NEW YORK, July 15, 2008
Dow Jones Closes Below 11,000
Stocks End Mostly Lower Even As Oil Prices Retreat
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(CBS/AP)
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Eye On The Economy
In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
Just days after the government said it would aid Fannie Mae and Freddie Mac if necessary, Federal Reserve Chairman Ben Bernanke told Congress the U.S. economy faces "numerous difficulties." During the day's testimony, Treasury Secretary Henry Paulson also said the Bush administration has no immediate plans to lend money to the mortgage giants or buy their stock.
Shares of Fannie and Freddie - which together hold or back nearly half of all the nation's mortgages - tumbled again.
The stock market did benefit from some bargain-hunting as oil retreated from its near-record levels, but the uncertainty of the financial sector made that recovery hard to sustain. If oil prices stabilize or retreat, consumers might feel more comfortable spending on discretionary items, and in turn help the economy.
"There's definitely a correlation between high energy prices and low consumer spending, and we need that to abate to get us a break," said Kim Caughey, equity research analyst at Fort Pitt Capital Group.
A barrel of light, sweet crude dropped $6.44 to settle at $138.74 on the New York Mercantile Exchange as traders bet that the weak economy in the United States and elsewhere will take its toll on global demand.
While some of the market's most battered bank stocks - including Washington Mutual Inc., Lehman Brothers Holdings Inc., and regional bank First Horizon National Corp. - finished higher Tuesday, most bank stocks gave up their brief rallies by the end of the session.
According to preliminary calculations, the Dow fell 92.65, or 0.84 percent, to 10,962.54. It was the blue chips' lowest close since July 24, 2006; the high price of oil is one of the major reasons the Dow has been trading at nearly two-year lows.
Broader stock indicators ended mixed. The Standard & Poor's 500 index fell 13.39, or 1.09 percent, to 1,214.91, while the Nasdaq composite index rose 2.84, or 0.13 percent, to 2,215.71.
Treasury prices traded higher, but pared earlier gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.83 percent from 3.86 percent late Monday.
The Labor Department said Tuesday that core inflation at the wholesale level, which excludes energy and food, ticked up by just 0.2 percent, but that overall wholesale prices jumped by a larger-than-expected 1.8 percent - the biggest gain since November. For the past 12 months, wholesale prices including food and energy showed an increase of 9.2 percent, the largest increase since June 1981.
U.S. consumers have been monitoring their budgets more carefully in the face of higher energy prices, falling home values and an uncertain jobs climate. The Commerce Department reported Tuesday that retail sales edged up by 0.1 percent - a weaker amount than the 0.4 percent increase analysts expected in June. Total sales were dampened especially by plummeting sales at car dealerships.
"The bottom line is, eventually, oil as a commodity is going to react to the overall economy," said Dan Alpert, managing director at the investment bank Westwood Capital.
Among the stronger stocks of the day were Lehman, which rose 82 cents, or 6.6 percent, to $13.22; WaMu, which rose 38 cents, or 11.8 percent, to $3.61; and First Horizon, which rose 85 cents, or 16.9 percent, to $5.89. First Horizon named a new CEO on Tuesday.
But Fannie Mae fell $2.66, or 27 percent, to $7.07, and Freddie Mac fell $1.85, or 26 percent, to $5.26. Treasury Secretary Henry Paulson said that if the government extends financial backing to the two institutions, it will be done "under terms and conditions that protect the U.S. taxpayer."
In a bid to protect Fannie Mae and Freddie Mac, Securities and Exchange Commission Chairman Christopher Cox said to Congress Tuesday that the SEC will broaden existing rules prohibiting naked short selling of banks and broker dealers.
Short-selling is a type of speculation, where a trader sells securities he doesn't own; essentially, it's a bet that a stock will fall. Naked short-selling is when a trader makes such a bet without arranging to borrow the stock first.
Another big decliner was American International Group Inc., which suffered the worst percentage drop in the Dow on Tuesday. AIG shares fell $1.20, or 5.32 percent, to $32 after a Wachovia analyst lowered his rating and earnings estimate for the beleaguered insurer.
General Motors Corp. saw the largest rebound among the 30 Dow stocks after announcing plans to lay off salaried workers, reduce truck production, suspend its dividend and borrow $2 billion to $3 billion as it adjusts to a weakening U.S. market. GM shares rose 46 cents, or 4.9 percent, to $9.84.
The Russell 2000 index of smaller companies fell 2.15, or 0.32 percent, to 662.35.
Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange, where volume came to 1.86 billion shares.
Overseas, Japan's Nikkei stock average fell 1.96 percent, Britain's FTSE 100 fell 2.42 percent, Germany's DAX index fell 1.91 percent, and France's CAC-40 fell 1.96 percent.
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See all 59 CommentsSince when is a $6 drop a "steep retreat" when it can fluctuate $10-$15 everyday?
The people who write these stories are absolute idiots.
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Duhhhhh.....Wow......Ya think? LOL
The Democractic lead congress has in only 17 months, killed the housing market, got gas prices up to $4.30
per gallon and the stock market closed below 11K, man the Dem''''s sure know how to help the little guy...
Hmm - oil AND the stock market dropping in the same day. This can''t be good.
17 months ago the Democratics took control of congress and look what has happened since that time.
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Haahoheehee, is it the Democrats in Congress, or the Republican in the White House? Ya know it''s so hard to tell. Hoooo, you know what I REALLY DON''T CARE ANYMORE!!!!
Let''s get rid of ALL OF THEM. It''s time.
inflation ... what inflation?
per gallon and the stock market closed below 11K, man the Dem''''''''s sure know how to help the little guy... ]
[Posted by Barocalto at 05:21 PM : Jul 15, 2008]
but everyone says the dems aren''t doing anything ... how can this be? how do you suppose they managed all this in just 17 months?
below 7000 in the next few months..better get all money out of banks and wallstreet, before its to late
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Yes, lets poll out all money out of banks and wallsteet.The could be the most stupidest thing you can possible do. Not all stocks in the stock market are tumbling down, in fact some stocks are still going up. If your stock is going down, take your money out of that stock and invest it in different stocks that have hit their bottom. Not all banks are in trouble, your money is safe, were not living in 1920''s here.
For those of you who have no clue who Lindsey Williams is, he wrote an interesting book %u201CThe Energy Non-Crisis%u201D. He makes claim that the energy crisis of the 70%u2019s was a total fabrication by the government and the oil companies have found oil at Gull Island, Alaska and were ordered to cap the wells. The book is no longer in print, however the entire book is available online at the reformation.org website. It is an interesting read and is totally in layman%u2019s terms. It does exhibit Mr. Williams limited understanding of the oil business, yet it does let you know that he was really in Prudhoe Bay, Alaska during the building of the pipeline. He reveals much from the inside walls of executives with Atlantic Richfield and British Petroleum (ARCO and BP) during the finding of oil on Gull Island.
It has been reported that his life has been threatened and his website, lwoil.com contains this farewell:
All of their hard work at fixing it so their Masters would reap all the benefits of the US economy and all of it''s money have paid off.
Mission accomplished!!!!
And for those who say it''s a democratic controlled congress... let''s look at those numbers, shall we?
Senate:
49 republicans
49 democratics
2 independents
tiebreaking vote: republican vice president.
House:
200 Republicans
235 Democratics
288 amount of votes needed for republican presidential veto override.
So... in reality, republicans block everything democrats try to get done.
So... in reality, republicans block everything democrats try to get done.
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Yah, maybe you''re right. But just to be on the safe side, LET''S GET RID OF THEM ANYWAY.
We can''t afford another four years of doing it by trial and error.
Bank customers are repeatedly told that their savings is FDIC insured, the problems is that until you receive your money from FDIC (if you ever do) you go hungry.
Now, near the end of his second term, the DOW is at 10,963.
So, the DOW has netted 376 points during all of Bush''''s Presidency. Great job Bushie!
So... in reality, republicans block everything democrats try to get done.
Posted by IRLiberal
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What, I can''t believe I am hearing this. Both parties are guilty here not just the republicans but also the democrats.Our representatives in Washington DC lack communication. Both parties can''t seem to put their differences aside and get issues resolved in Washington.To blame one party is silly.
The credit crunch, mortgage companies and the housing market has destroyed our economy not the republicans.
just remind me what the DOW was in 1928 ?
and how much stock got traded between say 1928 and 1934 ?
that will be a good indicator on the futures.
sincerely Just asking Bear
Fuzzy
Last Updated: 9:21pm BST 15/07/2008
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The US Treasury may have just days to act before foreign patience snaps, writes Ambrose Evans-Pritchard
Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.
Draining away: The US may struggle to plug its capital gap
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (#350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill''s head of international economics.
advertisement"This is not the time for policy-makers to underestimate, once again, the systemic risks to the financial system and the huge damage this would impose on the economy. Bold, aggressive action is needed, and needed now," he said.
Mr Bethune said the Treasury would have to inject up $20bn in fresh capital. This in turn might draw in a further $20bn in private money. Funds on this scale would be enough to see the two agencies through any scenario short of a meltdown in the US prime property market.
The phony oil futures bubble is about to burst...
Sweet. VERY sweet! I LUV IT! LOL.
The credit crunch, mortgage and housing problems have been greatly exacerbated due to deregulation. Who''s the party of deregulation? Republicans or Democrats?
Now, near the end of his second term, the DOW is at 10,963.
So, the DOW has netted 376 points during all of Bush''''''''s Presidency. Great job Bushie!
Posted by Smirk5
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Yes truly this is Bush''s fault. The housing market, the credit crunch, and the mortgage crises, all Bush is fault. I don''t think so. The people and greedy corporations created this mess not Bush.
John McCain telling a bad joke in 1986
Who''s the party of deregulation, Republicans or Democrats? You failed to answer that question. Who supported the deregulation that has been a huge part of this economic mess , Republicans or Democrats?
Posted by Smirk5
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What? Both parties didn''t create this mess, the people who didn''t know what they were getting themselves into created this problem.
Ok. I''ll make it easy for you. The republicans are the party of deregulation. Deregulation has been a huge player in the housing and credit problems we now experience.
That''s exactly why you need more regulation which Republicans mostly oppose. Otherwise, the taxpayer ends up holding the bag.
Posted by Smirk5 at
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I agree that we do need more regulations but I can''t help it that incompetent people don''t know any better. People do have the ability to make right and wrong decisions.People can think for themselves. Thats all I am getting at.
"but I can''''t help it that incompetent people don''''t know any better. People do have the ability to make right and wrong decisions."
You''re contradicting yourself here. You say it''s due to incompetent people but then you state that people do have the ability to make right and wrong decisions.
Incompetent ones don''t. And there are millions and millions of them. How do you think Bush Jr. ever became President? It required millions of incompetent voters. Republicans and their deregulation played a giant part in making it possible for incompetent people to secure loans they should have never been able to secure considering their incomes. Deregulation by mostly Republicans helped to set this thing up.
I just saw that,thank you for bringing that up.What I meant to say is that I can''t help it that people are so incompetent.If people don''t know what they are getting themselves into,they can seek help.
The DOW was at 10,587 on the day Bush took office.
Now, near the end of his second term, the DOW is at 10,963.
So, the DOW has netted 376 points during all of Bush''''''''s Presidency. Great job Bushie!
Posted by Smirk5 at 06:22 PM
Yeah but think about the commie chineeeze
stock.
"...people are so incompetent.If people don''''t know what they are getting themselves into,they can seek help."
That''s a nice thought, but like most Republican ideas, it doesn''t work. Even the Republicans NOW (a little late) understand that a bailout is about the only thing we can do. The help ultimately will come from the taxpayer. Now, the taxpayers have to pay billions and billions because of all that Republican deregulation.
I respect your view on this topic.Is it ok to say that both the republicans and the people are responsible for this economic mess.
The Dems are just as corrupt as the Repubs. You just cant see it can you.
They are both destroying the REPUBLIC if you idoits know what that is. This country is not the America that it was meant to be. It has been stolen long ago and your a commodity like sugar and pork. In other words your nothing and your owned. When you finaly see the truth lets hope its not to late for a revolution but with morons like you people you will just simply roll over like a beaten dog that your are.
Bank customers are repeatedly told that their savings is FDIC insured, the problems is that until you receive your money from FDIC (if you ever do), you go hungry.
Spain is now spiralling into the worst crisis since the Franco dictatorship. "The economy is in dire straits," said Dominic Bryant, Spain expert at BNP Paribas.
advertisement"Some of the housebuilders are going to go bust, it is as simple as that. Over 10pc of Spain''s economy has been building houses. This compares with 6pc-7pc in the US at the height of the bubble. The adjustment will be enormous," he said.
Now, near the end of his second term, the DOW is at 10,963.
So, the DOW has netted 376 points during all of Bush''''''''''''''''s Presidency. Great job Bushie!
Posted by Smirk5 at 06:22 PM
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My response:
1. Thanks for providing us with the Dow level on Bush''s first day!
2. Currently, it''s '' a wopping'' 376 points higher now than it was then---7 1/2 years later!
3. I predict it''s going down further---maybe a lot further---unless it''s propped up to prevent that from happening!
So much for GOP economic ability, they know as much about running an economy as I do about the mating habits of bugs! And, that ain''t much, folks!
It''s just a sheer example of how tax cuts for the rich and trickle-down voodoo economic nonsense doesn''t work!
It never has. Everytime one of these Republicans get lucky and some how get selected into the White House our economy immediately tanks...everytime.
And then John McCain gets on television and declares himself a footsoldier for Reagnomics.
How stupid is that? Now he want''s to put Plastic Man Romney on the ticket so he get a chance lay pipe where it hurts and have everybody make $6.50 an hour like his serfs over at Office Depot.
Come on Republicans are you buying this?
Posted by whitemale08 at 10:16 PM : Jul 15, 2008
Of course they are!!
Mindless, brain dead, zombies ALWAYS follow the leader!!
"Brains! Must eat BRAINS!! Must vote republican and eat brains!!"
And NOBODY, Democrat or Republican has announced ANY major plan to do ANYTHING about it. Bush made his usual "in denial" speech. The Democrats in Congress are sitting on their hands and doing nothing.
NOBODY IS DOING ANYTHING TO FIX THIS ACCELERATING CRISIS. I haven''t seen such a rapid and plainly visible economic fall since he Carter years.
The result - we have done nothing but ping-pong between the TWO GUILTY PARTIES, and NOTHING IS GETTING DONE.
STOP THE PARTISAN BICKERING. START REBUILDING OUR COUNTRY.
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