Bambaboo
03-18-2008, 11:22 PM
US Stocks at a Glance
Wall Street rallies ahead of Fed meeting
NEW YORK - Stocks rallied Tuesday as investors, relieved by better-than-expected results from Lehman Brothers and Goldman Sachs, also anticipated a massive interest rate cut from the Federal Reserve. The Dow Jones industrial average surged more than 200 points.
A rate cut from the Fed would come just two days after the central bank relaxed its lending practices to try to revive stagnant credit markets and also backed JPMorgan Chase & Co.'s buyout of failing investment bank Bear Stearns Cos. The Fed was holding a regularly scheduled meeting and was expected to announce its decision at 2:15 p.m. EDT.
The stock market's tone Tuesday was significantly more upbeat than it has been in recent days, in part because two rivals of Bear Stearns -- Lehman Brothers Inc. and Goldman Sachs Group Inc. -- both posted quarterly profits that were significantly lower than they were a year ago, but higher than analysts predicted.
The results were calming to a market that feared that the investment banks could be further weakened by bad bets on mortgage-backed securities. There was particular concern about Lehman Brothers, considered the company most like Bear Stearns, and investors had sold off the company's stock on Monday. But early Tuesday, Lehman shares spiked back up 16.7 percent, by $5.31 to $37.06, while Goldman shares rose 8.2 percent, by $12.36 to $163.38. Bear Stearns shares also rose, jumping 59 cents, or 12.2 percent, to $5.40.
Meanwhile, traders who bet on the Fed's next rate move are pricing in a 100 percent chance of a full-point rate cut. That would bring the target fed funds rate -- the rate that banks charge each other for overnight loans -- to 2 percent from 3 percent. Anything less could trigger frenetic selling, while anything more could rekindle the feeling that the credit markets and economy are in worse shape than Wall Street thought.
The Fed's accompanying economic statement will be closely read for signs that the central bank is still willing to lower rates and come up with new ways to free up cash in the financial system. Still, many market watchers are unsure whether more rate cuts are going to be enough to give the markets and the economy the stimulus they need. The Fed on Sunday, in addition to guaranteeing up to $30 billion of Bear Stearn's most troubled assets for JPMorgan, lowered its discount rate -- the rate it charges banks directly -- by a quarter-point. It also is allowing more types of financial firms to borrow from the central bank, and is accepting more various types of collateral.
In mid-morning trading Tuesday, the Dow rose 233.41, or 1.95 percent, to 12,205.66. Broader stock indicators also surged. The Standard & Poor's 500 index rose 29.16, or 2.28 percent, to 1,305.76, while the Nasdaq composite index rose 45.51, or 2.09 percent, to 2,222.52. A day earlier, the three major indexes finished widely mixed as investors sought the safety of blue chip stocks and abandoned companies viewed as riskier bets.
Bond prices fell as investors returned to stocks. The yield on the benchmark 10-year Treasury note, which move opposite its price, rose to 3.39 percent from 3.30 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $1.92 to $107.60 a barrel on the New York Mercantile Exchange. After soaring on Monday, JPMorgan rose another $1.59, or 3.9 percent, to $41.90 Tuesday. As of Monday's close, JPMorgan's buyout valued Bear Stearns at $2.21 a share, or $260.5 million.
Wall Street was not concentrating on economic data with the Fed's rate decision on tap, but Tuesday's reports supported the notion that the economy is continuing to slide while costs are rising. The Commerce Department said home construction fell in February: housing starts fell 0.6 percent, while building permits plummeted 7.8 percent.
Meanwhile, the Labor Department reported a 0.3 percent rise in its Producer Price Index for February, in line with estimates, but the core PPI, which strips out food and energy prices, rose by a greater-than-expected 0.5 percent.
Stocks markets overseas rebounded from sharp drops a day earlier. Japan's Nikkei stock average bounced 1.50 percent, while Hong Kong's index rose 1.4 percent. In afternoon trading, Britain's FTSE 100 rose 2.75 percent, Germany's DAX index added 2.69 percent, and France's CAC-40 increased 2.49 percent.
Wall Street rallies ahead of Fed meeting
NEW YORK - Stocks rallied Tuesday as investors, relieved by better-than-expected results from Lehman Brothers and Goldman Sachs, also anticipated a massive interest rate cut from the Federal Reserve. The Dow Jones industrial average surged more than 200 points.
A rate cut from the Fed would come just two days after the central bank relaxed its lending practices to try to revive stagnant credit markets and also backed JPMorgan Chase & Co.'s buyout of failing investment bank Bear Stearns Cos. The Fed was holding a regularly scheduled meeting and was expected to announce its decision at 2:15 p.m. EDT.
The stock market's tone Tuesday was significantly more upbeat than it has been in recent days, in part because two rivals of Bear Stearns -- Lehman Brothers Inc. and Goldman Sachs Group Inc. -- both posted quarterly profits that were significantly lower than they were a year ago, but higher than analysts predicted.
The results were calming to a market that feared that the investment banks could be further weakened by bad bets on mortgage-backed securities. There was particular concern about Lehman Brothers, considered the company most like Bear Stearns, and investors had sold off the company's stock on Monday. But early Tuesday, Lehman shares spiked back up 16.7 percent, by $5.31 to $37.06, while Goldman shares rose 8.2 percent, by $12.36 to $163.38. Bear Stearns shares also rose, jumping 59 cents, or 12.2 percent, to $5.40.
Meanwhile, traders who bet on the Fed's next rate move are pricing in a 100 percent chance of a full-point rate cut. That would bring the target fed funds rate -- the rate that banks charge each other for overnight loans -- to 2 percent from 3 percent. Anything less could trigger frenetic selling, while anything more could rekindle the feeling that the credit markets and economy are in worse shape than Wall Street thought.
The Fed's accompanying economic statement will be closely read for signs that the central bank is still willing to lower rates and come up with new ways to free up cash in the financial system. Still, many market watchers are unsure whether more rate cuts are going to be enough to give the markets and the economy the stimulus they need. The Fed on Sunday, in addition to guaranteeing up to $30 billion of Bear Stearn's most troubled assets for JPMorgan, lowered its discount rate -- the rate it charges banks directly -- by a quarter-point. It also is allowing more types of financial firms to borrow from the central bank, and is accepting more various types of collateral.
In mid-morning trading Tuesday, the Dow rose 233.41, or 1.95 percent, to 12,205.66. Broader stock indicators also surged. The Standard & Poor's 500 index rose 29.16, or 2.28 percent, to 1,305.76, while the Nasdaq composite index rose 45.51, or 2.09 percent, to 2,222.52. A day earlier, the three major indexes finished widely mixed as investors sought the safety of blue chip stocks and abandoned companies viewed as riskier bets.
Bond prices fell as investors returned to stocks. The yield on the benchmark 10-year Treasury note, which move opposite its price, rose to 3.39 percent from 3.30 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $1.92 to $107.60 a barrel on the New York Mercantile Exchange. After soaring on Monday, JPMorgan rose another $1.59, or 3.9 percent, to $41.90 Tuesday. As of Monday's close, JPMorgan's buyout valued Bear Stearns at $2.21 a share, or $260.5 million.
Wall Street was not concentrating on economic data with the Fed's rate decision on tap, but Tuesday's reports supported the notion that the economy is continuing to slide while costs are rising. The Commerce Department said home construction fell in February: housing starts fell 0.6 percent, while building permits plummeted 7.8 percent.
Meanwhile, the Labor Department reported a 0.3 percent rise in its Producer Price Index for February, in line with estimates, but the core PPI, which strips out food and energy prices, rose by a greater-than-expected 0.5 percent.
Stocks markets overseas rebounded from sharp drops a day earlier. Japan's Nikkei stock average bounced 1.50 percent, while Hong Kong's index rose 1.4 percent. In afternoon trading, Britain's FTSE 100 rose 2.75 percent, Germany's DAX index added 2.69 percent, and France's CAC-40 increased 2.49 percent.