Taking Stock Of Wall Street 2008-10-08

30 October, 2010

Stock markets continued their volatile gyrations and were headed down despite positive financial news that ordinarily would have been considered as upbeat. So panic and fear is one driving force unhurried the demonstrate situation.

GLOBAL PICTURE

Central banks of USA, European Union, UK, Canada and Sweden jointly prick their individual benchmark rates by 0.50%.

The US fed funds rate was reduced to 1.50%, and discount rate to 1.75%.

Yesterday The Bank of Japan had cut its rate to 0.5%. China lowered its rate by 0.27%, Hong Kong by 1%.

Overseas market indices plunged to recent lows, especially the Japanese Nikkei that dropped by -9.4% . Indonesian stock exchange had to halt trading.

Britain announced a BP 200 bln ($348 bln) bailout plan for their banks out of which $87 bln is earmarked for eight major banks.

Russia is to infuse $36 bln into its financial system.

Spain unilaterally is bailing out its troubled banks with a 30 euro ($40 bln) fund as a joint EU effort was not forthcoming.

G-7 nations’ ministers will meet this weekend to catch solutions to the present global financial situation.

Euro-Zone quarterly GDP went down by 0.2%.

US GOVERNMENTAL ACTIONS

The Fed Open Market Committee (FOMC) cut the fed funds rate from 2% to 1.5%. The Fed said the inflationary pressures are receding.

US ECONOMIC DATA

* National Association of Realtors (NAR) Pending Home Sales data for August – rose 7.4% as sales of foreclosed homes picked up unexpectedly. The economists were expecting a decline of -1.3%. It also reversed July’s figure of -2.7%. Compared to same period of last year, it is up by 8.8%. Western region showed the most growth of 18.4%, Northeast up by 8.4%, Midwest by 3.6 percent South by 2.3 percent.

* Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ended October 3 – The Market Composite Index showed an increase of 2.2% in volume. Compared to same week previous year, it was still down by -28.6%. The four-week moving average for the seasonally adjusted Market Index is also down by -1.4%.

– The Refinance Index increased by 0.9% and Purchase Index increased by 3.2%. The Government Purchase Index that includes FHA was up by 9.9%.

– The average interest rate on 30-year fixed rate mortgages decreased from 6.07% to 5.99%. For 15-year fixed rate mortgages, the rate decreased from 5.82% to 5.71%.

* EIA Petroleum Reserves Report for the week ended October 3 – Crude reserves increased by 8.1 mln barrels, far higher than the 2.2 mln barrels forecast. Gasoline inventories were up by 7.2 mln against the forecast of 1.5 mln barrels.

Oil fell again by -$1.11 (-1.23%) to $88.95.

Gold continued the rally up by $24.50 (2.78%) to $906.50.

CBOE Volatility: went higher by 3.85 to 57.58 from 53.68.

MARKET INDICES

Dow went DOWN -189.96 (-2.01%) to 9,257.15
S&P 500 DOWN by -11.29 (-1.13%) to 984.94
Nasdaq DOWN by -14.55 (-0.83%) to 1,740.33

NYSE

Daily Volume: 1.92 bln
A/D Ratio: 746 stocks advanced against 2522 declined
52-week Hi/Lo: 3 stocks climbed to recent Highs while 1934 went down to new Lows

Nasdaq

Daily Volume: 3.51 bln
A/D Ratio: 848 stocks advanced against 2156 declined
52-week Hi/Lo: 5 stocks climbed to unique Highs while 1184 went down to new Lows

MARKET NEWS

Bank of America (BAC) stock is down as its $10 bln common stock offering was priced lower than the market price of yesterday. Not surprising as it came finish on the heels of a disappointing earnings, outlook guidance and pared dividend.

BAC has also reached an agreement with the New York Attorney General to repurchase auction rate securities it sold to individuals and trusts and with maximum caps, those sold to businesses and charities. There were complaints that investors were misguided into buying these risky instruments.

Insurer MetLife (MET) also will be offering 75 mln common stock to the public worth $2.4 bln.

Research In Motion (RIMM) stock is rebounding with the announcement of the coming release of the touch screen version of BlackBerry.

There is no slay in glimpse for the 1-month strike by technical staff of Boeing (BA). Production of the Dreamliner Boeings has been delayed by months.

Ford Motor (F) will be cutting 6,000 jobs, this time in its Volvo division.

M&A NEWS

Tata Consultancy Services is buying Citigroup Global Services in India for $500+ mln.

Monster Worldwide (MNST) is acquiring 55% more stake in ChinaHR.com for $174 mln.

COMPANY RESULTS

Same-store retail sales in fell in September. All major chains including Target (TGT ), JCPenney (JCP), Kohl’s (KSS), Saks (SKS) and American Eagle (AEO) reported reduced earnings. A inspect in contrast were the discount retailers, Wal-Mart (WMT) and Costco (COST), who reported increased earnings.

MetLife (MET) gave a lower guidance on income and earnings which were far below the market’s expectations.

Monsanto Co (MON) and LDK Solar (LDK) announced earnings that beat market’s consensus.

ANALYSTS RATINGS

The company stocks upgraded include:

Apogee Enterprises Inc (APOG), Apollo Group Inc (APOL), Bank of America Corp (BAC), BMC Software Inc (BMC), Cadence Design Systems Inc (CDNS), Celgene Corp (CELG), Citrix Systems Inc (CTXS), Community Health Systems Inc (CYH), EBay Inc (EBAY), EnerNOC Inc (ENOC), Hasbro Inc (HAS),
Healthcare Realty Trust Inc (HR), Helmerich & Payne Inc (HP), Hill International Inc (HIL), Informatica Corp (INFA), Inter Parfums Inc (IPAR),
Jefferies Group Inc (JEF), Knoll Inc (KNL), Lowe’s Companies Inc (LOW), Mack-Cali Realty Corp (CLI), Pride International Inc (PDE),
Randgold Resources ADR (GOLD), Research In Motion Ltd (RIMM), Safeway Inc (SWY), Symantec Corp (SYMC) and Syngenta ADR (SYT).

Company stocks downgraded are:

AbitibiBowater Inc (ABH), Advanced Micro Divices (AMD), Ashford Hospitality REIT (AHT), AuthenTec Inc (AUTH), Callidus Software (CALD),
Double-Take Software Inc (DBTK), Ford Motor (F), General Motors (GM), Himax Technologies Inc (HIMX), Horace Mann Educators Corp (HMN),
Host Hotels & Resorts REIT (HST), KLA-Tencor Corp (KLAC), Life Time Fitness Inc (LTM), Mentor Corp (MNT), NCI Building Systems Inc (NCS),
Office Depot Inc (ODP), Orient-Express Hotels Ltd (OEH), Pros Holdings Inc (PRO), RealNetworks (RNWK), Red Lion Hotels Corp (RLH), SuccessFactors (SFSF), Transocean Inc (RIG) and ValueClick Inc (VCLK), Watts Water Technologies Inc (WATT)

FED TALK

Charles Plosser, President of Philadelphia Regional Fed warned the nation that there are limits to what a central bank can do even if it is given extra powers. He was speaking at the Council on Foreign Relations. He also wants functional regulation rather than the present system of simple superficial oversight.

POINTERS TO THE FUTURE

* The unemployment rate is expected to average 6.4% in the coming last quarter and then average 6.6% next year. It may top 9% by second half of 2009.

* Inflation is estimated at 4.0 percent for 2008 and 2.0 percent next year.