Nov. 7 (Bloomberg) -- U.S. stocks rose for the first time in three days as investors speculated the Federal Reserve will lower interest rates after unemployment surged, General Motors Corp. warned it is running out of cash and pending home sales dropped.
Exxon Mobil Corp., the biggest oil company, climbed 6.3 percent and Alcoa Inc., the nation's largest aluminum producer, rallied 9.1 percent as traders bet the Fed will cut the benchmark rate to 0.5 percent at its meeting on Dec. 16. GM, the biggest automaker, lost 9.2 percent. U.S. stock indexes briefly pared gains in the final hour of trading after Barack Obama said there is no quick fix for the economy.
``It's definitely to the point where bad news is good news,'' said Robert Morgan, equity strategist for Clermont Wealth Strategies, which oversees $4 billion in Lancaster, Pennsylvania. ``Investors are starting to realize this can't go on forever. From a technical standpoint, stocks have been building a base for several weeks now.''
The Standard & Poor's 500 Index added 26.11 points, or 2.9 percent, to 930.99. The gauge trimmed its weekly decline to 3.9 percent. The Dow Jones Industrial Average climbed 248.02, or 2.9 percent, to 8,943.81 after losing almost 10 percent in the previous two days. The Nasdaq Composite Index increased 2.4 percent to 1,647.4. Three stocks advanced for each that fell on the New York Stock Exchange.
The Dow and S&P 500 recovered after the steepest two-day declines since 1987 wiped out more than half of the market's rebound from a five-year low on Oct. 27. The S&P 500 slumped 37 percent this year on concern almost $700 billion in credit losses and writedowns at financial firms worldwide will push the global economy into recession.
Rising Unemployment
The U.S. jobless rate climbed in October to 6.5 percent, the highest level since 1994, and payrolls dropped by 240,000 workers, signaling the economic slump inherited by Barack Obama will last well into his first year as president.
``I've seen estimates as high as a loss of 300,000, so anywhere between 200,000 and 300,000'' met projections, Peter Boockvar, equity strategist at Miller Tabak & Co in New York, said in a Bloomberg Television interview.
Futures on the Chicago Board of Trade showed an 95 percent chance the Fed will cut its 1 percent target rate for overnight lending between banks in half at its Dec. 16 meeting, compared with 55 percent odds a week ago.
Energy, Utility Gains
Further action is needed to boost the economy because there is no quick fix to restore growth, said Obama, the president elect. Obama said a stimulus package will ``be the first thing I get done'' in office if Congress doesn't act by year end.
``He is speaking practically,'' said Peter Kenny, a managing director for institutional sales at Knight Equity Markets in Jersey City, New Jersey. ``But the buildup around his personality is so great and the expectations are so unreasonable that his biggest issue is going to get people to understand that he not a superhero.''
Energy companies and utilities led the S&P 500's advance, gaining more than 4.8 percent. Oil, which climbed as much as 3.4 percent today, closed 0.4 percent higher at $61.04 a barrel in New York. It had fallen 13 percent in the previous two days.
Exxon added $4.39 to $73.95. Chevron Corp. rallied 4.8 percent to $73.46. Consol Energy Inc., the No. 3 U.S. coal producer, advanced 10 percent for the biggest gain among S&P 500 energy producers.
AES Corp. jumped 28 percent to $8.48, the most in the benchmark stock index. Merrill Lynch & Co. analysts said shares of the U.S. power producer are cheap and raised their rating to ``neutral'' from ``underperform.''
Alcoa, Nvidia Advance
Alcoa added 93 cents to $11.19, helping lead S&P 500 raw- materials producers to 3.6 percent gain.
Nvidia Corp. increased 14 percent to $8.72. The company reported third-quarter profit and revenue that beat analysts' estimates after job cuts and a new contract with Apple Inc. helped cushion the impact of the economic slowdown.
Fluor Corp. climbed 21 percent to $41.03, the steepest advance in at least eight years. The largest publicly traded U.S. engineering firm reported quarterly profit above the average analyst estimate as it won contracts for work on a solar panel plant in Singapore and refinery in Indiana.
GM sank 9.2 percent to $4.36. The largest U.S. automaker, seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall ``significantly short'' of the amount needed by the end of June unless the auto market improves or it raises more capital.
Recession Official
The leader of a National Bureau of Economic Research panel that dates economic cycles said there is now no doubt that a recession is under way following today's jobs report. Robert Hall, a Stanford University economist, said the committee is waiting to determine the exact start date of a contraction. The Cambridge, Massachusetts-based bureau is the official arbiter of when U.S. expansions begin and end.
The U.S. economy shrank for the first time since 2001 a year ago and contracted again last quarter after the drop in housing prices froze credit markets globally. President George W. Bush authorized more than $1 trillion in spending to bail out banks.
Fewer Americans signed contracts to buy previously owned homes in September, according to a report from the National Association of Realtors today. The index of signed purchase agreements, or pending home resales, fell 4.6 percent, more than forecast, to 89.2, the industry group said in Washington.
`Priced In'
``A fair amount of the negativity from the economic backdrop has been priced in to the market,'' Michael James, managing director at Wedbush Morgan Securities in Los Angeles, said in a Bloomberg Television interview.
About $6.9 trillion has been erased from U.S. equity markets this year. Banks led the S&P 500's drop, losing 51 percent as a group, followed by commodities producers and computer companies.
Analysts expect full-year profits at companies in the S&P 500 to drop 8.5 percent, according to estimates compiled by Bloomberg.
Wells Fargo & Co. fell 2.5 percent to $29.50 as the biggest bank on the U.S. West Coast raised $11 billion in a stock sale to help pay for its purchase of Wachovia Corp. and signaled banks may be able to tap the public markets for cash.
Yahoo! Inc. lost 13 percent to $12.20 after Microsoft Corp. said it has no interest in buying the search engine operator.
Sprint Nextel Corp. declined 8.4 percent to $3.37. The wireless carrier, whose shares fell 74 percent this year, reported quarterly results below analysts' estimates as customer losses accelerated to the highest level since at least 2005.
The Russell 2000 Index of small U.S. companies rose 2 percent to 505.79. The MSCI World Index of 23 developed markets increased 1.3 percent to 937.47.
Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=a2ty08BahcZQ&refer=home
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Saturday, November 8, 2008
Stocks Higher after Jobs, Inventory Data
Investors weighed news that the U.S. economy lost 240,000 jobs and the unemployment rate jumped to 6.5% in October, and that wholesale inventories fell 0.1% in September .
US stocks moved solidly higher Friday as a weak jobs report failed to prevent a rebound from steep declines earlier in the week.
Some observers argue that Friday's release of the U.S. employment report for October, which showed nonfarm payrolls falling by a greater than expected 240,000 on the month, suggests the U.S. economy is headed toward a deep recession and will force the Federal Reserve to cut rates again.
Traders also eyed a report on September wholesale inventories, which fell 0.1%.
President-elect Barack Obama met with economic transition team members Friday morning and held a news conference.
Regarding the economic crisis, Obama said, "I do not underestimate the enormity of the task that lies ahead." He added: "Immediately after I become president I will confront this economic crisis head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity."
Obama, who takes office Jan. 20, made clear that "the United States has only one government and one president at a time."
European stocks were higher, with major indexes in London, Frankfurt, and Paris each posting gains. Asian markets finished mixed, with Tokyo stocks down 3.55%, Hong Kong up 3.29%, and Shanghai higher by 1.75%.
On Friday, the Dow Jones industrial average finished higher by 248.02 points, or 2.85%, to 8,943.81. The broader S&P 500 index added 26.11 points, or 2.89%, to 930.99. The tech-heavy Nasdaq composite index gained 38.7 points, or 2.41%, to 1,647.40.
On the New York Stock Exchange, 21 stocks were higher for every nine that declined. The ratio on the Nasdaq was 17-10 positive. Trading was slow, which "suggests Wall Street [is] not convinced the market has reached bottom," says S&P MarketScope.
Friday's gains followed two steep declines on Wednesday and Thursday. The Dow shed 4.85% Thursday after a 5.05% loss Wednesday. The broader S&P 500 index lost 5.03% Thursday following Wednesday's 5.27% decline. The tech-heavy Nasdaq composite index fell 5.53% and 4.34% on Wednesday and Thursday respectively.
U.S. nonfarm payrolls plunged 240,000 in October. The headline figure was below market expectations for a 190,000 drop. However, Wednesday's ADP private payrolls report added downside risk. Moreover, this comes after a big downward net revision of -179,000 the two months prior (September was revised to -284,000 from -159,000, and August was revised to -127,000 from -73,000). The unemployment rate jumped to 6.5% in October from 6.1% in September, which is the highest since March 1994. Average hourly earnings rose 0.2%, the same as in September. The workweek held at 33.6 hours. Goods producing jobs were down 132,000, with construction down 49,000, and manufacturing down 90,000. Service providing jobs lost 108,000. Only health services, mining and the government posted gains.
U.S. wholesale sales fell 1.5% in September, after a revised 1.6% decline in August (-1.0% previously). Inventories dipped 0.1% after rising 0.6% in August (0.8% previously). Petroleum sales declined 3.6%; excluding petroleum, sales were still down 1.1%. Inventories excluding petroleum rose 0.1%. The inventory-sales ratio inched up to 1.12 from 1.10 in August; it was a lean 1.06 in June.
Atlanta Fed President Lockhart spoke on the U.S. economy Friday, warning of trouble ahead. "I foresee substantial weakness at least through the first half of 2009. This weakness will exacerbate the employment picture, he said. Market conditions may have eased recently, but it's too early to declare the financial crisis over, he said.
Reuters reported European leaders will propose a new global financial framework after the IMF warned the world's richest economies face their first year of contraction since World War II. South Korea lowered interest rates by 25 basis points, its third cut in a month, after a deep rate cut by Britain and one by the European Central Bank on Thursday. Central banks around the world have stopped worrying about inflation and are reducing borrowing costs to try to prevent the global financial crisis from turning into a deep downturn.
There was more troubling news from the U.S. auto sector Friday. General Motors (GM) reported a third quarter loss of $7.43 a share, with a $2.8 billion loss for the automotive unit and a $1.7 billion loss for GMAC. GM anticipates weakness through 2009 as the slowdown spreads around the globe, with liquidity also in jeopardy, draining cash at a rate which will approach the minimum to sustain the business even if preventative actions on its liquidity are implemented.
Ford Motor Co. (F) posted a deeper-than-expected $2.98 billion quarterly operating loss and told investors it would take aggressive actions to further cut costs as it faces a severe slump in demand. Weak demand for autos is being felt around the world. Ford said it depleted its cash by $7.7 billion -- almost 30% -- during the quarter as it had to pay costs related to production cuts and make upfront payments to Ford Credit in an effort to spur consumers to buy automobiles. Ford told investors that it would look to cut salary expenses by 10%, a move that follows a 15% cut earlier this year.
Dire problems in the auto sector are landing squarely in the lap of the President-elect, with remedies mulled from cash infusions from TARP and government stakeholding to outright bankruptcy filings and/or mergers, says Action Economics.
According to a newswire report, Microsoft (MSFT) dismissed speculation that it might still be interested in a takeover of Yahoo (YHOO). "We made an offer, we made another offer... We have moved on," Micfrosoft CEO Steve Balmer reportedly said.
Walt Disney Co. (DIS) posted lower-than-expected fiscal fourth quarter EPS of 43 cents, vs. 42 cents one year earlier (both excluding items), on a 6% revenue rise. The company noted the higher cost of labor and other items. Wall Street Street was looking for EPS of 49 cents.
Genworth Financial (GNW) reported third quarter net operating EPS of 51 cents, vs. 83 cents one year earlier, on a 25% total revenue decline. The company suspended its quarterly dividend. It also suspends 2008 earnings guidance. Genworth says it is evaluating several additional capital flexibility alternatives, including potential asset sales.
Source: http://www.businessweek.com/investor/content/nov2008/pi2008117_295307.htm?chan=top+news_top+news+index+-+temp_investing
US stocks moved solidly higher Friday as a weak jobs report failed to prevent a rebound from steep declines earlier in the week.
Some observers argue that Friday's release of the U.S. employment report for October, which showed nonfarm payrolls falling by a greater than expected 240,000 on the month, suggests the U.S. economy is headed toward a deep recession and will force the Federal Reserve to cut rates again.
Traders also eyed a report on September wholesale inventories, which fell 0.1%.
President-elect Barack Obama met with economic transition team members Friday morning and held a news conference.
Regarding the economic crisis, Obama said, "I do not underestimate the enormity of the task that lies ahead." He added: "Immediately after I become president I will confront this economic crisis head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity."
Obama, who takes office Jan. 20, made clear that "the United States has only one government and one president at a time."
European stocks were higher, with major indexes in London, Frankfurt, and Paris each posting gains. Asian markets finished mixed, with Tokyo stocks down 3.55%, Hong Kong up 3.29%, and Shanghai higher by 1.75%.
On Friday, the Dow Jones industrial average finished higher by 248.02 points, or 2.85%, to 8,943.81. The broader S&P 500 index added 26.11 points, or 2.89%, to 930.99. The tech-heavy Nasdaq composite index gained 38.7 points, or 2.41%, to 1,647.40.
On the New York Stock Exchange, 21 stocks were higher for every nine that declined. The ratio on the Nasdaq was 17-10 positive. Trading was slow, which "suggests Wall Street [is] not convinced the market has reached bottom," says S&P MarketScope.
Friday's gains followed two steep declines on Wednesday and Thursday. The Dow shed 4.85% Thursday after a 5.05% loss Wednesday. The broader S&P 500 index lost 5.03% Thursday following Wednesday's 5.27% decline. The tech-heavy Nasdaq composite index fell 5.53% and 4.34% on Wednesday and Thursday respectively.
U.S. nonfarm payrolls plunged 240,000 in October. The headline figure was below market expectations for a 190,000 drop. However, Wednesday's ADP private payrolls report added downside risk. Moreover, this comes after a big downward net revision of -179,000 the two months prior (September was revised to -284,000 from -159,000, and August was revised to -127,000 from -73,000). The unemployment rate jumped to 6.5% in October from 6.1% in September, which is the highest since March 1994. Average hourly earnings rose 0.2%, the same as in September. The workweek held at 33.6 hours. Goods producing jobs were down 132,000, with construction down 49,000, and manufacturing down 90,000. Service providing jobs lost 108,000. Only health services, mining and the government posted gains.
U.S. wholesale sales fell 1.5% in September, after a revised 1.6% decline in August (-1.0% previously). Inventories dipped 0.1% after rising 0.6% in August (0.8% previously). Petroleum sales declined 3.6%; excluding petroleum, sales were still down 1.1%. Inventories excluding petroleum rose 0.1%. The inventory-sales ratio inched up to 1.12 from 1.10 in August; it was a lean 1.06 in June.
Atlanta Fed President Lockhart spoke on the U.S. economy Friday, warning of trouble ahead. "I foresee substantial weakness at least through the first half of 2009. This weakness will exacerbate the employment picture, he said. Market conditions may have eased recently, but it's too early to declare the financial crisis over, he said.
Reuters reported European leaders will propose a new global financial framework after the IMF warned the world's richest economies face their first year of contraction since World War II. South Korea lowered interest rates by 25 basis points, its third cut in a month, after a deep rate cut by Britain and one by the European Central Bank on Thursday. Central banks around the world have stopped worrying about inflation and are reducing borrowing costs to try to prevent the global financial crisis from turning into a deep downturn.
There was more troubling news from the U.S. auto sector Friday. General Motors (GM) reported a third quarter loss of $7.43 a share, with a $2.8 billion loss for the automotive unit and a $1.7 billion loss for GMAC. GM anticipates weakness through 2009 as the slowdown spreads around the globe, with liquidity also in jeopardy, draining cash at a rate which will approach the minimum to sustain the business even if preventative actions on its liquidity are implemented.
Ford Motor Co. (F) posted a deeper-than-expected $2.98 billion quarterly operating loss and told investors it would take aggressive actions to further cut costs as it faces a severe slump in demand. Weak demand for autos is being felt around the world. Ford said it depleted its cash by $7.7 billion -- almost 30% -- during the quarter as it had to pay costs related to production cuts and make upfront payments to Ford Credit in an effort to spur consumers to buy automobiles. Ford told investors that it would look to cut salary expenses by 10%, a move that follows a 15% cut earlier this year.
Dire problems in the auto sector are landing squarely in the lap of the President-elect, with remedies mulled from cash infusions from TARP and government stakeholding to outright bankruptcy filings and/or mergers, says Action Economics.
According to a newswire report, Microsoft (MSFT) dismissed speculation that it might still be interested in a takeover of Yahoo (YHOO). "We made an offer, we made another offer... We have moved on," Micfrosoft CEO Steve Balmer reportedly said.
Walt Disney Co. (DIS) posted lower-than-expected fiscal fourth quarter EPS of 43 cents, vs. 42 cents one year earlier (both excluding items), on a 6% revenue rise. The company noted the higher cost of labor and other items. Wall Street Street was looking for EPS of 49 cents.
Genworth Financial (GNW) reported third quarter net operating EPS of 51 cents, vs. 83 cents one year earlier, on a 25% total revenue decline. The company suspended its quarterly dividend. It also suspends 2008 earnings guidance. Genworth says it is evaluating several additional capital flexibility alternatives, including potential asset sales.
Source: http://www.businessweek.com/investor/content/nov2008/pi2008117_295307.htm?chan=top+news_top+news+index+-+temp_investing
Asian stock markets rebound from early lows
HONG KONG (AP) — Asian stock markets turned in a mixed performance Friday, but most recoiled from their lows despite a grim profit forecast from Toyota and sluggish U.S. economic data. European markets opened higher.
Many of Asia's bourses showed surprising resilience — notably in Hong Kong, South Korea and Singapore — given the overnight drop on Wall Street, as lower-priced shares attracted buyers and lending markets showed more signs of mending.
"The expectation was to open much lower following the trouncing in the U.S.," said Benjamin Collett, head of hedge fund sales trading Daiwa Securities SMBC Co. in Hong Kong.
Hong Kong's Hang Seng index, down over 3 percent early in the session, came back to end 3.3 percent higher at 14,243.43. Analysts pointed to an interest rate cut by leading bank HSBC Holdings Inc. — the result of recent softening in interbank rates amid persistent liquidity injections from central bankers — as a major catalyst.
South Korea's main stock index rebounded from a 4.9 percent fall to close 3.9 percent higher after the country's central bank cut interest rates by a quarter of a point — the third cut in less than a month — in a bid to boost an economy hammered by the global financial crisis.
The move followed interest rate cuts by the European Central Bank and the Bank of England overnight.
In Tokyo, the Nikkei 225 stock average pared its early 7 percent loss to close down 316.14 points, or 3.6 percent, to 8,583. Investor sentiment took a hit after Japan's top automaker Toyota slashed its annual forecast to a third of what it was a year ago. Its shares plunged 9.2 percent.
Early in Europe, benchmarks in Germany, France and Britain were up 1 percent or more in early trading.
In New York on Thursday, Wall Street's stock indexes plunged more than 4 percent on widespread anxiety about the economy after computer gear maker Cisco Systems warned of easing demand and retailers reported weak sales for October. A jump in unemployment benefits aggravated concerns.
"We're seeing data every day that looks really bad," said Nicole Sze, Singapore-based investment analyst at Bank Julius Baer & Co., which manages about $300 billion in assets. "The question is, has all the bad news been factored in? That's what investors are asking themselves."
Markets were likely to see more volatility as along as bad news forced investors to readjust their expectations about the scope of a recession and its impact on company profits, analysts said.
Weakening prices for metals and oil pressured Australia's S&P/ASX 200 index, down 2.4 percent, as resource giants like BHP Billiton Ltd. slumped.
Singapore's index gained 1 percent, recovering from steep early losses trigged in part by worse-than-expected quarterly results from DBS Group Holdings Ltd. The Singapore-based bank, Southeast Asia's largest, also said it would cut some 900 jobs.
In Japan, Toyota Motor Corp. shares sank to 3,460 yen after the company on Thursday afternoon cut its net profit forecast for the fiscal year through March 2009 to 550 billion yen ($5.5 billion). That's half of its earlier projection of 1.25 trillion yen ($12.6 billion), and about a third of the previous year's profit of 1.72 trillion yen. If that projection holds, it would be the smallest annual profit in eight years.
Japan's leading automaker blamed a contracting U.S. auto market, strong yen and higher materials prices. Executive Vice President Mitsuo Kinoshita went so far as to call it "an unprecedented situation."
In Europe on Thursday, the Bank of England slashed its key interest rate by 1.5 percentage points to its lowest in more than 50 years in a dramatic bid to cushion its economy, while the European Central Bank, which sets rate for the 15-nation zone that uses the euro, settled for a more conservative half-point trim.
Overnight, the Dow Jones industrial average fell 443.48, or 4.85 percent. The losses combined with another decline Wednesday represent the Dow's worst two-day percentage decline since the October 1987 crash.
U.S. stock index futures were up, suggesting Wall Street would rebound Friday morning. Dow futures were up 167, or 1.9 percent, to 8,868, while S&P futures were up 20.9, or 2.3 percent, to 925.5.
Oil prices rebounded modestly after plummeting overnight, with a barrel of light, sweet crude for December delivery up $1.03to $61.80 in Asian trade. The contract fell 7 percent to settle at $60.77 overnight.
In currencies, the dollar was trading at 97.34 yen from 97.30 late Thursday in New York. The euro rose to $1.2722 from $1.2681 the day before.
In Hong Kong, the interbank lending rate, known as Hibor, for three-month loans ratcheted down to 2.24 percent from 2.44.
Source: http://ap.google.com/article/ALeqM5h3kgMAkbLwyfxBdjzw8Pc4KZ7DhQD94A0J3O0
Many of Asia's bourses showed surprising resilience — notably in Hong Kong, South Korea and Singapore — given the overnight drop on Wall Street, as lower-priced shares attracted buyers and lending markets showed more signs of mending.
"The expectation was to open much lower following the trouncing in the U.S.," said Benjamin Collett, head of hedge fund sales trading Daiwa Securities SMBC Co. in Hong Kong.
Hong Kong's Hang Seng index, down over 3 percent early in the session, came back to end 3.3 percent higher at 14,243.43. Analysts pointed to an interest rate cut by leading bank HSBC Holdings Inc. — the result of recent softening in interbank rates amid persistent liquidity injections from central bankers — as a major catalyst.
South Korea's main stock index rebounded from a 4.9 percent fall to close 3.9 percent higher after the country's central bank cut interest rates by a quarter of a point — the third cut in less than a month — in a bid to boost an economy hammered by the global financial crisis.
The move followed interest rate cuts by the European Central Bank and the Bank of England overnight.
In Tokyo, the Nikkei 225 stock average pared its early 7 percent loss to close down 316.14 points, or 3.6 percent, to 8,583. Investor sentiment took a hit after Japan's top automaker Toyota slashed its annual forecast to a third of what it was a year ago. Its shares plunged 9.2 percent.
Early in Europe, benchmarks in Germany, France and Britain were up 1 percent or more in early trading.
In New York on Thursday, Wall Street's stock indexes plunged more than 4 percent on widespread anxiety about the economy after computer gear maker Cisco Systems warned of easing demand and retailers reported weak sales for October. A jump in unemployment benefits aggravated concerns.
"We're seeing data every day that looks really bad," said Nicole Sze, Singapore-based investment analyst at Bank Julius Baer & Co., which manages about $300 billion in assets. "The question is, has all the bad news been factored in? That's what investors are asking themselves."
Markets were likely to see more volatility as along as bad news forced investors to readjust their expectations about the scope of a recession and its impact on company profits, analysts said.
Weakening prices for metals and oil pressured Australia's S&P/ASX 200 index, down 2.4 percent, as resource giants like BHP Billiton Ltd. slumped.
Singapore's index gained 1 percent, recovering from steep early losses trigged in part by worse-than-expected quarterly results from DBS Group Holdings Ltd. The Singapore-based bank, Southeast Asia's largest, also said it would cut some 900 jobs.
In Japan, Toyota Motor Corp. shares sank to 3,460 yen after the company on Thursday afternoon cut its net profit forecast for the fiscal year through March 2009 to 550 billion yen ($5.5 billion). That's half of its earlier projection of 1.25 trillion yen ($12.6 billion), and about a third of the previous year's profit of 1.72 trillion yen. If that projection holds, it would be the smallest annual profit in eight years.
Japan's leading automaker blamed a contracting U.S. auto market, strong yen and higher materials prices. Executive Vice President Mitsuo Kinoshita went so far as to call it "an unprecedented situation."
In Europe on Thursday, the Bank of England slashed its key interest rate by 1.5 percentage points to its lowest in more than 50 years in a dramatic bid to cushion its economy, while the European Central Bank, which sets rate for the 15-nation zone that uses the euro, settled for a more conservative half-point trim.
Overnight, the Dow Jones industrial average fell 443.48, or 4.85 percent. The losses combined with another decline Wednesday represent the Dow's worst two-day percentage decline since the October 1987 crash.
U.S. stock index futures were up, suggesting Wall Street would rebound Friday morning. Dow futures were up 167, or 1.9 percent, to 8,868, while S&P futures were up 20.9, or 2.3 percent, to 925.5.
Oil prices rebounded modestly after plummeting overnight, with a barrel of light, sweet crude for December delivery up $1.03to $61.80 in Asian trade. The contract fell 7 percent to settle at $60.77 overnight.
In currencies, the dollar was trading at 97.34 yen from 97.30 late Thursday in New York. The euro rose to $1.2722 from $1.2681 the day before.
In Hong Kong, the interbank lending rate, known as Hibor, for three-month loans ratcheted down to 2.24 percent from 2.44.
Source: http://ap.google.com/article/ALeqM5h3kgMAkbLwyfxBdjzw8Pc4KZ7DhQD94A0J3O0
FACTBOX: President-elect Obama to face distressed economy
(Reuters) - President-elect Barack Obama will take office at a time when the U.S. economy is struggling, with many analysts warning of the potential for a deep, long recession.
The following is a look at recent economic data that underscore the economy's fragile condition:
* U.S. employers have cut a total 1.2 jobs million this year and the jobless rate hit a 14-1/2-year high of 6.5 percent in October 2008. In the August-October period alone, the economy shed 651,000 jobs, showing labor markets are crumbling faster and heightening the chances of a deep recession. A report on November 5 showed private-sector employers cut 157,000 jobs in October, the deepest in six years.
* U.S. gross domestic product shrank at a 0.3 percent annual rate in the third quarter, the sharpest contraction in seven years. A Reuters poll last month found that economists expect GDP to shrink for three straight quarters, which would be the longest period of contraction since 1974-75.
* The U.S. Treasury, which is ramping up government borrowing to fund efforts to rescue the financial system, said on Monday that a survey of 18 primary bond dealers showed a consensus for a $988 billion federal budget deficit for fiscal 2009, more than doubling the record $455 billion deficit in fiscal 2008, which ended September 30.
* U.S. stock markets tumbled in October. The Standard & Poor's 500 Index had its worst month since the October 1987 stock market crash, while the Dow Jones industrial average logged its biggest monthly drop in a decade.
* Mass layoffs -- involving 50 or more people -- hit their highest level in eight years in September.
* Consumer spending, which fuels two-thirds of U.S. economic activity, fell by 0.3 percent in September, the first drop in two years. U.S. consumer confidence in October suffered its steepest monthly drop on records dating to 1952.
* Existing home prices fell 9 percent from a year ago in September to the lowest level since April 2004. Prices of new homes were down 9.1 percent to their lowest since September 2004.
* U.S. industrial production tumbled by 2.8 percent in September, the biggest drop since December 1974. A report on Monday showed factory activity fell last month to its lowest level in 26 years. U.S. auto sales plunged 32 percent in October to a 25-year low.
* An index gauging activity in the service sector, which accounts for about 80 percent of U.S. output, fell sharply in October, into contractionary territory.
* About 85 percent of domestic banks tightened lending standards on commercial and industrial loans to large and middle-market firms over the past quarter, showing the credit crunch that set in a year ago is worsening.
* The Federal Reserve has cut benchmark interest rates to 1 percent from 5.25 percent in the last 13 months, and has pumped hundreds of billions of dollars into financial markets to try to get credit flowing again. So far, those efforts have had only limited success.
Source: http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4A673I20081107
The following is a look at recent economic data that underscore the economy's fragile condition:
* U.S. employers have cut a total 1.2 jobs million this year and the jobless rate hit a 14-1/2-year high of 6.5 percent in October 2008. In the August-October period alone, the economy shed 651,000 jobs, showing labor markets are crumbling faster and heightening the chances of a deep recession. A report on November 5 showed private-sector employers cut 157,000 jobs in October, the deepest in six years.
* U.S. gross domestic product shrank at a 0.3 percent annual rate in the third quarter, the sharpest contraction in seven years. A Reuters poll last month found that economists expect GDP to shrink for three straight quarters, which would be the longest period of contraction since 1974-75.
* The U.S. Treasury, which is ramping up government borrowing to fund efforts to rescue the financial system, said on Monday that a survey of 18 primary bond dealers showed a consensus for a $988 billion federal budget deficit for fiscal 2009, more than doubling the record $455 billion deficit in fiscal 2008, which ended September 30.
* U.S. stock markets tumbled in October. The Standard & Poor's 500 Index had its worst month since the October 1987 stock market crash, while the Dow Jones industrial average logged its biggest monthly drop in a decade.
* Mass layoffs -- involving 50 or more people -- hit their highest level in eight years in September.
* Consumer spending, which fuels two-thirds of U.S. economic activity, fell by 0.3 percent in September, the first drop in two years. U.S. consumer confidence in October suffered its steepest monthly drop on records dating to 1952.
* Existing home prices fell 9 percent from a year ago in September to the lowest level since April 2004. Prices of new homes were down 9.1 percent to their lowest since September 2004.
* U.S. industrial production tumbled by 2.8 percent in September, the biggest drop since December 1974. A report on Monday showed factory activity fell last month to its lowest level in 26 years. U.S. auto sales plunged 32 percent in October to a 25-year low.
* An index gauging activity in the service sector, which accounts for about 80 percent of U.S. output, fell sharply in October, into contractionary territory.
* About 85 percent of domestic banks tightened lending standards on commercial and industrial loans to large and middle-market firms over the past quarter, showing the credit crunch that set in a year ago is worsening.
* The Federal Reserve has cut benchmark interest rates to 1 percent from 5.25 percent in the last 13 months, and has pumped hundreds of billions of dollars into financial markets to try to get credit flowing again. So far, those efforts have had only limited success.
Source: http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4A673I20081107
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