| Market Summary |
Stocks started off the week with a bang as investors tried to continue last week’s rally. The session was recharged during the final hour of trading as optimism about second-quarter results poured in. Another boost came by way of CIT Group (CIT: Charts, News, Offers) after the company secured private-sector financing to prevent an inevitable bankruptcy. The Dow Jones Industrial Average stayed positive for a majority of the session and ended the day up by 104.21 points. Broader stock indicators also ended higher. The Nasdaq added 22.68 points and the Standard and Poor’s 500 Index added 10.75 points. Investors are continuing to search for clues to signal exactly how the economy is performing and how long a recovery will take. Second quarter results have largely contributed to the recent rallies on Wall Street. The bulk of the earnings reports including results from retailers are still to come, so investors may be sending stocks higher a little prematurely. The Conference Board reported that the index of leading economic indicators rose 0.7% in June. Analysts were only expecting an increase of 0.5%. U.S. light crude oil for August delivery settled up 42 cents to $63.98 a barrel on the New York Mercantile Exchange. Gold prices rose $11.30 to $948.80 an ounce.
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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 |
Why Toxic Assets Are So Hard to Clean Up
The board of CIT Group Inc. (CIT: Charts, News, Offers), one of the largest U.S. lenders to small and midsize businesses, approved a deal with major bondholders to keep the company out of bankruptcy, said two people briefed on the talks. CIT will receive a rescue loan from key bondholders hoping to keep it alive long enough to restructure its debt, these people said. They spoke on condition of anonymity because the company has not yet made an official announcement. The deal will not necessarily prevent a bankruptcy filing for the ailing firm, but will give it desperately needed breathing room while it attempts to refinance existing debt. CIT has a $1 billion payment due in August. (Source: Yahoo! Finance) Click here to read the full article
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Minimum wage workers set to get a raise
The nation’s lowest-paid workers are getting a raise. On July 24, the federal minimum wage will increase from $6.55 to $7.25 an hour, the final stage of a three-year plan to raise the lowest pay rate allowable for hourly workers. Economists say the nearly 11 percent raise will provide a substantial boost in spending power for some workers but also could hurt some small businesses and job seekers because it will make the cost of hiring and retaining workers more expensive. Overall, however, many expect the economic effect to be minimal, in part because so few employers actually pay workers that low rate. (Source: MSNBC) Click here to read the full article
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Halliburton profit slides, but tops forecasts
Halliburton Co (HAL: Charts, News, Offers) posted a higher-than-expected profit on Monday, lifting its shares, but the world's second-largest oil services company warned that North American natural gas markets would stay weak throughout 2009. Natural gas prices in the United States have tumbled to less than half of year-ago levels, and the industry expects high inventories to curb spending by producers on new wells. "It seems that in North America, there's no place to hide," said Bernard Duroc-Danner, chief executive of rival Weatherford International Ltd, which posted a steeper-than-expected second-quarter profit drop on Monday. "Pricing was under severe pressure just about everywhere I could think of." (Source: Reuters) Click here to read the full article
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| Market Analysis |
Why Toxic Assets Are So Hard to Clean Up
Despite trillions of dollars of new government programs, one of the original causes of the financial crisis -- the toxic assets on bank balance sheets -- still persists and remains a serious impediment to economic recovery. Why are these toxic assets so difficult to deal with? We believe their sheer complexity is the core problem and that only increased transparency will unleash the market mechanisms needed to clean them up. The bulk of toxic assets are based on residential mortgage-backed securities (RMBS), in which thousands of mortgages were gathered into mortgage pools. The returns on these pools were then sliced into a hierarchy of "tranches" that were sold to investors as separate classes of securities. (Source: Wall Street Journal) Click here to read the full article
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Once-Trendy Crocs Could Be on Their Last Legs
The colorful foam clogs appeared in 2002, just as the country was recovering from a recession. Brash and bright, they were a cheap investment (about $30) that felt good and promised to last forever. Former president George W. Bush wore them. Aerosmith lead singer Steven Tyler wore them. Your grandma wore them. They roared along with the economy, mocked by the fashion world but selling 100 million pairs in seven years. Then the boom times went bust, and Crocs (CROX: Charts, News, Offers) went to the back of the closet. The company had expanded to meet demand, but financially pressed customers cut back. (Source: The Washington Post) Click here to read the full article
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Do Intel's numbers spell recovery?
Intel (INTC: Charts, News, Offers) ignited an intergalactic stock fest Tuesday night after winning at beat the number. That its earnings victory was pretty much an open secret on Wall Street before the announcement -- though the extent of smoke blowing and arm waving on the accompanying conference call wasn't -- didn't stop folks from celebrating as if it were one of the greatest achievements of the past couple of decades. Aside from a bigger-than-expected pop in revenue (due to an inventory snapback) and thus a rise in non-GAAP earnings, Intel had nothing that spectacular to report. (Source: MSN Money) Click here to read the full article
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