source: www.msnbc.msn.com
By Will Andrews
updated 11:00 p.m. ET Nov. 25, 2008
U.S. stocks closed mixed Tuesday as profit taking pressured the market following two strong sessions. Technology issues underperformed the broader market. But bonds surged after the Federal Reserve announced a $600 billion program to buy mortgage-related debt and a $200 billion facility to support consumer debt securities.
Wall Street also digested a better than expected read on U.S. consumer confidence in November, a record year-over-year decline in a key gauge of U.S. home prices in September, and an about as-expected report on U.S. third-quarter gross domestic product.
On Tuesday, the Dow Jones industrial average finished higher by 36.08 points at 8,479.47. The broad S&P 500 index added 5.58 points to 857.39. The tech-heavy Nasdaq composite index shed 7.29 points to 1,464.73.
On the New York Stock Exchange, 21 stocks were higher in price for every 10 that advanced. The ratio on the Nasdaq was 15-12 positive.
The U.S. dollar index slid after an earlier rise. Gold futures edged higher. Oil futures fell.
Stock markets in Europe closed higher, with major indexes rising 0.44% in London, 1.18% in Paris, and 0.13% in Frankfurt. Markets in Asia finished mixed, with Tokyo stocks rising 5.22%, while Hong Kong fell 3.38% and Shanghai was lower by fell 0.44%.
The Federal Reserve stepped up its efforts to support strained credit markets through new programs aimed at boosting consumer credit and the market for mortgage-backed securities, according to a Dow Jones report. Under the Term Asset-Backed Securities Loan Facility, or TALF, the Fed will extend up to $200 billion in non-recourse loans to holders of asset-backed securities backed by consumer and small business loans. The Treasury Department will extend $20 billion in funds under the Troubled Asset Relief Program to support the initiative. "The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads," the Fed said. The Fed also said it will purchase up to $100 billion in GSE debt through a series of competitive auctions starting next week. It will also purchase up to $500 billion in mortgage-backed securities backed by GSEs, with the goal of starting that program by the end of the year.
JPMorgan Chase (JPM) said it planned to sell three-year debt under a U.S. Federal Deposit Insurance Corp. guarantee program, denominated in euros and in sterling and both in benchmark size. The notes will come under the FDIC's new Temporary Liquidity Guarantee Program. JPMorgan is managing the triple-A rated deal itself, an official at the bank said. Goldman Sachs (GS) on Monday became the first bank to take advantage of the program, and Morgan Stanley (MS) also announced a guaranteed debt issue on Tuesday.
In economic news Tuesday, preliminary U.S. third-quarter gross domestic product GDP was revised lower to a -0.5% growth rate, from -0.3% previously, as expected. Real consumption spending was knocked down to a -3.7% pace, from -3.1%, with a downward revision to durable goods spending. Fixed investment was unrevised at a -5.6% pace, though residential construction spending was revised up to -17.6% from -19.1%; both equipment and software, and spending on structures were revised down.
Real net exports contributed positively to GDP growth but at a slower 1.07% pace [revised from 1.13% previously], though inventories contributed more at a 0.89% rate from 0.56% previously. Government spending also added less to Q3 growth than initially reported, posting a 5.4% pace from 5.8% previously. The GDP chain price index was steady at 4.2%, while the core rate slowed to 2.6% from 2.9%.
The U.S. S&P/Case-Shiller home price index fell 1.85% in September to 161.56 from a revised 164.60 in August [164.57 previously] for the 20-city composite. All 20 cities in the index posted declines, paced by San Francisco, Phoenix, Las Vegas, and Miami. On a year-over-year basis, home prices are down 17.44% from -16.6% previously reported.
U.S. consumer confidence improved to 44.9 in November, above the record low of 38.8 in October and the 39 expected by markets. However, it is well below the 95.2 reading seen a year ago. Expectations rose to 46.7 from 35.7. However, present situations slipped to 42.2 from 43.5 on continued job fears, with those saying jobs are "hard to get" is 37.2, up from 36.6% in the prior month. The 12-month inflation index fell to 5.9% from 6.8%.
"The data are a bit better than expected, [but] job concerns still weigh on household moods to reflect soft spending ahead," says S&P senior economist Beth Ann Bovino.
The International Council of Shopping Centers and Goldman Sachs weekly sales index fell 0.9% in the week ended Nov. 22 after rising 0.3% the week before. Sales declined 0.8% on a year on year basis after falling 0.1% the week before.
Reuters reports the World Bank forecast the Chinese economy will grow next year at 7.2%, the slowest pace since 1990, as the impact of global financial turmoil intensifies and the real estate sector remains in the doldrums. The World Bank in June had forecast 2009 gross domestic product growth of 9.2%. It already expects growth this year to moderate to 9.4%, the first single-digit pace of expansion since 2002, from a breakneck 11.9% in 2007. Louis Kuijs, the senior economist in the bank's Beijing office, said one silver lining was that inflation had disappeared from the radar as demand softened and raw material prices tumbled. The bank expects consumer prices to rise just 2.0% next year after a 6.5% increase in 2008.
The bank is much gloomier than its sister organization, the International Monetary Fund, which on Monday forecast 8.5% growth for China next year.
In other U.S. markets Tuesday, the 10-year Treasury note was up 1-31/32 to 105-17/32 for a yield of 3.106% and the 30-year bond was up
2-10/32 to 115-04/32 for a yield of 3.657% after the Fed announced plans to purchase as much as $600 billion in mortgage securities. The Fed move prompted investors to hedge against losses in their portfolios, according to Bloomberg dispatch.
Th U.S. dollar index was lower at 85.06.
January West Texas Intermediate crude oil futures were off $3.66 to $50.84 per barrel Tuesday on profit taking from a two-day rally. There is some speculation tomorrow's Dept. of Energy report will show increases in inventories due to a demand slowdown. The American Petroleum Institute reported last week that U.S. fuel demand dropped 5.2% in the first 10 months of the year, the biggest drop since 1981.
December gold futures were lower at $818.10 per ounce Tuesday on profit taking from a two-day rally. The market could see some volatility as traders and funds adjust portfolios at the end of the month, says S&P MarketScope.
Among Tuesday's stocks in the news, Hewlett-Packard (HPQ) posted fourth-quarter non-GAAP EPS of $1.03, vs. 86 cents one year earlier, on a 19% revenue rise. EPS was in line with HP's preannouncement. Based on current exchange rates, the copmpany now expects an unfavorable year-over-year currency impact on revenue of about 5 percentage points in the fiorst quarter and roughly 6-7 percentage points for fiscal 2009. It sees first-quarter revenue of about $32 billion-$32.5 billion, with non-GAAP EPS of 93 cents-95 cents, and fiscal 2009 revenue of $127.5 billion-$130.0 billion, with non-GAAP EPS of $3.88-$4.03.
The board of mining giant BHP Billiton (BHP) said it no longer believes that completion of the company's unsolicited all-stock offer to acquire Rio Tinto (RTP) would be in the best interests of BHP shareholders.
Vimpel Communications (VIP) posted third-quarter earnings per American Depositary Share of 27 cents, vs. 45 cents one year earlier, despite a 45% revenue rise. The company notes net income was negatively affected by currency exchange rate fluctuations, resulting in a $341 million net forex loss as 82% of its debt was denominated in US dollars. Vimpel said that while its operations have not yet been affected by the financial turmoil, it clearly understands it will not be immune to it going forward.
Analog Devices (ADI) reported fourth-quarter EPS from continuing operations of 49 cetns, vs. 30 cents one year earlier, on a 6% revenue rise. However, the company said order rates slowed in late September, and backlog declined significantly from the prior quarter, which limits ADI's short-term visibility. The company currently expects first-quarter revenue to decline sequentially by about 20%; it sees EPS from continuing operations of 22 cents-23 cents, excluding charges.
Inter Parfums (IPAR) cut its 87 cents 2008 EPS view to about 81 cents on revenue of about $445 million [down from its previous view of $460 million], citing the recent sustained strength of the U.S. dollar against the euro. The company believes 2009 will continue to be challenging with the likelihood of a prolonged global recession. It says its initial guidance for 2009 in absolute dollars calls for net sales of about $405 million and EPS of 85 cents.
Copyright © 2008 The McGraw-Hill Companies Inc. All rights reserved.
The U.S. dollar index slid after an earlier rise. Gold futures edged higher. Oil futures fell.
Stock markets in Europe closed higher, with major indexes rising 0.44% in London, 1.18% in Paris, and 0.13% in Frankfurt. Markets in Asia finished mixed, with Tokyo stocks rising 5.22%, while Hong Kong fell 3.38% and Shanghai was lower by fell 0.44%.
The Federal Reserve stepped up its efforts to support strained credit markets through new programs aimed at boosting consumer credit and the market for mortgage-backed securities, according to a Dow Jones report. Under the Term Asset-Backed Securities Loan Facility, or TALF, the Fed will extend up to $200 billion in non-recourse loans to holders of asset-backed securities backed by consumer and small business loans. The Treasury Department will extend $20 billion in funds under the Troubled Asset Relief Program to support the initiative. "The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads," the Fed said. The Fed also said it will purchase up to $100 billion in GSE debt through a series of competitive auctions starting next week. It will also purchase up to $500 billion in mortgage-backed securities backed by GSEs, with the goal of starting that program by the end of the year.
JPMorgan Chase (JPM) said it planned to sell three-year debt under a U.S. Federal Deposit Insurance Corp. guarantee program, denominated in euros and in sterling and both in benchmark size. The notes will come under the FDIC's new Temporary Liquidity Guarantee Program. JPMorgan is managing the triple-A rated deal itself, an official at the bank said. Goldman Sachs (GS) on Monday became the first bank to take advantage of the program, and Morgan Stanley (MS) also announced a guaranteed debt issue on Tuesday.
In economic news Tuesday, preliminary U.S. third-quarter gross domestic product GDP was revised lower to a -0.5% growth rate, from -0.3% previously, as expected. Real consumption spending was knocked down to a -3.7% pace, from -3.1%, with a downward revision to durable goods spending. Fixed investment was unrevised at a -5.6% pace, though residential construction spending was revised up to -17.6% from -19.1%; both equipment and software, and spending on structures were revised down.
Real net exports contributed positively to GDP growth but at a slower 1.07% pace [revised from 1.13% previously], though inventories contributed more at a 0.89% rate from 0.56% previously. Government spending also added less to Q3 growth than initially reported, posting a 5.4% pace from 5.8% previously. The GDP chain price index was steady at 4.2%, while the core rate slowed to 2.6% from 2.9%.
The U.S. S&P/Case-Shiller home price index fell 1.85% in September to 161.56 from a revised 164.60 in August [164.57 previously] for the 20-city composite. All 20 cities in the index posted declines, paced by San Francisco, Phoenix, Las Vegas, and Miami. On a year-over-year basis, home prices are down 17.44% from -16.6% previously reported.
U.S. consumer confidence improved to 44.9 in November, above the record low of 38.8 in October and the 39 expected by markets. However, it is well below the 95.2 reading seen a year ago. Expectations rose to 46.7 from 35.7. However, present situations slipped to 42.2 from 43.5 on continued job fears, with those saying jobs are "hard to get" is 37.2, up from 36.6% in the prior month. The 12-month inflation index fell to 5.9% from 6.8%.
"The data are a bit better than expected, [but] job concerns still weigh on household moods to reflect soft spending ahead," says S&P senior economist Beth Ann Bovino.
The International Council of Shopping Centers and Goldman Sachs weekly sales index fell 0.9% in the week ended Nov. 22 after rising 0.3% the week before. Sales declined 0.8% on a year on year basis after falling 0.1% the week before.
Reuters reports the World Bank forecast the Chinese economy will grow next year at 7.2%, the slowest pace since 1990, as the impact of global financial turmoil intensifies and the real estate sector remains in the doldrums. The World Bank in June had forecast 2009 gross domestic product growth of 9.2%. It already expects growth this year to moderate to 9.4%, the first single-digit pace of expansion since 2002, from a breakneck 11.9% in 2007. Louis Kuijs, the senior economist in the bank's Beijing office, said one silver lining was that inflation had disappeared from the radar as demand softened and raw material prices tumbled. The bank expects consumer prices to rise just 2.0% next year after a 6.5% increase in 2008.
The bank is much gloomier than its sister organization, the International Monetary Fund, which on Monday forecast 8.5% growth for China next year.
In other U.S. markets Tuesday, the 10-year Treasury note was up 1-31/32 to 105-17/32 for a yield of 3.106% and the 30-year bond was up
2-10/32 to 115-04/32 for a yield of 3.657% after the Fed announced plans to purchase as much as $600 billion in mortgage securities. The Fed move prompted investors to hedge against losses in their portfolios, according to Bloomberg dispatch.
Th U.S. dollar index was lower at 85.06.
January West Texas Intermediate crude oil futures were off $3.66 to $50.84 per barrel Tuesday on profit taking from a two-day rally. There is some speculation tomorrow's Dept. of Energy report will show increases in inventories due to a demand slowdown. The American Petroleum Institute reported last week that U.S. fuel demand dropped 5.2% in the first 10 months of the year, the biggest drop since 1981.
December gold futures were lower at $818.10 per ounce Tuesday on profit taking from a two-day rally. The market could see some volatility as traders and funds adjust portfolios at the end of the month, says S&P MarketScope.
Among Tuesday's stocks in the news, Hewlett-Packard (HPQ) posted fourth-quarter non-GAAP EPS of $1.03, vs. 86 cents one year earlier, on a 19% revenue rise. EPS was in line with HP's preannouncement. Based on current exchange rates, the copmpany now expects an unfavorable year-over-year currency impact on revenue of about 5 percentage points in the fiorst quarter and roughly 6-7 percentage points for fiscal 2009. It sees first-quarter revenue of about $32 billion-$32.5 billion, with non-GAAP EPS of 93 cents-95 cents, and fiscal 2009 revenue of $127.5 billion-$130.0 billion, with non-GAAP EPS of $3.88-$4.03.
The board of mining giant BHP Billiton (BHP) said it no longer believes that completion of the company's unsolicited all-stock offer to acquire Rio Tinto (RTP) would be in the best interests of BHP shareholders.
Vimpel Communications (VIP) posted third-quarter earnings per American Depositary Share of 27 cents, vs. 45 cents one year earlier, despite a 45% revenue rise. The company notes net income was negatively affected by currency exchange rate fluctuations, resulting in a $341 million net forex loss as 82% of its debt was denominated in US dollars. Vimpel said that while its operations have not yet been affected by the financial turmoil, it clearly understands it will not be immune to it going forward.
Analog Devices (ADI) reported fourth-quarter EPS from continuing operations of 49 cetns, vs. 30 cents one year earlier, on a 6% revenue rise. However, the company said order rates slowed in late September, and backlog declined significantly from the prior quarter, which limits ADI's short-term visibility. The company currently expects first-quarter revenue to decline sequentially by about 20%; it sees EPS from continuing operations of 22 cents-23 cents, excluding charges.
Inter Parfums (IPAR) cut its 87 cents 2008 EPS view to about 81 cents on revenue of about $445 million [down from its previous view of $460 million], citing the recent sustained strength of the U.S. dollar against the euro. The company believes 2009 will continue to be challenging with the likelihood of a prolonged global recession. It says its initial guidance for 2009 in absolute dollars calls for net sales of about $405 million and EPS of 85 cents.
Copyright © 2008 The McGraw-Hill Companies Inc. All rights reserved.
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