.63, while Sprint Nextel Corp. rose 27 cents, or 4.2 percent, to $6.77.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange, where consolidated volume came to 5.11 billion shares, compared with 5.22 billion traded Monday.
The Russell 2000 index of smaller companies fell 11.25, or 1.56 percent, to 709.19.
Overseas, Britain's FTSE 100 fell 1.91 percent, Germany's DAX index slid 0.64 percent, and France's CAC-40 fell 1.98 percent. Japanese financial markets were closed Tuesday for a national holiday.
Top economic officials updating Congress about efforts to work out a $700 billion financial rescue plan faced a greater degree of second-guessing from lawmakers than some investors had expected. The Dow Jones industrials, which had been higher for the first half of the session ended at the lows of the day, tacking a 161-point loss onto a steep drop from Monday.
Still, trading appeared more orderly than Monday, when investors rushed into hard assets like oil and gold. Meanwhile, demand remained high for 3-month Treasury bills, considered the safest short-term financial asset, while the dollar regained some ground after being hard hit Monday.
After days of intense gyrations in financial markets, investors are anxious about whether the plan to absorb bad mortgages and other risky assets will help steer the economy onto more solid footing -- and also about resistance to the plan in Congress.
Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox testified before lawmakers, who are working alongside others in the Bush administration to complete the details of the bailout.
Traders grew nervous, and sent the stock market lower, as the officials faced questions about whether the government's planned response was appropriate. Sen. Chuck Schumer, D-N.Y., for example, asked whether $150 billion might be adequate to get the program started if investors were told more money could be added if necessary.
The market remains uncertain about how long it will take for the bailout plans to take effect, and assuming they do, how effective they will be.
"There's skepticism about whether the $700 billion number is the right number," said Jim Herrick, manager and director of equity trading at Baird & Co.
Bernanke told the Senate Banking Committee Congress risks triggering a recession if it doesn't act on the plan. He said inaction could leave a range of businesses unable to borrow the money while consumers could find it impossible to finance big purchases like cars and homes.
While financial markets showed uneasiness as investors listened to the testimony, there wasn't the level of fear and volatility that dominated Monday's trading.
Demand for short-term Treasurys remained high. The yield on the 3-month T-bill fell to 0.79 percent from 0.88 percent on Monday; last week, it was around zero after investors flooded money into T-bills as the credit markets seized up. That spurred government officials to propose a debt buyout plan.
The yield on the benchmark 10-year Treasury note, which trades opposite its price, fell to 3.80 percent from 3.85 percent late Monday.
The dollar, whose decline Monday drove some of the frenetic trading in other markets, regained some of its lost ground against the euro, while gold prices declined after starting the week with a big advance.
The Dow fell 161.52, or 1.47 percent, to 10,854.17 after having risen more than 125 points in the early going and then falling by more than 180. With Monday's 370-point decline, the blue chips are down 534 points, or 4.69 percent, for the week.
Broader stock indicators also fell Tuesday. The Standard & Poor's 500 index fell 18.87, or 1.56 percent, to 1,188.22, and the Nasdaq composite index fell 25.67, or 1.18 percent, to 2,153.34.
Investors also were watching oil prices after anxiety over the government bailout and a huge short-covering rally pushed crude to the biggest one-day gain.
Light, sweet crude for November delivery fell $2.76 to settle at $106.61 on the New York Mercantile Exchange. The October contract, which expired Monday, surged as much as $25.45 to $130 before falling back to settle at $120.92, an advance of $16.37. While that gain was due to technical market dynamics, the price of oil has moved higher over the past week amid increasing concerns about the U.S. financial system.
"We're going to see this volatility for a while even after this package passes because I think we're still facing a fundamental slowdown in the economy worldwide which is going to have some impact on earnings," said J. Stephen Lauck, chief executive and portfolio manager at Ashfield Capital Partners.
Financial stocks finished mixed as some investors worried that the government's plan could prove inadequate to save some banks. Should the government pay too little for assets some banks might be forced to book ruinous write-offs and risk going under.
Bank of America Corp. fell 85 cents, or 2.5 percent, to $33.30, while Washington Mutual Inc. fell 13 cents, or 3.9 percent, to $3.20.
Some energy names lost ground as oil declined. Occidental Petroleum Corp. fell $4.08, or 5 percent, to $77.16 and XTO Energy Inc. declined $1.14, or 2.2 percent, to $51.30.
In addition, some industrial stocks slid as investors worried about the well-being of the global economy. Aluminum maker Alcoa Inc. fell $1.21, or 4.5 percent, to $25.59. Seed company Monsanto Co. fell $4.85, or 4.2 percent, to $112.14.
Some technology stocks advanced as investors looked for areas outside the financial, energy and industrial sectors. Computer chip maker Intel Corp. rose 13 cents to $18.63, while Sprint Nextel Corp. rose 27 cents, or 4.2 percent, to $6.77.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange, where consolidated volume came to 5.11 billion shares, compared with 5.22 billion traded Monday.
The Russell 2000 index of smaller companies fell 11.25, or 1.56 percent, to 709.19.
Overseas, Britain's FTSE 100 fell 1.91 percent, Germany's DAX index slid 0.64 percent, and France's CAC-40 fell 1.98 percent. Japanese financial markets were closed Tuesday for a national holiday.
Tuesday, September 23, 2008
Bailout debate mulls making Wall Street pay
NEW YORK (Reuters) - The planned $700 billion bailout to shore up the battered U.S. financial system looked set to drag into next week as Washington lawmakers haggled over how exactly they could make Wall Street pay for its rescue.
Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.
"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?"'
A day after America's last two big investment banks, Goldman Sachs (NYSE:GS - News) and Morgan Stanley (NYSE:MS - News), ended Wall Street's swashbuckling era by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.
U.S. lawmakers and Bush administration officials were hammering out details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.
U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two-days of congressional hearings on Tuesday to hasten approval of the bailout.
With the economy the No. 1 issue in a U.S. presidential election that is about six weeks away, lawmakers want a plan in place quickly, fearing delay could send markets reeling again.
But with one-third of the U.S. Senate and the entire U.S. House of Representatives up for re-election on November 4, lawmakers will want to sound tough on such hot-button issues as the pay of reckless executives.
"We are not sending a blank check to Wall Street," House Speaker Nancy Pelosi said after holding bipartisan talks.
With so many ideas being floated in Washington on Monday, one congressional aide who asked not to be identified likened the scene to a "Turkish bazaar of public policy ideas."
The crisis has unsettled world markets, and Group of Seven finance ministers and central bank heads promised "heightened close cooperation" to safeguard the global economy.
The latest jitters came after the deal late Sunday scrapped the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that collapsed or were bought in the brutal meltdown of recent weeks.
Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc (Tokyo:8306.T - News), on Monday to spend as much as $8.5 billion for about one-fifth of the prestigious 73-year-old investment bank, sending Morgan's shares higher before closing down.
ANGER AT BAILOUT
After Monday's talks, U.S. Rep. Barney Frank, a top Democrat, said the U.S. government would take equity in the companies seeking a bailout. But the U.S. Treasury is against that idea, sources close to Treasury told Reuters.
The White House said it agreed to an oversight board to monitor the bailout, which Democrats had pushed for. And Frank said there was also agreement that the plan should minimize the number of Americans who will lose their homes to foreclosure.
But lawmakers and Treasury officials were at odds on the emotional issue of whether executives at the companies in need of rescue must agree to limits to their compensation.
With details still in dispute, Frank said the legislation could take until next week to complete.
Earlier, U.S. President George W. Bush said, "Failure to act would have broad consequences far beyond Wall Street."
But U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, voiced outrage at the notion of any bailout without a cap on executive pay.
"The (Bush) administration's plan ... would enrich the Wall Street executives whose reckless investments caused the financial crisis," the powerful California Democrat said. "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
Even some Republicans came out against the bailout.
Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said he feared the bailout was "neither workable nor comprehensive."
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Sen. Chuck Hagel, a Nebraska Republican, told Reuters after a meeting of fellow Senate Banking Committee members, "I suspect there will be opposition. We're not there. We don't even have a product yet."
South Carolina Republican Sen. Jim DeMint called the Bush plan "completely unacceptable."
The uncertainty caused stocks to lose most of the gains seen on Friday, when word of the plan sparked Wall Street's best one-day gain since 1987. The S&P 500 index (^SPX - News) dropped 3.8 percent.
Buoyed by the dollar's near 2 percent decline, U.S. crude oil futures soared $16.37 to settle at $120.92, the biggest ever jump in a trading session. At one point, oil was up a stunning $25.45, or 24.3 percent.
In a crisis that has lurched from issue to issue since the U.S. economy first showed weakness and home prices began to tumble last year, prompting a credit crunch and the collapse of investment banking, some wondered where it would end.
"The thing that scares me is the breadth of it," said Robert MacMahon, managing director for restructuring at GE (NYSE:GE - News) Corporate Lending.
Democrats, who control both chambers of Congress, pushed for changes to the plan on concerns that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of the Bush administration.
GLOBAL CRISIS
The crisis is threatening global markets. Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system. (ID:nLM163631). Even in the oil-rich Gulf region, the crisis was felt.
The United Arab Emirates Central Bank launched its first-ever emergency funding facility to help fund banks as global lending between institutions shriveled.
The Fed's agreement to convert the once high-flying Goldman and Morgan Stanley investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets and avoid a deep recession.
Both Goldman and Morgan will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.
The rescue came together after seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK - News) file for bankruptcy, Merrill Lynch & Co Inc (NYSE:MER - News) agree to sell itself to Bank of America (NYSE:BAC - News), and the Fed stage an $85 billion rescue of American International Group Inc (NYSE:AIG - News).
AIG shares gained 23 percent on Monday on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed's loan.
Goldman and Morgan Stanley were the last of the big five investment banks that shaped 20 years of Wall Street history after Bear Stearns collapsed earlier this year.
Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.
"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?"'
A day after America's last two big investment banks, Goldman Sachs (NYSE:GS - News) and Morgan Stanley (NYSE:MS - News), ended Wall Street's swashbuckling era by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.
U.S. lawmakers and Bush administration officials were hammering out details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.
U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two-days of congressional hearings on Tuesday to hasten approval of the bailout.
With the economy the No. 1 issue in a U.S. presidential election that is about six weeks away, lawmakers want a plan in place quickly, fearing delay could send markets reeling again.
But with one-third of the U.S. Senate and the entire U.S. House of Representatives up for re-election on November 4, lawmakers will want to sound tough on such hot-button issues as the pay of reckless executives.
"We are not sending a blank check to Wall Street," House Speaker Nancy Pelosi said after holding bipartisan talks.
With so many ideas being floated in Washington on Monday, one congressional aide who asked not to be identified likened the scene to a "Turkish bazaar of public policy ideas."
The crisis has unsettled world markets, and Group of Seven finance ministers and central bank heads promised "heightened close cooperation" to safeguard the global economy.
The latest jitters came after the deal late Sunday scrapped the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that collapsed or were bought in the brutal meltdown of recent weeks.
Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc (Tokyo:8306.T - News), on Monday to spend as much as $8.5 billion for about one-fifth of the prestigious 73-year-old investment bank, sending Morgan's shares higher before closing down.
ANGER AT BAILOUT
After Monday's talks, U.S. Rep. Barney Frank, a top Democrat, said the U.S. government would take equity in the companies seeking a bailout. But the U.S. Treasury is against that idea, sources close to Treasury told Reuters.
The White House said it agreed to an oversight board to monitor the bailout, which Democrats had pushed for. And Frank said there was also agreement that the plan should minimize the number of Americans who will lose their homes to foreclosure.
But lawmakers and Treasury officials were at odds on the emotional issue of whether executives at the companies in need of rescue must agree to limits to their compensation.
With details still in dispute, Frank said the legislation could take until next week to complete.
Earlier, U.S. President George W. Bush said, "Failure to act would have broad consequences far beyond Wall Street."
But U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, voiced outrage at the notion of any bailout without a cap on executive pay.
"The (Bush) administration's plan ... would enrich the Wall Street executives whose reckless investments caused the financial crisis," the powerful California Democrat said. "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
Even some Republicans came out against the bailout.
Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said he feared the bailout was "neither workable nor comprehensive."
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Sen. Chuck Hagel, a Nebraska Republican, told Reuters after a meeting of fellow Senate Banking Committee members, "I suspect there will be opposition. We're not there. We don't even have a product yet."
South Carolina Republican Sen. Jim DeMint called the Bush plan "completely unacceptable."
The uncertainty caused stocks to lose most of the gains seen on Friday, when word of the plan sparked Wall Street's best one-day gain since 1987. The S&P 500 index (^SPX - News) dropped 3.8 percent.
Buoyed by the dollar's near 2 percent decline, U.S. crude oil futures soared $16.37 to settle at $120.92, the biggest ever jump in a trading session. At one point, oil was up a stunning $25.45, or 24.3 percent.
In a crisis that has lurched from issue to issue since the U.S. economy first showed weakness and home prices began to tumble last year, prompting a credit crunch and the collapse of investment banking, some wondered where it would end.
"The thing that scares me is the breadth of it," said Robert MacMahon, managing director for restructuring at GE (NYSE:GE - News) Corporate Lending.
Democrats, who control both chambers of Congress, pushed for changes to the plan on concerns that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of the Bush administration.
GLOBAL CRISIS
The crisis is threatening global markets. Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system. (ID:nLM163631). Even in the oil-rich Gulf region, the crisis was felt.
The United Arab Emirates Central Bank launched its first-ever emergency funding facility to help fund banks as global lending between institutions shriveled.
The Fed's agreement to convert the once high-flying Goldman and Morgan Stanley investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets and avoid a deep recession.
Both Goldman and Morgan will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.
The rescue came together after seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK - News) file for bankruptcy, Merrill Lynch & Co Inc (NYSE:MER - News) agree to sell itself to Bank of America (NYSE:BAC - News), and the Fed stage an $85 billion rescue of American International Group Inc (NYSE:AIG - News).
AIG shares gained 23 percent on Monday on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed's loan.
Goldman and Morgan Stanley were the last of the big five investment banks that shaped 20 years of Wall Street history after Bear Stearns collapsed earlier this year.
Sunday, September 21, 2008
Economists see financial bailout as necessary
WASHINGTON (AP) -- The economy could suffer a massive hangover from the government's efforts to rescue the financial system in the form of a soaring debt burden. But the alternatives look infinitely worse.
The $700 billion the administration is seeking from Congress as the upper bounds of what it will need to take a mountain of bad loans off the books of financial firms is certainly an eye-popping figure.
To get the funds to buy up the bad mortgage loans that have threatened to bring the financial system to its knees, the government will have to borrow. And that borrowing will come at a time when the federal budget deficit is already soaring.
The deficit for this budget year, which ends on Sept. 30, is expected to rise to $407 billion, a figure that is more than double the $161.5 billion imbalance for 2007, reflecting what the economic slowdown and this year's $168 billion economic stimulus program are already doing to the government's books.
The Bush administration is estimating that the deficit for the budget year that begins Oct. 1, which will cover the new president's first year in office, will hit $482 billion, a record in dollar terms.
And that forecast doesn't include the $200 billion the administration committed to spending two weeks ago when it took over the nation's two biggest mortgage companies, Fannie Mae and Freddie Mac.
And it doesn't have any of the $700 billion the administration is seeking to soak up the bad mortgage-backed securities that have been at the heart of the severe credit crisis the country has been struggling with since August 2007.
The legislation Congress passed this summer that gave the authority to rescue Fannie and Freddie boosted the limit on the national debt by $800 billion to $10.6 trillion.
The legislation the administration is now seeking to authorize the financial system bailout, according to a draft obtained by The Associated Press, would boost that debt limit to $11.3 trillion, up another $700 billion.
It is the rapidly rising debt that is cause for concern. The government is already spending more than $400 billion a year just to pay interest on the national debt. The higher that debt goes, the higher the government's borrowing costs and the less it has to spend on other programs.
Republican John McCain and Democrat Barack Obama are both running for president, making campaign promises about what new programs they will implement once in office, promises that could be severely constrained by the costs of a financial bailout.
The escalating borrowing also means that the government is competing with the private sector for loans, driving up interest rates. And then there is the matter of the country's large trade imbalances which mean the United States has to borrow $2 billion a day from foreigners.
Will foreigners still want to lend as much to the United States if there are concerns that all the borrowing could weaken the dollar's value against other currencies.
But even with all these threats, economists said the government has to take decisive action because the alternative of letting the financial system slide into even deeper problems which could jeopardize the routine loans that businesses and consumers need was simply not an option.
"It was critical to arrest the downward slide in financial markets," said Sung Won Sohn, an economist at California State University, Channel Islands.
The dire situation was dramatically demonstrated this past week when the Federal Reserve, working with the central banks of other nations, poured billions of dollars into the financial system without any significant impact because of the fear keeping banks from lending.
The financial system has already been staggered with $500 billion in losses from the mortgage mess and the International Monetary Fund has estimated the ultimate price could be $1 trillion.
What the administration's plan would do is at least establish a price for the mortgage-backed securities, which at the moment no one wants to own.
Officials who have briefed Congress on Treasury Secretary Henry Paulson's plan have suggested that one approach would be for the government to buy the toxic debt through a reverse auction process in which companies wanting to unload their mortgage-backed securities would propose a price to the government -- say 50 cents on the dollar -- and those offering the lowest price would win the bid.
By establishing a price for assets no one currently wants to buy, it could allow a market to develop and allow financial firms to get on with the effort of taking their losses and getting the damaged assets off their books.
"This could go a long way toward solving these problems," said Mark Zandi, chief economist at Moody's Economy.com, who has written a book on the mortgage meltdown.
And the final cost to the government?
No one knows for sure, but Zandi said if the experience with cleaning up all the assets left over from the savings and loan mess is any guide, it should be less than the $700 billion that the administration is seeking.
In the S&L crisis, the government was able to recoup about two-thirds of its initial costs when it sold the assets it had obtained from the failed S&Ls.
"Obviously there is a big upfront cost to taxpayers," Zandi said, "but the ultimate cost may be measurably lower."
The $700 billion the administration is seeking from Congress as the upper bounds of what it will need to take a mountain of bad loans off the books of financial firms is certainly an eye-popping figure.
To get the funds to buy up the bad mortgage loans that have threatened to bring the financial system to its knees, the government will have to borrow. And that borrowing will come at a time when the federal budget deficit is already soaring.
The deficit for this budget year, which ends on Sept. 30, is expected to rise to $407 billion, a figure that is more than double the $161.5 billion imbalance for 2007, reflecting what the economic slowdown and this year's $168 billion economic stimulus program are already doing to the government's books.
The Bush administration is estimating that the deficit for the budget year that begins Oct. 1, which will cover the new president's first year in office, will hit $482 billion, a record in dollar terms.
And that forecast doesn't include the $200 billion the administration committed to spending two weeks ago when it took over the nation's two biggest mortgage companies, Fannie Mae and Freddie Mac.
And it doesn't have any of the $700 billion the administration is seeking to soak up the bad mortgage-backed securities that have been at the heart of the severe credit crisis the country has been struggling with since August 2007.
The legislation Congress passed this summer that gave the authority to rescue Fannie and Freddie boosted the limit on the national debt by $800 billion to $10.6 trillion.
The legislation the administration is now seeking to authorize the financial system bailout, according to a draft obtained by The Associated Press, would boost that debt limit to $11.3 trillion, up another $700 billion.
It is the rapidly rising debt that is cause for concern. The government is already spending more than $400 billion a year just to pay interest on the national debt. The higher that debt goes, the higher the government's borrowing costs and the less it has to spend on other programs.
Republican John McCain and Democrat Barack Obama are both running for president, making campaign promises about what new programs they will implement once in office, promises that could be severely constrained by the costs of a financial bailout.
The escalating borrowing also means that the government is competing with the private sector for loans, driving up interest rates. And then there is the matter of the country's large trade imbalances which mean the United States has to borrow $2 billion a day from foreigners.
Will foreigners still want to lend as much to the United States if there are concerns that all the borrowing could weaken the dollar's value against other currencies.
But even with all these threats, economists said the government has to take decisive action because the alternative of letting the financial system slide into even deeper problems which could jeopardize the routine loans that businesses and consumers need was simply not an option.
"It was critical to arrest the downward slide in financial markets," said Sung Won Sohn, an economist at California State University, Channel Islands.
The dire situation was dramatically demonstrated this past week when the Federal Reserve, working with the central banks of other nations, poured billions of dollars into the financial system without any significant impact because of the fear keeping banks from lending.
The financial system has already been staggered with $500 billion in losses from the mortgage mess and the International Monetary Fund has estimated the ultimate price could be $1 trillion.
What the administration's plan would do is at least establish a price for the mortgage-backed securities, which at the moment no one wants to own.
Officials who have briefed Congress on Treasury Secretary Henry Paulson's plan have suggested that one approach would be for the government to buy the toxic debt through a reverse auction process in which companies wanting to unload their mortgage-backed securities would propose a price to the government -- say 50 cents on the dollar -- and those offering the lowest price would win the bid.
By establishing a price for assets no one currently wants to buy, it could allow a market to develop and allow financial firms to get on with the effort of taking their losses and getting the damaged assets off their books.
"This could go a long way toward solving these problems," said Mark Zandi, chief economist at Moody's Economy.com, who has written a book on the mortgage meltdown.
And the final cost to the government?
No one knows for sure, but Zandi said if the experience with cleaning up all the assets left over from the savings and loan mess is any guide, it should be less than the $700 billion that the administration is seeking.
In the S&L crisis, the government was able to recoup about two-thirds of its initial costs when it sold the assets it had obtained from the failed S&Ls.
"Obviously there is a big upfront cost to taxpayers," Zandi said, "but the ultimate cost may be measurably lower."
Friday, September 19, 2008
US Stocks Skyrocket on Government Rescue Plan, Ban on Short-Selling of Financials-
NEW YORK (AP) -- Wall Street extended a huge rally Friday as investors stormed back into the market, relieved that the government plans to rescue banks from billions of dollars in bad debt. The Dow Jones industrials rose more than 400 points, giving them a massive gain of more than 800 points over two days.
A new ban on short selling, or placing bets that a stock will fall, was likely adding to the market's gains. And Friday was a quarterly "quadruple witching" day, which marks the simultaneous expiration of options contracts, an event that often adds to volatility.
Treasury Secretary Henry Paulson will be speaking at 10 a.m. Eastern time about the rescue plan, which is expected to help alleviate the year-old credit crisis by removing soured real estate debt from financial institutions' books.
If a plan is put in place to help the banking industry, it could help alleviate the uncertainty that has been sending the markets into tumult over the past week. Lending has grinded to a virtual standstill in the wake of the bankruptcy of Lehman Brothers Holdings Inc. and the bailout of teetering insurer American International Group Inc.
The Federal Reserve said Friday it will expand its emergency lending and let commercial banks finance purchases of asset-backed paper from money market funds. The Fed will also buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
And to help calm investors' anxieties, the Treasury Department has decided to use a Depression-era fund to provide guarantees for U.S. money market mutual funds. Money market mutual funds are typically considered safe, but many investors have been fleeing them due to worries about the funds' exposure to the embattled financial industry.
To help limit the freefall in financial stocks, the Securities and Exchange Commission announced it is temporarily banning the short-selling of nearly 800 financial stocks. Short-selling is the common practice of betting against company stocks by borrowing its shares, selling them, and pocketing the difference when they fall.
"The federal government has been petitioned by Wall Street to take evasive action in the money markets, the stock and bond markets, to avoid a complete meltdown of the credit system," said Joe Battipaglia, market strategist at Stifel, Nicolaus & Co. "Once the credit system melts down, the economy falls. We can hand-ring about if this is the proper thing for the government to do, or if Wall Street pulled the panic button too soon, but that's something for the historians to sort out."
In the first minutes of trading, the Dow Jones industrial average rose 412.31, or 3.74 percent, to 11,432.00.
Broader stock indicators also surged. The Standard & Poor's 500 index rose 50.02, or 4.15 percent, to 1,256.53, and the Nasdaq composite index rose 85.82, or 3.90 percent, to 2,284.92.
A new ban on short selling, or placing bets that a stock will fall, was likely adding to the market's gains. And Friday was a quarterly "quadruple witching" day, which marks the simultaneous expiration of options contracts, an event that often adds to volatility.
Treasury Secretary Henry Paulson will be speaking at 10 a.m. Eastern time about the rescue plan, which is expected to help alleviate the year-old credit crisis by removing soured real estate debt from financial institutions' books.
If a plan is put in place to help the banking industry, it could help alleviate the uncertainty that has been sending the markets into tumult over the past week. Lending has grinded to a virtual standstill in the wake of the bankruptcy of Lehman Brothers Holdings Inc. and the bailout of teetering insurer American International Group Inc.
The Federal Reserve said Friday it will expand its emergency lending and let commercial banks finance purchases of asset-backed paper from money market funds. The Fed will also buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
And to help calm investors' anxieties, the Treasury Department has decided to use a Depression-era fund to provide guarantees for U.S. money market mutual funds. Money market mutual funds are typically considered safe, but many investors have been fleeing them due to worries about the funds' exposure to the embattled financial industry.
To help limit the freefall in financial stocks, the Securities and Exchange Commission announced it is temporarily banning the short-selling of nearly 800 financial stocks. Short-selling is the common practice of betting against company stocks by borrowing its shares, selling them, and pocketing the difference when they fall.
"The federal government has been petitioned by Wall Street to take evasive action in the money markets, the stock and bond markets, to avoid a complete meltdown of the credit system," said Joe Battipaglia, market strategist at Stifel, Nicolaus & Co. "Once the credit system melts down, the economy falls. We can hand-ring about if this is the proper thing for the government to do, or if Wall Street pulled the panic button too soon, but that's something for the historians to sort out."
In the first minutes of trading, the Dow Jones industrial average rose 412.31, or 3.74 percent, to 11,432.00.
Broader stock indicators also surged. The Standard & Poor's 500 index rose 50.02, or 4.15 percent, to 1,256.53, and the Nasdaq composite index rose 85.82, or 3.90 percent, to 2,284.92.
Thursday, September 18, 2008
Financial strains ease but Street remains cautious
NEW YORK (AP) -- Financial markets appeared less strained Thursday, but investors were still nervous, seeking safe investments like gold and Treasury bills and showing some reluctance to return to stocks.
The modest moves in stocks were a welcome sign, though the advances the Dow Jones industrial average showed at times did little to offset the 800-point decline the blue chips had logged over the first three sessions this week.
Investors appeared somewhat relieved after the Federal Reserve and other major central banks around the world on Thursday acted in concert to inject as much as $180 billion into global money markets, an attempt to keep the credit crisis from worsening. The Fed added another $55 billion in overnight loans Thursday.
Market participants still appear to be treading carefully to determine how to proceed in what is looking to be the most troubling period for the world's financial system in most investors' memory.
Grinding gears in the world's credit markets have driven up the cost of borrowing for businesses, while investors are also contending with fears that more big-name financial companies could falter. The fear in the markets had led to speculation about the future of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley. Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual; and a person familiar with the negotiations said Morgan Stanley and Wachovia Corp. are in talks about a possible combination. He spoke on condition of anonmyity because the talks are ongoing.
"We are in uncharted territory," said Linda Duessel, the equity market strategist at Federated Investors. "The seriousness and the size of this fallout has been underestimated from the beginning. It's most disconcerting what's going on in the credit market."
In late morning trading, the Dow Jones industrial average rose 21.01, or 0.20 percent, to 10,630.67.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 1.03, or 0.09 percent, to 1,155.36, and the Nasdaq composite index slipped 5.01, or 0.24 percent, to 2,093.84.
Monday's 504-point loss in the Dow was its biggest drop since the drop following the September 2001 terror attacks. The blue-chip index is now about 24 percent below its Oct. 9, 2007, record close of 14,164.53.
On Wednesday, the 3-month Treasury bill -- considered one of the safest short-duration assets -- saw demand surge so high that its yield briefly dipped into negative territory for the first time since 1940. Investors are so focused on parking their money in safe assets that they're willing to take very little return on such investments.
The prices for short-duration Treasurys fell from Wednesday's levels. But the yield on the 3-month T-bill was still extremely low at 0.19 percent -- up from 0.2 percent late Wednesday, but well below its yield of 1.60 percent just a week ago.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.44 percent in early Thursday trading from 3.42 percent late Wednesday.
Gold, another safe haven, rose further on Thursday, after posting their largest one-day price jump ever on Wednesday.
Oil is not considered as safe as gold but it, too, has been drawing investors who deem it safer than stocks. Light, sweet crude on the New York Mercantile Exchange rose 55 cents to $97.71 a barrel, after jumping more than $6 a barrel Wednesday.
The dollar fell against most other major currencies.
In economic data, the Labor Department reported that initial claims for unemployment benefits rose by 10,000 last week to 455,000, due primarily to Louisiana's job losses from Hurricane Gustav.
The Philadelphia Fed said its regional manufacturing report improved to a 3.8 in September from a negative 12.7 in August. It marks the first positive reading since November.
In earnings news, FedEx Inc. posted a 22 percent decline in quarterly earnings, as the package delivery company cut costs to offset slowing global growth. The fiscal first-quarter results came in as expected. The stock fell $1.19 to $86.88.
Overseas, Japan's Nikkei stock average dropped 2.22 percent to its lowest closing level in over three years. Hong Kong's Hang Seng index lost 0.03 percent.
In afternoon trading, Britain's FTSE 100 rose 0.81 percent, Germany's DAX index rose 1.13 percent, and France's CAC-40 fell 0.64 percent.
The modest moves in stocks were a welcome sign, though the advances the Dow Jones industrial average showed at times did little to offset the 800-point decline the blue chips had logged over the first three sessions this week.
Investors appeared somewhat relieved after the Federal Reserve and other major central banks around the world on Thursday acted in concert to inject as much as $180 billion into global money markets, an attempt to keep the credit crisis from worsening. The Fed added another $55 billion in overnight loans Thursday.
Market participants still appear to be treading carefully to determine how to proceed in what is looking to be the most troubling period for the world's financial system in most investors' memory.
Grinding gears in the world's credit markets have driven up the cost of borrowing for businesses, while investors are also contending with fears that more big-name financial companies could falter. The fear in the markets had led to speculation about the future of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley. Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual; and a person familiar with the negotiations said Morgan Stanley and Wachovia Corp. are in talks about a possible combination. He spoke on condition of anonmyity because the talks are ongoing.
"We are in uncharted territory," said Linda Duessel, the equity market strategist at Federated Investors. "The seriousness and the size of this fallout has been underestimated from the beginning. It's most disconcerting what's going on in the credit market."
In late morning trading, the Dow Jones industrial average rose 21.01, or 0.20 percent, to 10,630.67.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 1.03, or 0.09 percent, to 1,155.36, and the Nasdaq composite index slipped 5.01, or 0.24 percent, to 2,093.84.
Monday's 504-point loss in the Dow was its biggest drop since the drop following the September 2001 terror attacks. The blue-chip index is now about 24 percent below its Oct. 9, 2007, record close of 14,164.53.
On Wednesday, the 3-month Treasury bill -- considered one of the safest short-duration assets -- saw demand surge so high that its yield briefly dipped into negative territory for the first time since 1940. Investors are so focused on parking their money in safe assets that they're willing to take very little return on such investments.
The prices for short-duration Treasurys fell from Wednesday's levels. But the yield on the 3-month T-bill was still extremely low at 0.19 percent -- up from 0.2 percent late Wednesday, but well below its yield of 1.60 percent just a week ago.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.44 percent in early Thursday trading from 3.42 percent late Wednesday.
Gold, another safe haven, rose further on Thursday, after posting their largest one-day price jump ever on Wednesday.
Oil is not considered as safe as gold but it, too, has been drawing investors who deem it safer than stocks. Light, sweet crude on the New York Mercantile Exchange rose 55 cents to $97.71 a barrel, after jumping more than $6 a barrel Wednesday.
The dollar fell against most other major currencies.
In economic data, the Labor Department reported that initial claims for unemployment benefits rose by 10,000 last week to 455,000, due primarily to Louisiana's job losses from Hurricane Gustav.
The Philadelphia Fed said its regional manufacturing report improved to a 3.8 in September from a negative 12.7 in August. It marks the first positive reading since November.
In earnings news, FedEx Inc. posted a 22 percent decline in quarterly earnings, as the package delivery company cut costs to offset slowing global growth. The fiscal first-quarter results came in as expected. The stock fell $1.19 to $86.88.
Overseas, Japan's Nikkei stock average dropped 2.22 percent to its lowest closing level in over three years. Hong Kong's Hang Seng index lost 0.03 percent.
In afternoon trading, Britain's FTSE 100 rose 0.81 percent, Germany's DAX index rose 1.13 percent, and France's CAC-40 fell 0.64 percent.
Wednesday, September 17, 2008
Oil prices rebound on AIG bailout, weaker dollar
Oil prices bounce higher after government bails out AIG, dollar gains vs euro
NEW YORK (AP) -- Oil prices rebounded Wednesday as a government rescue of American International Group Inc. soothed skittish investors who feared the insurer's collapse could have triggered a wholesale exodus from commodities.
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Light, sweet crude for October delivery rose $1.45 to $92.60 a barrel in early trading on the New York Mercantile Exchange.
Meanwhile at the pump, retail gas prices were virtually flat compared with the previous session as more Gulf Coast refineries began ramping up operations after the passage of Hurricane Ike. A gallon of regular inched up one-tenth of a penny to a new national average of $3.855, according to auto club AAA, the Oil Price Information Service and Wright Express.
Some recovery in crude was expected after the contract dropped $10 in the previous two sessions, bringing prices to their lowest level in seven months and down 8 percent for the year. At one point Tuesday, oil touched $90.51 a barrel, its lowest since Feb. 8, and down 39 percent from a record $147.27 on July 11.
Still, recent rallies often have been followed by sharp selloffs as oil market traders try to wring whatever money they can out of the quickly deflating oil bubble.
Wednesday's oil gain was energized by the bailout of AIG. The Federal Reserve on Tuesday agreed to pump $85 million in taxpayer money into the insurance giant in return for a 79.9 percent ownership stake. The lifeline was aimed at avoiding an AIG collapse due to massive losses tied to the subprime mortgage crisis and the credit crunch.
If AIG had been allowed to fail, investors feared the company would move to unwind positions in energy and other commodities to raise cash, setting in motion another big commodities liquidation. Oil's big two-day price drop this week was due in part to similar concerns that surfaced after Lehman Brothers Holdings Inc. filed for bankruptcy Monday.
"The fear was that if AIG was allowed to go down, we could be looking at a huge exit from financial instruments across the spectrum: equities, oil futures, everything," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.
A slightly weaker dollar also gave oil prices a boost. A falling greenback encourages investors to shift funds into commodities, which are often bought as safe-haven assets used to hedge against inflation or weakness in the U.S. currency.
With so much uncertainty surrounding the U.S. financial system and fears that slowing economic growth will undermine crude demand, Wednesday's jump in oil prices probably has not broken the recent downward trend.
Events that would usually boost prices -- such as OPEC cutting output by 520,000 barrels a day last week, or damage to oil installations on the Texas coast by Ike last weekend -- haven't done so.
"The OPEC cut didn't have any impact," said Peter McGuire, managing director at investment firm Commodity Warrants Australia in Sydney. "Then Ike didn't slow the market either."
Also Wednesday, the U.S. government reported a bigger-than-expected drop in crude supplies, reflecting the shutdown of virtually all Gulf Coast oil production because of Ike and Hurricane Gustav.
The Energy Information Administration said U.S. crude stocks fell by 6.3 million barrels for the week ending Sept. 12, much bigger than the 3.7 million barrel drop expected by analysts surveyed by energy research firm Platts expected.
Gasoline inventories fell by 3.3 million barrels to 184.6 million barrels. Analysts expected stockpiles of the motor fuel to fall by 3.6 million barrels.
Meanwhile, inventories of distillate fuel, which include diesel and heating oil, fell by 900,000 barrels to 129.6 million barrels for the week ended Sept. 12. Analysts expected distillate stocks to slip by 1.7 million barrels.
Violence continued Wednesday across Nigeria's restive Niger Delta oil region. Nigeria's main militant group said it destroyed an oil-pumping station and a pipeline that crosses southern Nigeria, extending a spate of violence into a fifth day. The Movement for the Emancipation of the Niger Delta also said it attacked an oil pumping station overnight, destroying the flow station run by the local unit of Royal Dutch Shell PLC after battling security forces protecting the site.
In other Nymex trading, heating oil futures fell about half a penny to $2.716 a gallon, while gasoline prices lost 2.3 cents to $2.3775 a gallon. Natural gas for October delivery added 38 cents to $7.939 per 1,000 cubic feet.
In London, November Brent crude rose $1.72 to $90.94 a barrel on the ICE Futures exchange.
Associated Press writers Louise Watt in London and Alex Kennedy contributed to this report from Singapore.
NEW YORK (AP) -- Oil prices rebounded Wednesday as a government rescue of American International Group Inc. soothed skittish investors who feared the insurer's collapse could have triggered a wholesale exodus from commodities.
ADVERTISEMENT
Light, sweet crude for October delivery rose $1.45 to $92.60 a barrel in early trading on the New York Mercantile Exchange.
Meanwhile at the pump, retail gas prices were virtually flat compared with the previous session as more Gulf Coast refineries began ramping up operations after the passage of Hurricane Ike. A gallon of regular inched up one-tenth of a penny to a new national average of $3.855, according to auto club AAA, the Oil Price Information Service and Wright Express.
Some recovery in crude was expected after the contract dropped $10 in the previous two sessions, bringing prices to their lowest level in seven months and down 8 percent for the year. At one point Tuesday, oil touched $90.51 a barrel, its lowest since Feb. 8, and down 39 percent from a record $147.27 on July 11.
Still, recent rallies often have been followed by sharp selloffs as oil market traders try to wring whatever money they can out of the quickly deflating oil bubble.
Wednesday's oil gain was energized by the bailout of AIG. The Federal Reserve on Tuesday agreed to pump $85 million in taxpayer money into the insurance giant in return for a 79.9 percent ownership stake. The lifeline was aimed at avoiding an AIG collapse due to massive losses tied to the subprime mortgage crisis and the credit crunch.
If AIG had been allowed to fail, investors feared the company would move to unwind positions in energy and other commodities to raise cash, setting in motion another big commodities liquidation. Oil's big two-day price drop this week was due in part to similar concerns that surfaced after Lehman Brothers Holdings Inc. filed for bankruptcy Monday.
"The fear was that if AIG was allowed to go down, we could be looking at a huge exit from financial instruments across the spectrum: equities, oil futures, everything," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.
A slightly weaker dollar also gave oil prices a boost. A falling greenback encourages investors to shift funds into commodities, which are often bought as safe-haven assets used to hedge against inflation or weakness in the U.S. currency.
With so much uncertainty surrounding the U.S. financial system and fears that slowing economic growth will undermine crude demand, Wednesday's jump in oil prices probably has not broken the recent downward trend.
Events that would usually boost prices -- such as OPEC cutting output by 520,000 barrels a day last week, or damage to oil installations on the Texas coast by Ike last weekend -- haven't done so.
"The OPEC cut didn't have any impact," said Peter McGuire, managing director at investment firm Commodity Warrants Australia in Sydney. "Then Ike didn't slow the market either."
Also Wednesday, the U.S. government reported a bigger-than-expected drop in crude supplies, reflecting the shutdown of virtually all Gulf Coast oil production because of Ike and Hurricane Gustav.
The Energy Information Administration said U.S. crude stocks fell by 6.3 million barrels for the week ending Sept. 12, much bigger than the 3.7 million barrel drop expected by analysts surveyed by energy research firm Platts expected.
Gasoline inventories fell by 3.3 million barrels to 184.6 million barrels. Analysts expected stockpiles of the motor fuel to fall by 3.6 million barrels.
Meanwhile, inventories of distillate fuel, which include diesel and heating oil, fell by 900,000 barrels to 129.6 million barrels for the week ended Sept. 12. Analysts expected distillate stocks to slip by 1.7 million barrels.
Violence continued Wednesday across Nigeria's restive Niger Delta oil region. Nigeria's main militant group said it destroyed an oil-pumping station and a pipeline that crosses southern Nigeria, extending a spate of violence into a fifth day. The Movement for the Emancipation of the Niger Delta also said it attacked an oil pumping station overnight, destroying the flow station run by the local unit of Royal Dutch Shell PLC after battling security forces protecting the site.
In other Nymex trading, heating oil futures fell about half a penny to $2.716 a gallon, while gasoline prices lost 2.3 cents to $2.3775 a gallon. Natural gas for October delivery added 38 cents to $7.939 per 1,000 cubic feet.
In London, November Brent crude rose $1.72 to $90.94 a barrel on the ICE Futures exchange.
Associated Press writers Louise Watt in London and Alex Kennedy contributed to this report from Singapore.
Stocks sink after government bailout of AIG
Wall Street tumbles again after government bails out AIG, Barclays buys Lehman businesses
NEW YORK (AP) -- Wall Street stumbled again Wednesday, with anxieties about the financial system still running high even after the government bailed out the insurer American International Group Inc. The Dow Jones industrial average dropped about 300 points.
The Federal Reserve is giving a two-year, $85 billion loan to AIG in exchange for a nearly 80 percent stake in the insurer, after it lost billions in the risky business of insuring against bond defaults. Wall Street had feared that the conglomerate, which has its tentacles in various financial services industries around the world, would follow the investment bank Lehman Brothers Holdings Inc. into bankruptcy.
"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"
He said the fear gripping the market reflects investors' concerns that AIG wasn't able to find a lifeline in the private sector and that Wall Street is now fretting about what other institutions could falter.
The two independent Wall Street investment banks left standing -- Goldman Sachs Group Inc. and Morgan Stanley -- remain under scrutiny, as does Washington Mutual Inc., the country's largest thrift bank. Morgan Stanley revealed its quarterly earnings early late Tuesday, posting a better-than-expected 7 percent slide in fiscal third-quarter profit. It insisted that it is surviving the credit crisis that has ravaged many of its peers.
Lehman filed for bankruptcy protection on Monday, and by late Tuesday had sold its North American investment banking and trading operations to Barclays, Britain's third-largest bank, for the bargain price of $250 million. Over the weekend, Merrill Lynch, the world's largest brokerage, sold itself in a last-ditch effort to avoid failure to Bank of America Corp.
The troubles in the financial sector could exacerbate the problems facing the weak U.S. economy, given that individuals and businesses rely on the nation's money centers.
The Commerce Department reported Wednesday that new home construction fell by 6.2 percent in August to 895,000 units, the slowest building pace since January 1991. Slumping demand for houses, sinking home prices and mortgage defaults have been the catalysts behind Wall Street's turmoil -- and the risky mortgage-backed assets held by the nation's banks are not apt to regain in value until the housing market turns around.
The Dow fell 298.00, or 2.69 percent, to 10,761.02 a day after Wall Street regained some of Monday's nosedive, in which the blue chips fell 504 points. The index is down more than 5 percent on the week, and has fallen more than 23 percent since reaching a record close of 14,164.53 on Oct. 9 last year.
Broader stock indicators also plunged. The Standard & Poor's 500 index dropped 42.68, or 3.52 percent, to 1,170.92, while the Nasdaq composite index fell 76.11, or 3.45 percent, to 2,131.79.
The stock market is likely to see heavy back-and-forth movement as traders continue to assess the flood of news that has poured in over the past several days.
On Monday, the Dow lost 504 points, the largest tumble since its drop following the September 2001 terror attacks. On Tuesday, it rose 141 points, after the Fed decided to leave interest rates unchanged.
"It's still uncertain ground we're treading. We just have to move on a daily basis," said Jack A. Ablin, chief investment officer at Harris Private Bank.
The government took other measures Tuesday to help alleviate the turmoil in the markets. The Treasury said it will start selling bonds for the Fed to aid it with its lending efforts, while the Securities and Exchange Commission said it will strictly prohibit naked short-selling starting Thursday.
Short-selling is when traders borrow shares of a stock they expect to fall and sell them -- if the stock does indeed fall, the traders buy the cheaper shares to cover the borrowed ones and profit from the difference. Naked short-selling occurs when sellers don't actually borrow the shares before selling them; it's a practice some say is partially responsible for the huge drop in the shares of investment banks like Lehman, Merrill Lynch and Bear Stearns Cos., which JPMorgan Chase & Co. bought earlier this year.
Bond prices wavered Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.39 percent from 3.43 percent late Tuesday. The dollar was lower against other major currencies, while gold prices rose.
Crude oil rebounded $2.27 to $93.42 a barrel on the New York Mercantile Exchange. Crude has dropped by about $10 a barrel over the past two days due to concerns that troubles in the financial sector will dampen the economy and cause big funds to unwind their commodities bets.
Declining issues outnumbered advancers by nearly 10 to 1 on the New York Stock Exchange, where volume came to 655.9 million shares.
Overseas, Japan's Nikkei stock average rose 1.2 percent after AIG's rescue, but Hong Kong's Hang Seng index lost 3.6 percent.
In afternoon trading in Europe, Britain's FTSE 100 fell 1.37 percent, Germany's DAX index fell 2.25 percent, and France's CAC-40 fell 2.27 percent.
NEW YORK (AP) -- Wall Street stumbled again Wednesday, with anxieties about the financial system still running high even after the government bailed out the insurer American International Group Inc. The Dow Jones industrial average dropped about 300 points.
The Federal Reserve is giving a two-year, $85 billion loan to AIG in exchange for a nearly 80 percent stake in the insurer, after it lost billions in the risky business of insuring against bond defaults. Wall Street had feared that the conglomerate, which has its tentacles in various financial services industries around the world, would follow the investment bank Lehman Brothers Holdings Inc. into bankruptcy.
"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"
He said the fear gripping the market reflects investors' concerns that AIG wasn't able to find a lifeline in the private sector and that Wall Street is now fretting about what other institutions could falter.
The two independent Wall Street investment banks left standing -- Goldman Sachs Group Inc. and Morgan Stanley -- remain under scrutiny, as does Washington Mutual Inc., the country's largest thrift bank. Morgan Stanley revealed its quarterly earnings early late Tuesday, posting a better-than-expected 7 percent slide in fiscal third-quarter profit. It insisted that it is surviving the credit crisis that has ravaged many of its peers.
Lehman filed for bankruptcy protection on Monday, and by late Tuesday had sold its North American investment banking and trading operations to Barclays, Britain's third-largest bank, for the bargain price of $250 million. Over the weekend, Merrill Lynch, the world's largest brokerage, sold itself in a last-ditch effort to avoid failure to Bank of America Corp.
The troubles in the financial sector could exacerbate the problems facing the weak U.S. economy, given that individuals and businesses rely on the nation's money centers.
The Commerce Department reported Wednesday that new home construction fell by 6.2 percent in August to 895,000 units, the slowest building pace since January 1991. Slumping demand for houses, sinking home prices and mortgage defaults have been the catalysts behind Wall Street's turmoil -- and the risky mortgage-backed assets held by the nation's banks are not apt to regain in value until the housing market turns around.
The Dow fell 298.00, or 2.69 percent, to 10,761.02 a day after Wall Street regained some of Monday's nosedive, in which the blue chips fell 504 points. The index is down more than 5 percent on the week, and has fallen more than 23 percent since reaching a record close of 14,164.53 on Oct. 9 last year.
Broader stock indicators also plunged. The Standard & Poor's 500 index dropped 42.68, or 3.52 percent, to 1,170.92, while the Nasdaq composite index fell 76.11, or 3.45 percent, to 2,131.79.
The stock market is likely to see heavy back-and-forth movement as traders continue to assess the flood of news that has poured in over the past several days.
On Monday, the Dow lost 504 points, the largest tumble since its drop following the September 2001 terror attacks. On Tuesday, it rose 141 points, after the Fed decided to leave interest rates unchanged.
"It's still uncertain ground we're treading. We just have to move on a daily basis," said Jack A. Ablin, chief investment officer at Harris Private Bank.
The government took other measures Tuesday to help alleviate the turmoil in the markets. The Treasury said it will start selling bonds for the Fed to aid it with its lending efforts, while the Securities and Exchange Commission said it will strictly prohibit naked short-selling starting Thursday.
Short-selling is when traders borrow shares of a stock they expect to fall and sell them -- if the stock does indeed fall, the traders buy the cheaper shares to cover the borrowed ones and profit from the difference. Naked short-selling occurs when sellers don't actually borrow the shares before selling them; it's a practice some say is partially responsible for the huge drop in the shares of investment banks like Lehman, Merrill Lynch and Bear Stearns Cos., which JPMorgan Chase & Co. bought earlier this year.
Bond prices wavered Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.39 percent from 3.43 percent late Tuesday. The dollar was lower against other major currencies, while gold prices rose.
Crude oil rebounded $2.27 to $93.42 a barrel on the New York Mercantile Exchange. Crude has dropped by about $10 a barrel over the past two days due to concerns that troubles in the financial sector will dampen the economy and cause big funds to unwind their commodities bets.
Declining issues outnumbered advancers by nearly 10 to 1 on the New York Stock Exchange, where volume came to 655.9 million shares.
Overseas, Japan's Nikkei stock average rose 1.2 percent after AIG's rescue, but Hong Kong's Hang Seng index lost 3.6 percent.
In afternoon trading in Europe, Britain's FTSE 100 fell 1.37 percent, Germany's DAX index fell 2.25 percent, and France's CAC-40 fell 2.27 percent.
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