Bolsanet - the stockmarkets blog

Wall Street put a stop to a terrifying decline and stormed higher Friday as President-elect Barack Obama appeared ready to tap the chief of the New York Federal Reserve as the next treasury secretary and hand him the herculean task of righting the U.S. financial system. The Dow Jones industrial average, which had broken even for the day until news of the nomination leaked about an hour before the close, raced upward and finished 494 points higher, a rally of more than 6 1/2 percent.


The outbreak of buying pushed the Dow above 8,000 -- a figure that would have seemed like a nightmare three months ago but on Friday was a relief for Americans who have watched their investments and retirement savings drain away with alarming speed.
In the two previous days, the Dow had lost a staggering 873 points, more than 10 percent of its value, and the broader Standard & Poor's 500 index had sunk to its lowest level since 1997.
The turnaround came when word reached Wall Street that Obama was likely to nominate New York Fed president Timothy Geithner, 47, for treasury secretary. Geithner would assume top responsibility for tackling what threatens to be the deepest recession in a generation.
Financial markets despise uncertainty, and investors were looking for a clear message from Obama on who will make up his economic brain trust. Wall Street had been voicing increasing frustration with Henry Paulson, the current treasury secretary, over his erratic handling of the federal financial rescue system.
"Something needed to be done on the economy," said Ben Halliburton, chief investment officer at Tradition Capital Management. "The fact that they've got the team together, maybe that is going to shorten the period of indecision."
Elsewhere, the government continued its efforts to shore up the financial system. The Federal Deposit Insurance Corp. also said it would guarantee up to $1.4 trillion in U.S. bank debt for more than three years as part of the government's financial rescue plan.
The decision is aimed at breaking the logjam of bank-to-bank lending. The health of the economy depends on the free flow of credit, and credit markets cinched up again as the market plunged earlier this week.
The benchmark Standard & Poor's 500 index jumped 47.59, or 6.32 percent, to 800.03, and the Nasdaq composite advanced 68.23, or 5.18 percent, to 1,384.35.

(source: biz.yahoo.com)

Stocks pulled back sharply and bonds jumped Friday as lackluster profit reports and rising oil prices stirred concerns about the ability of the economy to continue to push ahead.

Disappointing results from Dow Jones industrial average components 3M Co., Honeywell Inc., and Caterpillar Inc., gave investors little incentive to buy. Wachovia Corp.'s weak profits renewed concerns that have dogged Wall Street in recent months about the banking sector.

Rising oil prices added to investors' concerns. Oil moved past the psychological barrier of $90 per barrel for the first time before retreating.

"We've got a multitude of earnings that are less than optimal in spaces outside the financials," said Art Hogan, chief market strategist at Jefferies & Co. "Investors are starting to get concerned about both the pace of the U.S. economy and the pace of earnings growth."

In midday trading, the Dow Jones industrial average fell 175.91, or 1.27 percent, to 13,713.05. The Dow had been down as much as 240 points.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 17.26, or 1.12 percent, to 1,522.82, and the Nasdaq composite index dropped 31.99, or 1.14 percent, to 2,767.32.

Friday's pullback pales in comparison to what traders on the floor of the New York Stock Exchange had to contend with exactly 20 years ago. On Oct. 19, 1987 -- a day still known as Black Monday -- the Dow plunged 23 percent amid concerns about interest rates and slowing economic growth.

Bonds prices rose again Friday, extending a rally to an unusual five sessions. The yield on the benchmark 10-year Treasury note, which moves inversely to the price, fell to 4.42 percent from 4.50 percent late Thursday. Prices and yields move in opposite directions. The dollar was mixed against other major currencies, while gold prices rose.

After touching $90.02 overnight, light, sweet crude fell 61 cents to $88.86 on the New York Mercantile Exchange. Part of oil's run-up this week owes to continued worries over tensions between Turkey and Kurdish rebels in northern Iraq. Investors are concerned a conflict could disrupt supplies through Turkey, an important oil hub.
The rise in crude prices has also attracted investors looking for a hedge against the weakening U.S. dollar. The greenback fell to a new low against the euro Thursday.

(source: biz.yahoo.com)

Bank of America's third-quarter earnings skidded to $3.7 billion, or 82 cents a share, from $5.42 billion, or $1.18 a share, a year earlier.

A 93% drop in profit at the firm's investment bank -- to $100 million from $1.43 billion a year earlier -- was largely responsible for the fall.

Ken Lewis, the bank's CEO summed up the firm's frustration with results at the investment bank during a conference call Thursday. Asked by analyst if he planned to do any acquisitions or expand the business in order to get more experienced staffers, Lewis said: "I have had all of the fun I can stand in investment banking at the moment. So to get bigger is not really something I want to do."

He said there will likely be changes at the unit and has set a review of the business.
"What I can't say is that we'll stay the course," he said. "The probability of changes and eliminations of some businesses and infrastructure ... is very high."

The mean estimates of analysts surveyed by Thomson Financial were for earnings of $1.06 a share on revenue of $18.3 billion.

"While the significant dislocations in the capital markets have hurt most participants, we are still very disappointed in our third quarter performance," Lewis said in a prepared statement.

Bank of America's net interest income rose to $8.62 billion from $8.59 billion, while its provision for credit losses increased to $2.03 billion from $1.17 billion a year ago.

Total average assets at Sept. 30 stood at $1.58 trillion, up from $1.50 trillion on the same date during 2006.

(source: marketwatch.com)

Google Inc.'s third-quarter profit soared 46 percent to hurdle the enormous expectations that have elevated the Internet search leader's stock price by more $100 during the past month.

The Mountain View-based company said Thursday that it earned $1.07 billion, or $3.38 per share, for the three months ended in September, up from net income of $733.4 million, or $2.36 per share, at the same time last year.

If not for the cost of awarding stock to its steadily expanding work force, Google said it would have earned $3.91 per share. That topped the average estimate of $3.78 per share among analysts surveyed by Thomson Financial.

Revenue for the period totaled $4.23 billion, a 57 percent increase from $2.67 billion last year.
After subtracting commissions paid to its thousands of advertising partners, Google's revenue stood at $3.01 billion -- about $70 million above the average analyst estimate.

The performance represented a return to form for Google after its second-quarter earnings disappointed Wall Street. The company has surpassed analyst estimates in all but two of the 13 quarters since its August 2004 initial public offering.

(source: biz.yahoo.com)