| Market Summary |
Stocks continued to rally on Thursday despite a choppy session. All three major indices traded mostly flat during morning trading despite JPMorgan Chase (JPM: Charts, News, Offers) beating Wall Street’s expectations. Stocks turned higher during afternoon trading as investors anticipated results from Google (GOOG: Charts, News, Offers) and IBM (IBM: Charts, News, Offers). Financial shares became a little shaky after it was reported that CIT Group (CIT: Charts, News, Offers) will not receive a bailout from the government. Shares of CIT fell nearly 71% in response to the news and the looming possibility of a bankruptcy. A number of reports on various sectors of the economy were released today. The Labor Department reported that the number of individuals filing for unemployment benefits fell more than expected. Investors didn’t read too much into the data because the drop was influenced by shutdowns in auto industry production. The Philadelphia Fed index, a regional reading on manufacturing, dipped to negative 7.5 in July from negative 2.2 in June. Asian and European markets also ended the day higher. Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.54%. In currency trading, the dollar fell against the euro and Japanese yen.
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Slideshow: 13 Biggest Federal Reserve/Treasury Moves in 2008-2009.
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2008 - early 2009 was an unprecedented period for the United States economy. Take a look back at some of the key steps that the Fed and the Treasury took over this time period, most of which were unthinkable before the crisis began.
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View the Slideshow!
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| Market News |
CIT won't get bailout, raising bankruptcy prospect
CIT Group Inc. (CIT: Charts, News, Offers) shares tumbled more than 70 percent Thursday as its inability to get emergency government funding raised expectations that the commercial lender will file for bankruptcy protection. It is unclear how a bankruptcy filing by a company that lends to thousands of small and mid-size businesses would affect shaky financial markets hobbled by an economy in recession and bleeding hundreds of thousands of jobs a month. Small businesses are seen as keys to economic recovery. CIT said late Wednesday that negotiations with regulators about a possible rescue had broken off after days of round-the-clock talks. (Source: Yahoo! Finance) Click here to read the full article
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Foreclosure Filings in U.S. Reach Record 1.5 Million
U.S. foreclosure filings hit a record in the first half, a sign that job losses and falling property prices deepened the housing recession, according to RealtyTrac Inc. More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, the Irvine, California-based seller of default data said today in a statement. That’s a 15 percent increase from the year earlier. One in 84 U.S. households received a filing. "People are losing their jobs, seeing their income go down and are underwater on their mortgage," Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles, said in an interview. "It’s a toxic combination." (Source: Bloomberg) Click here to read the full article
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Paulson stands by BofA-Merrill deal
Former Treasury Secretary Henry Paulson, testifying before Congress for the first time since leaving office, defended his role Thursday in salvaging a controversial deal struck during the height of the banking panic last fall. Former Treasury Secretary Henry Paulson, testifying before Congress for the first time since leaving office, defended his role Thursday in salvaging a controversial deal struck during the height of the banking panic last fall. Paulson testified before the House Committee on Oversight and Government Reform, whose members have already questioned the chiefs of Bank of America (BAC: Charts, News, Offers) and the Federal Reserve. (Source: CNN Money) Click here to read the full article
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| Featured Article from the InvestorGuide University |
New vs. Used
Did you know most new cars depreciate a few thousand dollars as soon as they are driven off the lot? Learn the advantages and disadvantages of buying new vs. used.
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| Market Analysis |
The Time Bomb in Corporate Debt
No surprise here: As the recession grinds on, more companies are falling behind on their debt payments. The default rate tops 11%, up from 2.4% last year--and could peak at 12.8% by the end of the year, the highest ever, according to credit rating agency Moody's Investors Service. But what's worrying economists more is that the rate could remain stubbornly high for quite a while. "Be prepared for a multi-year period of high defaults," says Louise Purtle, a senior analyst at CreditSights. "We're going to see peaks like a mountain range." That's a departure from the usual pattern in recessions, even severe ones. Historically corporate defaults spike as downturns ease, then fall back to more normal levels. But the recovery may be delayed this time around. Companies aren't cleaning up their balance sheets that much, and current debt levels are unsustainable. The debt overhang could hamper the economy for years to come. (Source: BusinessWeek) Click here to read the full article
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Are Big Banks Getting Cheeky?
The headlines over the last week have reinforced the perception that the country’s financial institutions, or at least some of them, are beginning to rebuild and profit. But resentment and the risk of public backlash against these banks remain, as shown by the recent opinions and editorials complaining about how ungrateful these banks are and suggesting they are once again trying to take advantage of the government and game the system. As Goldman Sachs (GS: Charts, News, Offers) earns $3.4 billion in a single quarter, many Americans continue to suffer from the recession, which was triggered by a financial crisis in which the banks played a part. News reports about banks taking a more assertive approach reinforce this perception. So I’ve decided to look at whether the criticism rings true: Are banks getting too cheeky? (Source: The New York Times) Click here to read the full article
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Las Vegas As a Lesson In Basic Economics
Though Las Vegas is perhaps best known as a tacky City of Sin where what happens within its limits stays there, its fortunes and misfortunes provide us with broad lessons about how economies work. Indeed, if one set out to understand the true workings of supply and demand, employment, inflation and Schumpeterian creative destruction, a tour of Las Vegas would provide living anecdotes that confirm and at times explode many widely held economic viewpoints. (Source: Real Clear Markets) Click here to read the full article
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