| Market Summary |
Stocks hovered over the flat line on Tuesday as investors looked for other news to spark a rally. Investors welcomed a positive earnings report from Goldman Sachs (GS: Charts, News, Offers), but still executed trades with caution ahead of a slew of economic reports due out this week. Wall Street hasn’t found the momentum that it previously had for three months as it rallied nearly 40%. Caution about the economy and earnings seem to be the motivating force behind recent declines. Johnson and Johnson (JNJ: Charts, News, Offers) delivered second-quarter earnings that beat expectations despite a drop in profits. Stocks became choppy during the afternoon following a report that showed a large gain in retail sales mainly due to higher gas prices. An increase in energy prices also sent wholesale prices up much higher than expected last month. In other news, shares of CIT Group (CIT: Charts, News, Offers) rallied as speculation that the government will step in to help the company increased. Chrysler Financial said that it has paid back the $1.5 billion it received from the U.S. Treasury in January. U.S. light crude oil for August delivery fell 17 cents to settle at $59.52 a barrel on the New York Mercantile Exchange. Treasury prices fell, raising the yield on the benchmark 10-year note to 3.43%. The dollar gained against other major currencies.
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| Market News |
Goldman's Outrage
They will never admit to this at Goldman Sachs (GS: Charts, News, Offers) (they don’t really fess up to much over there at the Big G) but in the fall of 2008, just after the Lehman Brothers bankruptcy gave the world a lesson in systemic risk, Goldman, the world’s greatest risk taker, was finished too. That’s right, it was toast. Finished. Kaput. Until, that is, the firm that was built on wheeling and dealing in some of the most esoteric investments the world of high finance had ever seen, needed a government bailout to stay afloat, which included $10 billion in cash from the Treasury Department (granted by its former CEO, then-Treasury Secretary Hank Paulson) and more importantly, full access to the Federal Reserve’s discount window to be a commercial bank. (Source: The Daily Beast) Click here to read the full article
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Dell shares dive as PC market still looks rough
Dell Inc. (DELL: Charts, News, Offers) said Tuesday that the U.S. personal computer market has reached its low point but that the timing of a global turnaround in the technology industry remains anyone's guess. The pessimism sent Dell shares plummeting $1.04, or 8 percent, to $11.98 in afternoon trading. At a meeting with Wall Street analysts, the world's No. 2 PC maker elaborated on guidance it issued Monday, when it said it expects slightly stronger sales in the current quarter than in the last one. Despite these signs of improvement, Dell executives said Tuesday that many of the conditions that hurt the PC industry over the last several quarters aren't easing. (Source: Yahoo! Finance) Click here to read the full article
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SEC says it will 'adapt its ways' post-Madoff
The Securities and Exchange Commission has been revamping itself, buttressing enforcement efforts and taking a series of initiatives to protect investors in the wake of the financial crisis and massive Madoff fraud, the agency's chairman said Tuesday. The agency has undergone fundamental changes "that will reinforce our focus on investor protection and market integrity," SEC Chairman Mary Schapiro said. Appointed by President Barack Obama, Schapiro took the helm in January of an agency demoralized and widely assailed over its failure to detect Bernard Madoff's Ponzi scheme for many years despite red flags. The SEC also was criticized by lawmakers and investor advocates for its oversight of Wall Street investment banks in the period leading up to the financial crisis that erupted last year. (Source: MSNBC) Click here to read the full article
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| Market Analysis |
The 5 Major Questions Facing Wall Street
With financial Armageddon pretty much off the table, the banks and brokerages left standing have an opportunity to finish the job, clean up the mess and make some needed changes. If successful, Wall Street could be a more profitable and safer place to do business in 2010. So, as we head into the second half of the year, here is a to-do list that the financial community needs to get cracking on. Answer these questions, and maybe we won't parade half the industry before Congress next year to complain about bonuses. (Actually, we probably will do that to make ourselves feel better anyway.) (Source: MarketWatch) Click here to read the full article
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Tracking the Path of Government Stimulus
In Indianapolis last month, a state government official named Jacob Sipe finally got the news he'd been anticipating. The U.S. Treasury had approved $164 million to finance affordable housing projects left paralyzed by the credit crisis, using funds from the Obama administration's increasingly controversial fiscal stimulus. Before the financial crisis erupted, the housing program was funded via state tax credits that developers in turn sold to large banks. With the banks crippled, demand for the tax credits -- and thus the funds that subsidized the state's low-cost housing -- evaporated. (Source: USA Today) Click here to read the full article
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Don't Buy Brown and Sarkozy's Oil 'Speculations'
In the Wall Street Journal last week, French president Nicolas Sarkozy teamed up with U.K. Prime Minister Gordon Brown on a piece meant to reduce oil-price volatility. Given their shared view that oil volatility "damages both consumers and producers", they have called upon the International Organization of Securities Regulators "to consider improving transparency and supervision of the oil futures markets in order to reduce damaging speculation." Sadly, for those around the world reliant on stable oil prices, their alleged solutions completely miss the point. And they'll do nothing to reduce substantial volatility when it comes to the price of oil. (Source: Real Clear Markets) Click here to read the full article
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