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Markets made up nearly half of yesterday's losses. Market mavens attributed it to three factors: covering by shorts, bottom-fishing buyers and optimism on the bailout bill. Europe's banking sector worries from subprime loan exposure are not yet over. Close on the heels of rescuing Fortis bank we read yesterday, governments in Belgium, France, and Luxembourg pumped $9.24 bln into another Belgian bank Dexia today. European markets closed the day up by around 2%. Asian markets were mixed in their response - Japan's Nikkei turning negative and Hong Kong's Hangseng going positive. Economic Data: The Conference Board consumer confidence level for September - rose by 1.3 to 59.8 from August's 58.5 reading. That is in excess of the forecast of 54.0. The three-month average rose to 56.7 from 53.8. NAPM Chicago Business Barometer Index - Chicago Regional manufacturing survey fell 1.2 by to 56.7, but still bettered the consensus forecast of 53.0. S&P/Case-Shiller 20-City Composite - Home prices fell by 0.9% in major cities in July compared to previous month. It is a whopping 16.3% decline from the same period last year. The ABC News Consumer Comfort Index - is steady at -41 on a scale of +100 to -100. But, it is far below the 22-year average reading of -10. ICSC-Goldman weekly chain-store sales index - fell by 0.2% from last week. Yearly index just made it by 1.1%. September retail sales may be flat at 1.0 percent. The Redbook report on consumer confidence for the week ending September 27 - showed a rise of only 1.0% from the previous week. With no end in sight for the European economic troubles, the dollar renewed its rally against a basket of world currencies and settled higher by 2.5%. Oil rose by $4.27 (4.43%) to $100.64. Yesterday it had dipped below $100. With stocks regaining some of the luster, Gold fell by -$13.60 (-1.52%) to $880.80. Another casualty was the market for Treasury securities that were in high demand during yesterday's calamity. CBOE Volatility (VIX) sobered down by 7.33 to 39.39. Market indices: Dow went UP by 485.21 (4.68%) to 10850.66 S&P 500 UP by 58.32 (5.27%) to 1164.74 Nasdaq UP by 98.60 (4.97%) to 2082.33 NYSE: Daily Volume: 1.18 bln A/D Ratio: 2597 stocks advanced against 649 declined 52-week Hi/Lo: 8 stocks set new Highs while 292 dipped to new Lows Nasdaq: Daily Volume: 2.16 bln A/D Ratio: 1964 stocks advanced against 1014 declined 52-week Hi/Lo: 12 stocks topped new Highs while 239 set new Lows As if to wipe out yesterday's precarious fall, market rebounded with all its major sectors full steam ahead. While the errant financials provided the lead along with energy sector, the rearguard was formed by the defensive utilities. Nasdaq gave some missed heartbeats to Google (GOOG) investors in the closing minutes with a near $60 drop in price. After an hour, they were relieved to hear it was all due to a technical glitch. Credit rating agencies, spurred into action from their stupor, are showing too much alacrity in handing down ratings. Fitch revised Hartford Financial Services Group (HIG)'s credit outlook to negative. Yesterday, Fitch had placed Citigroup's (C) issuer default rating under Negative Watch list. Whatever be the nomenclature they use, as can be expected, this affected the share prices of the downrated companies. Restructuring Efforts: Circuit City (CC) has set out on a restructuring mission following the recent disappointing outlook, though details are yet to be worked out. AT&T(T) is reorganizing its business into four divisions - consumer, business, infrastructure and diversified, with the more visible telecom services under the consumer division. This is an internal restructuring. General Motors (GM) has begun laying off hundreds of contract workers. Pfizer (PFE) is cutting down on cardiac, obesity and bone research activities in an effort to refocus its priorities. Ciena Capital of the Allied Capital (ALD) fold has filed for bankruptcy protection. M&A News: The Washington Post (WPO) is set to acquire Foreign Policy Magazine. Company Results: Pepsi (PBG) announced quarterly earnings that exceeded market's expectation. Analysts' Ratings: Following company stocks were upgraded: Abercrombie & Fitch Co (ANF), Airgas Inc (ARG), AMR Corporation (AMR),Anworth Mortgage Asset (ANH), Baldor Electric Co (BEZ), Emerson (EMR), First Horizon National (FHN), Landstar System Inc (LSTR), QLogic Corp (QLGC), Research In Motion Ltd (RIMM), SatCon Technology (SATC), Sovereign Bancorp (SOV), and Wells Fargo & Co (WFC). Downgraded stocks include: Acme Packet Inc (APKT), Armstrong World Industries (AWI), California Pizza Kitchen (CPKI), Chipmos Tech Bermuda Ltd (IMOS), Circuit City Stores (CC), Cooper Tire & Rubber Co (CTB), Fifth Third Bancorp (FITB), Gentex Corp (GNTX), Grey Wolf Inc (GW), Littelfuse Inc (LFUS), NYMAGIC Inc (NYM), ProLogis (PLD), Semitool Inc (SMTL), Total System Services (TSS), Ultra Clean Holdings (UCTT), Varian Semiconductor Equipment (VSEA), VCA Antech Inc (WOOF) and Wintrust Financial Corporation (WTFC). The SEC now thinks that companies can be allowed to value "inactive" assets based on assumptions and modeling rather than adjusting them to market values. Further details and instructions are to be issued in consultation with the accounting organization FASB. This may prove beneficial to business with inactive assets in the present turmoil. Usually media do not publish important news based on their preconceived ideas on public's knowledge and understanding. Earlier today, the federal funds rate for banks had risen alarmingly to 7.00%. Fed readily made available a 28-day repo worth $20 bln. Liquidity soon improved due to availability of funds that the fed funds rate immediately dipped to 3.5% and later even to 1.5%. God alone knows how many more such Fed interventions will be necessary before we get out of this crisis. Some experts say it may even take a decade to clear up the mess created by Wall Street prodigals. Today afternoon, we heard from Atlanta Fed's Dennis Lockhart in New Orleans: * inflation is no longer as worrisome * prospects for growth have weakened * if broken state of global financial markets continue like this, it would pose a "grave threat" to the US economy * is pessimistic about the near-term outlook * expects a "very weak" final six months of 2008. Okay, we already know about inflation; anything to say about recession? |
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