Obama goes prime-time; McCain goes after Obama
AP - 31 minutes ago
AP - Democratic presidential candidate Barack Obama plunked down $4 million for a campaign-closing television ad Wednesday night and summoned voters to "choose hope over fear and unity over division" in Tuesday's election. Republican John McCain derided the event as a "gauzy, feel-good commercial," paid for with broken promises
Wednesday, October 29, 2008
Stocks
Stocks end mixed in late slide after Fed rate cut
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Slideshow: Stock Markets Play Video Video: Technical View of the Market CNBC Related Quotes Symbol Price Change
GE 19.20 0.00
^GSPC 930.09 0.00
^IXIC 1,657.21 +7.74
AP – Specialists work at a post on the floor of the New York Stock Exchange, Wednesday, Oct. 29, 2008. (AP … NEW YORK – Wall Street received the interest rate cut it wanted, but still turned in a baffling late-day performance Wednesday, shooting higher and then skidding lower in the very last minutes of trading as some investors rushed to cash in profits after the previous session's big advance. The major indexes ended the day mixed, with the Dow Jones industrials falling 74 points — only the third time in October that the blue chips had just a double-digit close.
Analysts were divided over why the market turned around so abruptly. Some cited reports of a lackluster profit forecast at General Electric Co. — a Dow component that dropped nearly 4 percent from its late-session high — and others contended investors were simply looking to cash in gains after the Federal Reserve's decision to lower its fed funds rate by a half-point to 1 percent.
"It was a panic sell in the last two minutes," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, referring to reports that GE was aiming at 2009 profits to be little changed from 2008. The reports were subsequently called into question, and a GE spokesman said the statements were taken out of context.
Because of the last-hour confusion, it was likely that it would take the opening of trading on Thursday to get a better read on how the market feels about the Fed's rate cut and its accompanying economic statement. At the same time, the Commerce Department's expected reading on the gross domestic product for the third quarter will most likely shape trading.
The market waffled while it was still digesting the Fed's afternoon announcement, then advanced for most of the final hour of trading. Until shortly before the close, it looked like Wall Street was feeling more confident about the economy and would extend its huge rally from Tuesday, which propelled the Dow Jones industrials up nearly 900 points.
Policymakers spelled out a weakening of economic conditions in the U.S. and abroad, citing first a drop in spending by American consumers. The Fed also reiterated that it expects government steps, including its own efforts to increase liquidity, to improve credit market conditions and the economy over time.
Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, said the Fed's overall tone conveyed it regards the economic troubles as somewhat typical of a weak economy and not the kind of intractable problems that signal a deep recession is imminent.
"They more or less indicated elevated concerns about the economy but nothing in it suggests any real panic but that this is just one more step in their program to restore the financial system to complete functioning."
But the final hour of trading on Wall Street over the past month has seen turnarounds in sentiment as well as prices, and the late-session volatility that has become the norm was in force again Wednesday.
"We set ourselves up in the last hour with a golden opportunity to lock in profits," said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.
He said that very late in the day, more investors were putting a somewhat downbeat spin on the Fed's statement, which Larson said indicated policymakers are willing to lower the fed funds rate below 1 percent if necessary. Traders started thinking, "if they're willing to go under 1 percent, there must be serious problems that we don't know about yet," he said.
The Dow was up as much as 298 points in the last quarter hour of the session, giving it a two-day gain of more than 1,187 points, when it began to slide. It closed down 74.16, or 0.82 percent, at 8,990.96. During the 21 trading days so far this month, the Dow has logged gains or losses of fewer than 100 points only twice — on Oct. 1 and Oct. 14; the month has seen unprecedented volatility, with the blue chips recording their largest ever advance, 936 points, and their largest ever decline, 778 points.
Broader stock indicators were mixed. The S&P 500 index fell 10.42, or 1.11 percent, to 930.09, and the technology-heavy Nasdaq composite index advanced 7.74, or 0.47 percent, to 1,657.21.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume totaled 7.01 billion shares compared with 6.93 billion shares traded Tuesday.
Some traders expressed frustration at the market's finish.
"You cannot have moves like this and have any sort of investor confidence," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC.
The credit markets had a lukewarm response to the Fed move. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, fell to 0.58 percent from 0.74 percent Tuesday. A drop in yield indicates an increase in demand. Meanwhile, the yield on the benchmark 10-year Treasury note rose to 3.86 percent from 3.84 percent late Tuesday.
Light, sweet crude rose $4.77 to settle at $67.50 a barrel on the New York Mercantile Exchange as the dollar fell against other major currencies. With many commodities priced in dollars a weaker greenback makes prices rise.
It was clear from Wednesday's trading that Wall Street is nowhere near moving away from the volatility that has devastated stock prices this month. And many investors are hesitant to re-enter the market after being hit hard — even with Tuesday's jump, the three major stock indexes are still down more than 30 percent for the year, battered since last month's freeze-up of the credit markets. The troubles with the credit markets have made it harder and more expensive for businesses and consumers to get loans.
While signs have emerged that the government action to revive credit markets is starting to work, investors remain skittish over the effects of the prolonged credit freeze on the economy, which relies on lending to feed growth.
Investors are hoping the latest rate cut will complement the government's still-unfolding efforts to aid the commercial paper market, where companies turn for short-term loans, and the banks themselves. The Treasury Department this week is investing directly in banks, hoping the cash will make them more likely to issue loans.
Wall Street's rally Tuesday helped lift trading in most markets overseas. Japan's Nikkei stock average jumped 7.74 percent. Britain's FTSE 100 rose 8.05 percent, Germany's DAX index slipped 0.31 percent, and France's CAC-40 rose 9.23 percent.
___
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Digg Facebook Newsvine del.icio.us Reddit StumbleUpon Technorati Yahoo! Bookmarks Print By TIM PARADIS, AP Business Writer Tim Paradis, Ap Business Writer – Wed Oct 29, 6:29 pm ET Play Video ABC News – Will the Market Rally Continue?
Slideshow: Stock Markets Play Video Video: Technical View of the Market CNBC Related Quotes Symbol Price Change
GE 19.20 0.00
^GSPC 930.09 0.00
^IXIC 1,657.21 +7.74
AP – Specialists work at a post on the floor of the New York Stock Exchange, Wednesday, Oct. 29, 2008. (AP … NEW YORK – Wall Street received the interest rate cut it wanted, but still turned in a baffling late-day performance Wednesday, shooting higher and then skidding lower in the very last minutes of trading as some investors rushed to cash in profits after the previous session's big advance. The major indexes ended the day mixed, with the Dow Jones industrials falling 74 points — only the third time in October that the blue chips had just a double-digit close.
Analysts were divided over why the market turned around so abruptly. Some cited reports of a lackluster profit forecast at General Electric Co. — a Dow component that dropped nearly 4 percent from its late-session high — and others contended investors were simply looking to cash in gains after the Federal Reserve's decision to lower its fed funds rate by a half-point to 1 percent.
"It was a panic sell in the last two minutes," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, referring to reports that GE was aiming at 2009 profits to be little changed from 2008. The reports were subsequently called into question, and a GE spokesman said the statements were taken out of context.
Because of the last-hour confusion, it was likely that it would take the opening of trading on Thursday to get a better read on how the market feels about the Fed's rate cut and its accompanying economic statement. At the same time, the Commerce Department's expected reading on the gross domestic product for the third quarter will most likely shape trading.
The market waffled while it was still digesting the Fed's afternoon announcement, then advanced for most of the final hour of trading. Until shortly before the close, it looked like Wall Street was feeling more confident about the economy and would extend its huge rally from Tuesday, which propelled the Dow Jones industrials up nearly 900 points.
Policymakers spelled out a weakening of economic conditions in the U.S. and abroad, citing first a drop in spending by American consumers. The Fed also reiterated that it expects government steps, including its own efforts to increase liquidity, to improve credit market conditions and the economy over time.
Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, said the Fed's overall tone conveyed it regards the economic troubles as somewhat typical of a weak economy and not the kind of intractable problems that signal a deep recession is imminent.
"They more or less indicated elevated concerns about the economy but nothing in it suggests any real panic but that this is just one more step in their program to restore the financial system to complete functioning."
But the final hour of trading on Wall Street over the past month has seen turnarounds in sentiment as well as prices, and the late-session volatility that has become the norm was in force again Wednesday.
"We set ourselves up in the last hour with a golden opportunity to lock in profits," said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.
He said that very late in the day, more investors were putting a somewhat downbeat spin on the Fed's statement, which Larson said indicated policymakers are willing to lower the fed funds rate below 1 percent if necessary. Traders started thinking, "if they're willing to go under 1 percent, there must be serious problems that we don't know about yet," he said.
The Dow was up as much as 298 points in the last quarter hour of the session, giving it a two-day gain of more than 1,187 points, when it began to slide. It closed down 74.16, or 0.82 percent, at 8,990.96. During the 21 trading days so far this month, the Dow has logged gains or losses of fewer than 100 points only twice — on Oct. 1 and Oct. 14; the month has seen unprecedented volatility, with the blue chips recording their largest ever advance, 936 points, and their largest ever decline, 778 points.
Broader stock indicators were mixed. The S&P 500 index fell 10.42, or 1.11 percent, to 930.09, and the technology-heavy Nasdaq composite index advanced 7.74, or 0.47 percent, to 1,657.21.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume totaled 7.01 billion shares compared with 6.93 billion shares traded Tuesday.
Some traders expressed frustration at the market's finish.
"You cannot have moves like this and have any sort of investor confidence," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC.
The credit markets had a lukewarm response to the Fed move. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, fell to 0.58 percent from 0.74 percent Tuesday. A drop in yield indicates an increase in demand. Meanwhile, the yield on the benchmark 10-year Treasury note rose to 3.86 percent from 3.84 percent late Tuesday.
Light, sweet crude rose $4.77 to settle at $67.50 a barrel on the New York Mercantile Exchange as the dollar fell against other major currencies. With many commodities priced in dollars a weaker greenback makes prices rise.
It was clear from Wednesday's trading that Wall Street is nowhere near moving away from the volatility that has devastated stock prices this month. And many investors are hesitant to re-enter the market after being hit hard — even with Tuesday's jump, the three major stock indexes are still down more than 30 percent for the year, battered since last month's freeze-up of the credit markets. The troubles with the credit markets have made it harder and more expensive for businesses and consumers to get loans.
While signs have emerged that the government action to revive credit markets is starting to work, investors remain skittish over the effects of the prolonged credit freeze on the economy, which relies on lending to feed growth.
Investors are hoping the latest rate cut will complement the government's still-unfolding efforts to aid the commercial paper market, where companies turn for short-term loans, and the banks themselves. The Treasury Department this week is investing directly in banks, hoping the cash will make them more likely to issue loans.
Wall Street's rally Tuesday helped lift trading in most markets overseas. Japan's Nikkei stock average jumped 7.74 percent. Britain's FTSE 100 rose 8.05 percent, Germany's DAX index slipped 0.31 percent, and France's CAC-40 rose 9.23 percent.
___
The Federal Reserve slashed
WASHINGTON – The Federal Reserve slashed a key interest rate by half a percentage point, driving it to a level seen only once before in the last half-century, and the government finally began distributing funds from the billions in the financial rescue package.
Those efforts Wednesday were part of a concerted drive by officials, just days before a national election, to demonstrate they are moving as quickly as possible to deal with the most serious financial crisis to hit the country since the 1930s.
"Policymakers have their foot to the accelerator and they are using every effort at their disposal to stop the slide in the economy and financial markets," said Mark Zandi, chief economist with Moody's Economy.com. "And it's not a moment too soon given the serious damage that has already been done."
Fresh evidence of the state of the economy comes Thursday with the government's release of its first look at economic activity in the July-September quarter. The data is expected to show that the country's gross domestic product shrank at a rate of 0.5 percent in the third quarter.
Many analysts believe the GDP — the measure of the value of all the goods and services produced in the United States — is falling further in the current quarter and will also fall in the first three months of next year. Just two consecutive quarters of declining GDP fulfill the classic definition of a recession.
While Wall Street posted its second biggest point gain in history Tuesday in anticipation of the Fed rate cut, the bleak economic reality appeared to ensure that the euphoria was short-lived. The Dow Jones industrial average finished Wednesday down 74 points, a drop analysts said partly reflected growing worries about whether the government's actions will be sufficient to avert a deep and prolonged recession.
Asian stock markets, however, rose sharply in early trading Thursday. South Korea's index jumped 12 percent, Hong Kong's Hang Seng index was up 10 percent, and Japan's Nikkei gained 7 percent.
The Fed, as investors had hoped, announced a half-point cut in the federal funds rate, the interest that banks charge each other on overnight loans, driving it down to 1 percent, a low last seen in 2003-2004. That rate has not been lower since 1958 when Dwight Eisenhower was president.
Reducing the rate as low as zero cannot be ruled out, some analysts said, but they cautioned that reducing rates that far carried some risks, including that if the credit crisis suddenly worsened, the Fed would have used up its ammunition.
Analysts also noted that just lowering rates cannot serve as a panacea to overcome a credit crisis. While the goal is to encourage banks to begin lending again, financial institutions are skittish about extending new loans given the huge losses they have racked up in bad mortgages.
Meanwhile, the administration announced that the spigot had been opened on the $700 billion fund created by Congress Oct. 3 to rescue the U.S. financial system. Treasury issued a report showing checks had been disbursed for $125 billion in payments to nine major banks, including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley. The goal is to bolster their balance sheets so they will resume more normal lending.
And the administration was nearing an agreement on a plan to help around 3 million homeowners avoid foreclosure, according to sources who had been briefed on the matter. The program would be the most aggressive effort yet to limit damages from the severe housing slump.
Besides cutting interest rates, the Fed announced it was extending credit lines worth $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore in an effort to bolster financial markets in those countries and relieve investors' anxieties.
It brought to 14 the number of central banks that the Fed has entered into so-called swap arrangements for currency as a way to pump more liquidity into global credit markets, part of an effort that the Bank of England estimated has resulted in $5 trillion in support being put forward by governments worldwide.
The International Monetary Fund unveiled a new streamlined lending process to get support to countries caught up in the credit crisis, another effort by the 185-member institution to show it was prepared to perform its job as lender of last resort to countries facing difficulties. The IMF already has moved to help Iceland, Ukraine and Hungary with other nations quickly lining up for aid.
The Fed's half-point interest rate cut marked the second rate reduction this month. The Fed slashed the rate by a half-point on Oct. 8 in a coordinated action with other foreign central banks. Economists predict foreign central banks will follow suit with another round of rate cuts over the next week.
In a brief statement explaining Wednesday's action, the Fed said that the "intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and business to obtain credit."
The central bank said that "downside risks to growth remain" holding out the promise of further rate cuts if needed. The rate-cut decision was unanimous.
Federal Reserve Chairman Ben Bernanke and his colleagues pledged they would "monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."
Many analysts said they believe the Fed will not stop at 1 percent if officials see the need to cut rates further. Some are forecasting another half-point move at the Fed's last meeting of the year on Dec. 16.
But other economists said with rates already so low, the Fed may decide to hold at 1 percent, leaving some room for a further reduction next year should the country's economic troubles intensify.
The Fed's action was quickly followed by a reduction by commercial banks in their prime lending rate, the benchmark for millions of consumer and business loans, which was cut from 4.5 percent down to 4 percent, its lowest level in four years.
The central bank also announced that it was lowering its discount rate, the interest it charges to make direct loans to banks, by a half-point to 1.25 percent. This rate has become increasingly important as the central bank has dramatically increased direct loans to banks in an effort to break the grip of the credit crisis.
Those efforts Wednesday were part of a concerted drive by officials, just days before a national election, to demonstrate they are moving as quickly as possible to deal with the most serious financial crisis to hit the country since the 1930s.
"Policymakers have their foot to the accelerator and they are using every effort at their disposal to stop the slide in the economy and financial markets," said Mark Zandi, chief economist with Moody's Economy.com. "And it's not a moment too soon given the serious damage that has already been done."
Fresh evidence of the state of the economy comes Thursday with the government's release of its first look at economic activity in the July-September quarter. The data is expected to show that the country's gross domestic product shrank at a rate of 0.5 percent in the third quarter.
Many analysts believe the GDP — the measure of the value of all the goods and services produced in the United States — is falling further in the current quarter and will also fall in the first three months of next year. Just two consecutive quarters of declining GDP fulfill the classic definition of a recession.
While Wall Street posted its second biggest point gain in history Tuesday in anticipation of the Fed rate cut, the bleak economic reality appeared to ensure that the euphoria was short-lived. The Dow Jones industrial average finished Wednesday down 74 points, a drop analysts said partly reflected growing worries about whether the government's actions will be sufficient to avert a deep and prolonged recession.
Asian stock markets, however, rose sharply in early trading Thursday. South Korea's index jumped 12 percent, Hong Kong's Hang Seng index was up 10 percent, and Japan's Nikkei gained 7 percent.
The Fed, as investors had hoped, announced a half-point cut in the federal funds rate, the interest that banks charge each other on overnight loans, driving it down to 1 percent, a low last seen in 2003-2004. That rate has not been lower since 1958 when Dwight Eisenhower was president.
Reducing the rate as low as zero cannot be ruled out, some analysts said, but they cautioned that reducing rates that far carried some risks, including that if the credit crisis suddenly worsened, the Fed would have used up its ammunition.
Analysts also noted that just lowering rates cannot serve as a panacea to overcome a credit crisis. While the goal is to encourage banks to begin lending again, financial institutions are skittish about extending new loans given the huge losses they have racked up in bad mortgages.
Meanwhile, the administration announced that the spigot had been opened on the $700 billion fund created by Congress Oct. 3 to rescue the U.S. financial system. Treasury issued a report showing checks had been disbursed for $125 billion in payments to nine major banks, including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley. The goal is to bolster their balance sheets so they will resume more normal lending.
And the administration was nearing an agreement on a plan to help around 3 million homeowners avoid foreclosure, according to sources who had been briefed on the matter. The program would be the most aggressive effort yet to limit damages from the severe housing slump.
Besides cutting interest rates, the Fed announced it was extending credit lines worth $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore in an effort to bolster financial markets in those countries and relieve investors' anxieties.
It brought to 14 the number of central banks that the Fed has entered into so-called swap arrangements for currency as a way to pump more liquidity into global credit markets, part of an effort that the Bank of England estimated has resulted in $5 trillion in support being put forward by governments worldwide.
The International Monetary Fund unveiled a new streamlined lending process to get support to countries caught up in the credit crisis, another effort by the 185-member institution to show it was prepared to perform its job as lender of last resort to countries facing difficulties. The IMF already has moved to help Iceland, Ukraine and Hungary with other nations quickly lining up for aid.
The Fed's half-point interest rate cut marked the second rate reduction this month. The Fed slashed the rate by a half-point on Oct. 8 in a coordinated action with other foreign central banks. Economists predict foreign central banks will follow suit with another round of rate cuts over the next week.
In a brief statement explaining Wednesday's action, the Fed said that the "intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and business to obtain credit."
The central bank said that "downside risks to growth remain" holding out the promise of further rate cuts if needed. The rate-cut decision was unanimous.
Federal Reserve Chairman Ben Bernanke and his colleagues pledged they would "monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."
Many analysts said they believe the Fed will not stop at 1 percent if officials see the need to cut rates further. Some are forecasting another half-point move at the Fed's last meeting of the year on Dec. 16.
But other economists said with rates already so low, the Fed may decide to hold at 1 percent, leaving some room for a further reduction next year should the country's economic troubles intensify.
The Fed's action was quickly followed by a reduction by commercial banks in their prime lending rate, the benchmark for millions of consumer and business loans, which was cut from 4.5 percent down to 4 percent, its lowest level in four years.
The central bank also announced that it was lowering its discount rate, the interest it charges to make direct loans to banks, by a half-point to 1.25 percent. This rate has become increasingly important as the central bank has dramatically increased direct loans to banks in an effort to break the grip of the credit crisis.
SUNRISE
SUNRISE, Fla. - Democratic presidential candidate Barack Obama plunked down $4 million for a campaign-closing television ad Wednesday night and summoned voters to "choose hope over fear and unity over division" in Tuesday's election. Republican John McCain derided the event as a "gauzy, feel-good commercial," paid for with broken promises.
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