Stocks are striking a much-improved tone after Wednesday's high energy selloff, as investors await testimony this morning from Fed Chairman Ben Bernanke. Monthly chain store sales and some big earnings could also influence direction.
The financial sector continues to get pounded. General Motors reported a significant third-quarter loss, but there is a glimmer of hope in the pharmaceutical industry.
Stocks closed sharply lower as a probe of the home loan industry by New York's attorney general drew in the country's biggest mortgage finance companies and Washington Mutual warned the housing downturn would extend well into next year.
New York's expanding probe of the home mortgage industry hammered the stocks of Fannie Mae and Freddie Mac.
Washington Mutual, the largest U.S. savings and loan, said loan losses will mount as the housing slump persists through 2008.
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In addition to the realization that economic news would have to be really bad for the Fed to cut rates further, there are two problems with the markets today, both dealing with a change in perception on two key sectors--financials and energy.
Countrywide Financial Chief Executive Angelo Mozilo on Friday said the U.S. Securities and Exchange Commission has opened an informal inquiry into his stock sales, confirming previous reports, and that he and the company are cooperating.
A big question ahead of Friday trading is whether the "halo" around Microsoft's first quarter and other strong earnings reports will provide enough momentum to overpower the dark fears stalking credit and the financial sector.
Bank of America on Thursday said it will stop offering home mortgages through brokers by the end of the year, resulting in a loss of 700 jobs, so that it may focus on lending directly to consumers.
Futures trading up as Motorola beat expectations and guided upward while EMC was in line and both are up nicely pre-open. There's strength in Europe, strength in Asia, third Quarter GDP in China rose 11.5%. That was in line with expectations. Chinese stocks are the only major market down in Asia, down 5%, probably on worries that more rate hikes are likely.
The "kitchen sink" theory is out the window. There's a trust problem developing on the Street. Remember a few weeks ago traders drove up the stocks of companies like Citigroup, even though they did take very large losses for subprime and CDOs?
Stocks rallied late in the session to end a seesaw trading session higher as bargain hunters stepped in despite economic concerns and worries about global credit markets. "It seems like a little bit of a bounce back from Friday's Armageddon," said Mike Burnick, director of research at the Sovereign Society.
Worry about slowing economic growth and a new bout of credit fears ignited the global sell off in stocks which continues into the U.S. open. Wall Street was the first market to spiral downward in Friday's big sell off amid worries the U.S. sub prime mess will take longer to sweep away than expected and is fanning out into other types of credits.
Stocks ended mixed as Bank of America's earnings shortfall was countered by strong tech and healthcare earnings. "In the last few days there is more concern about this bleeding into the fourth quarter, with the Bank of America comments and housing having more of a negative impact on the consumer than maybe we've seen so far," said Alec Young, equity strategist at S&P.
You can hear the wings flapping in the Treasury market, as the big flight to safety trade that started yesterday continues. The dollar is skidding to new lows, and a bit of fear has returned to the street.
Stocks are struggling with familiar problems this morning: 1) The Yen has rallied against the dollar and other currencies, again reviving concerns about the yen carry trade unwinding; European equities are lower.
Technology has been a big lure in an otherwise fishy stock market this week.
Washington Mutual said third-quarter profit fell by 72 percent due to mounting losses and write-downs related to mortgages.
Citigroup said third-quarter profit fell 57 percent, hurt by losses and writedowns for subprime and leveraged loans, fixed-income trading and weakness in its consumer business.