|
| Weekly Wrap Up |
Purely by looking at the net change between Monday and Friday of last week, it actually appears to have been a decent, normal week for the stock markets. The major indexes ended mixed, with the Dow Jones down about 33 points, and the NYSE and NASDAQ up, 95 and 12 points respetively. However, if you look more closely, you will realize that it was a week with huge ups and downs. The markets started the week off with major losses: the Dow Jones fell over 500 points on Monday, the sixth biggest point loss it has ever experienced, and it's largest fall since the September 11th attacks in 2001. Monday's losses were prompted by news from major companies the financial industry, including Lehman Brothers (LEH: Charts, News, Offers) which announced that the company was filing for bankruptcy, and Merrill Lynch (MER: Charts, News, Offers) which announced that the company was being bought out by Bank of America (BAC: Charts, News, Offers). The markets gained back a small amount on Tuesday, but on Wednesday the markets tumbled again, with the Dow losing an additional 450 points, as another major financial company - AIG (AIG: Charts, News, Offers) - had to be bought out by the federal government. On Thursday and Friday, however, the markets turned around and recovered almost all of their losses, as investors were soothed by the government's announcment of a multi-billion dollar plan to aid the failing financial market. Midweek gold prices rose to almost $900 per ounce, before falling to $865. In addition, crude oil prices fell early in the week, but rose by the end of the week to $104 per barrel. More Market News
|
|
| Economic News |
The Federal Reserve held its key interest-rate target at 2% Tuesday, indicating that the central bank would rather continue its plan to fight than provide much-needed liquidity to damaged credit markets. The Federal Open Market Committee noted that strains in the financial markets have increased significantly and that labor markets have continued to weaken. Tight credit conditions, continued housing woes and some slowing in export growth should weigh on growth over the next few quarters. However, it reiterated its position that the economy will stay afloat with the initiatives already put in place. "Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth," the FOMC said in a statement. (Source: TheStreet) Full Story
|
The monthly premium for the vast majority of the elderly and disabled participating in Medicare will hold steady at $96.40 next year. It's the first time since 2000 that the charge for health coverage is not increasing. Premiums usually go up to reflect higher costs and demand for care projected for the coming year. Such increases will most certainly occur in 2009, but they will be offset when calculating the premiums by an adequate reserve in the Medicare Part B trust fund. That reserve gained $9.3 billion earlier this year after officials discovered money was inadvertently being drawn from Medicare Part B to cover hospice benefits. Health care costs have been rising much more quickly than overall inflation over the years. That trend indicates this year's break for beneficiaries is likely a blip. (Source: BusinessWeek) Full Story
|
Coming to the rescue of a bedrock of American investing, the Treasury Department and the Federal Reserve took three big steps Friday to shore up the $3.3 trillion U.S. money-market fund industry. Investors have been fleeing money-market funds after a week of chaos on Wall Street that included the bankruptcy of Lehman Brothers, an $85 billion government bailout of American International Group and a sweeping plan for the federal government to buy up financial companies' troubled mortgage debt. Money-market funds are typically a safe investment popular with American consumers and companies alike, but redemptions have severely strained fund families and global financial markets. In response, the Treasury said it would insure up to $50 billion in money-market fund investments at financial companies that pay a fee to participate in the program. (Source: CNN Money) Full Story
|
| Business News |
Bank of America (BAC: Charts, News, Offers) on Monday began adding another slice to its growing financial services empire, buying Merrill Lynch (MER: Charts, News, Offers) in a $50 billion deal that would create a bank that offers everything from fixed-income trading to credit card lending. It will rival Citigroup Inc. (C: Charts, News, Offers), the biggest U.S. bank in terms of assets. Bank of America Corp. said early Monday it would acquire Merrill Lynch in an all-stock transaction that should lift the uncertainty shrouding the investment bank since the start of the credit crisis over a year ago. Charlotte, N.C.-based Bank of America has the most deposits of any U.S. bank, while Merrill Lynch & Co. Inc. is the world's largest and most widely recognized brokerage. (Source: Yahoo! Finance) Full Story
|
Lehman Brothers (LEH: Charts, News, Offers) filed for Chapter 11 bankruptcy protection Monday morning, according to several published reports. The 158-year-old investment bank filed for Chapter 11 protection at 1:45 a.m. EDT in the Bankruptcy Court for the Southern District of New York, according to The Wall Street Journal. In a statement, Lehman said its board decided to file for Chapter 11 to "protect its assets and maximize value." Lehman said it plans to file certain motions so that it can continue to manage its operations. None of the broker-dealer subsidiaries or other subsidiaries of Lehman will be included in the filing and all of the broker-dealers will continue to operate, the company said. Lehman customers, including those of its Neuberger Berman subsidiary may continue to trade or take other actions on their accounts. (Source: TheStreet) Full Story
|
Sales of General Mills Inc. (GIS: Charts, News, Offers) products like Cheerios and Betty Crocker dessert mixes rose in the first quarter as more consumers abandoned pricier restaurants, but the increase wasn't enough to stave off high commodity costs. The Golden Valley, Minn.-based company said Wednesday that profit fell 4 percent during its fiscal first quarter despite the strong sales. Food makers are seeing their profits hurt by high costs for key ingredients like corn and oil. And consumers are seeing higher prices as companies try to make up the shortfall. With General Mills' expectation that input costs will be up 9 percent in fiscal 2009, grocery store prices won't be falling any time soon. But even with those higher prices, many shoppers are spending more of their food dollars in stores rather than at restaurants as they also grapple with the high cost of gas and other items. (Source: BusinessWeek) Full Story
|
|
| Technology Focus |
A stronger dollar could trim Oracle's (ORCL: Charts, News, Offers) growth during the coming quarter. On the upside, Oracle's big improvement in operating margins should provide a buffer against slower revenue growth going forward. On Thursday, Oracle reported year-over-year revenue growth of 18% to $5.42 billion for the first fiscal quarter ended in August. The Redwood Shores, Calif. Company's operating margin, excluding special charges, rose 350 basis points year over year to 40.1%. That should provide a cushion against the recent strengthening of the dollar. President Safra Catz projected that today's currency exchange rates could take 3 percentage points off the top of revenue growth in the second quarter. Oracle projected second-quarter top line growth of 12% to 15% in constant currency, implying revenue of $6.01 billion to $6.17 billion, excluding special items. (Source: TheStreet) Full Story
|
Dell Inc. (DELL: Charts, News, Offers) shares fell to their lowest point in seven years Tuesday after the personal computer company highlighted what it sees as a slowdown in investment technology spending in the U.S. and abroad.
In keeping with its practice of not giving a financial forecast, Dell didn't spell out any specific earnings or revenue outlook for the quarter or its fiscal year. Dell had warned investors in its last earnings report that it was seeing "conservatism" in tech spending in the U.S., Europe and Asia.
But the company issued a statement before the market opened that described "further softening in global end-user demand" in its current, fiscal third quarter.
That was enough to spook investors, who sent Dell's shares down $2.01, or more than 11%, to close at $15.98. (Source: MarketWatch) Full Story
|
When Hewlett-Packard Co. (HPQ: Charts, News, Offers) announced five months ago it was acquiring technology-services firm Electronic Data Systems Corp., Wall Street expected big layoffs from the combined company.
But the size of the job cuts -- 24,600 jobs over the next three years, nearly 8 percent of HP's 320,000-employee work force -- came as a shock when HP laid out its plans Monday for integrating EDS.
The surprise could provide a lift for Palo Alto-based HP's stock price Tuesday because of the potential cost savings from the dramatic reduction in staff and HP Chief Executive Mark Hurd's track record for wringing more profits out of lean operations. (Source: Yahoo Finance) Full Story
|
| Your Money |
Money market funds have been among the few places that investors could put their cash and sleep peacefully.
At the moment, that is not necessarily true.
On Tuesday, the Reserve Primary Fund, a giant money market fund whose parent helped invent that investment, said its customers would lose money. Instead of each share being worth a dollar for every dollar invested, it said its customers' shares were worth only 97 cents. In Wall Street parlance, it "broke the buck," a rare occurrence.
So far, it appears that no other money market funds have fallen below a dollar a share. And other money market managers have hastened to reassure investors that their money is safe. But the Primary Fund’s announcement did raise this question: What, in today’s world, is truly safe? (Source: Yahoo Finance) Full Story
|
|
|
|
| Our Sites |
|---|
InvestorGuide
InvestorWords
BusinessDictionary |
|
| Trivia Question |
|---|
In economics, what is the Bracket Creep?
(answer below) |
|
| Market Overview |
|---|
| DJIA |
11,388.44 |
-33.55 |
| S&P |
1,254.99 |
+3.30 |
| NYSE |
8,187.13 |
+95.29 |
| NASDAQ |
2,273.90 |
+12.63 |
| 10Yr |
3.769% |
+0.04 |
| Dollar |
77.94 |
-1.03 |
| More market statistics |
|
|
| Stock Research |
|---|
|
| View personal research page |
|
|
|
|
| Daily Newsletters |
|---|
| September 19, 2008 |
| September 18, 2008 |
| September 17, 2008 |
| September 16, 2008 |
| September 15, 2008 |
|
| Last Week |
|---|
| September 8-12 |
|
| Trivia Answer |
|---|
| It is a phenomenon where rising incomes push individuals into higher tax brackets, leaving them worse off with lower real disposable incomes. |
|
