JP Morgan Revise Bear Stearn bid at US$ 10
Global Market
The Federal Reserve further expanded its role as a backstop to Wall Street dealers, setting up a new company to manage and sell $30 billion of Bear Stearns Cos. assets. In disclosing terms of a financing arrangement to speed JPMorgan Chase & Co.'s purchase of Bear Stearns, it hired BlackRock Inc. to oversee and sell the assets, which will be placed in a new company created by the central bank.
Fed trying to restore confidence to financial markets by averting a collapse of Bear Stearns, is pushing the central bank into new territory. It shows the Fed acting like a bank liquidator for Bear Stearns.
The Fed agreed to help JPMorgan acquire Bear Stearns after a run on Bear. In an effort to shore up other firms, it also agreed to become lender to all 20 primary dealers in Treasury notes.
The Fed would provide financing to JPMorgan for $30 billion of Bear Stearns assets. It also released terms of the funding managed by BlackRock. The Fed said JPMorgan will shoulder the first $1 billion of any losses, disclosed that the loan will be for 10 years and carry the 2.5 percent interest rate charged to commercial banks at the discount window.
Fed officials defended their role in the Bear Stearns rescue necessary to prevent a broader financial panic. Credit markets have been roiled by concerns that borrowers won't repay debt, and funding has dwindled for securities firms, hedge funds, and mortgage banks.
Still Fed may have overstepped and altered the role of the government in financial markets. Under the terms of the deal, the Fed will loan $29 billion, and JPMorgan will loan $1 billion, to a new company based in the U.S. state of Delaware.
The new company will send $30 billion to JPMorgan in exchange for some Bear Stearns assets. BlackRock has been hired by the central bank to manage and liquidate the assets to repay the loans, interest, and management expenses of the company. JPMorgan will be first to absorb losses on the assets. The structure resembles that of the Resolution Trust Corp. to dispose of the assets of insolvent savings and loans banks.
Stock Market
U.S. stocks rallied to the highest level as JPMorgan Chase & Co.'s increased bid for Bear Stearns Cos. and a gain in home sales boosted speculation the economy will recover from credit losses.
Bear Stearns nearly doubled after JPMorgan raised its offer to about $10 a share from $2.52. Tiffany & Co. climbed after better-than-forecast earnings. Monsanto Co. posted its steepest advance after UBS AG advised buying the shares.
The Standard & Poor's 500 Index added 20.37 points to 1,349.88. The Dow Jones Industrial Average increased 187.32 to 12,548.64. The Nasdaq Composite Index gained 68.64 to 2,326.75.
The S&P 500 trimmed its loss to 8.1 percent and posted its first gains of the month. The market rally after a report showed existing home sales climbed for the first time in seven months. Asian shares advanced, led by Taiwan's increase. All major European markets were closed for a holiday.
Yields on Treasury securities climbed, the dollar advanced against the yen, and gold fell as traders pared bets on additional interest-rate cuts by the Federal Reserve.
Bear Stearns climbed $5.29 to $11.25. JPMorgan will exchange stock worth about $10 for each Bear Stearns share. Under the terms of the deal the two firms struck the takeover price had been $2.52 a share.
Banks, brokerages and insurance companies in the S&P 500 rose 0.7 percent. Citigroup Inc. contributed the most to the gain 3.4 percent to $23.27.
Financial shares also gained after Federal Home Loan Banks were freed to increase their purchases of mortgage-backed bonds by about $150 billion.
Lehman Brothers Holdings Inc. fell $2.01 to $46.64 after being downgraded by analyst.
Tiffany rallied $4.05 to $42.65 after saying ongoing earnings were $1.27, six cents better than estimate.
Monsanto climbed $7.13 to $104.26 after analyst said results from the company businesses may help boost the shares to $125 in the next 12 months.
Sales of existing homes in the U.S. rose in February, easing concern credit restrictions and falling prices would hurt demand. Purchases increased 2.9 percent. Economists in a survey had forecast a decline of 0.8 percent.
D.R. Horton Inc. climbed $1.02 to $16.70. Home Depot climbed $1.20 to $29.26. Lowe's added $1.06 to $24.29.
CIT Group Inc. surged $3.40 to $13.03. They climbed after analyst said it may be a takeover target. Walgreen Co. added $1.83 to $38.61. Their second-quarter profit was bigger than analysts estimated because of increased sales of prescription drugs.
Best Buy Co. rose 86 cents to $43.27. They are benefiting from growth in sales of video-game software. Best Buy shares may climb to $52 once investors overcome fears of how the retailer will fare in a recession.
HCP Inc. increased $1.37 to $33.11. They will replace Commerce Bancorp Inc. in the S&P 500. Commerce Bancorp added 9 cents to $36.44.
Sirius Satellite Radio Inc. rose 25 cents to $3.15. Its proposed acquisition of XM Satellite Radio Holdings Inc. to create a single U.S. satellite-radio provider won U.S. antitrust clearance. XM Satellite Radio surged 15 percent to $13.79.
The S&P 500 climbed 3.2 percent last week after the Federal Reserve injected more cash into the banking system and Wall Street's largest securities firms reported earnings that topped estimates.
Currencies
The dollar fell against the euro on speculation industry reports will show U.S. consumer confidence dropped and a housing slump deepened.
The currency dropped again against the yen as analyst forecast the economy will suffer a recession. It also weakened against the Australian and New Zealand dollars, as a rally in Asian stocks encouraged investors to carry trade asset.
The dollar fell to $1.5547 per euro. It declined to 100.35 yen. The euro rose to 156.03 yen. The pound gained to $1.9934.
The MSCI Asia-Pacific index of shares rose 3.2 percent after JPMorgan Chase & Co. quadrupled its bid for Bear Stearns Cos. to about $10 a share, bolstering confidence in financial assets.
Before today's slump, the dollar had rebounded 5 cents from $1.5903 per euro on March 17. The Dollar Index traded on ICE Futures in New York fell to 72.405 today from 72.949.
The Conference Board confidence index fell to 73.5 from 75 in February. Home-price index fall 10.5 percent from a year earlier. Money supply growth is weakening the dollar and a stimulus to an economy entering a recession.
The yen rebounded as some traders bought to protect options if yen weaken beyond 101.
The euro extended gains before European Central Bank speech to Parliament's economic and monetary affairs committee tomorrow. ECB anchoring inflation expectations at highest priority after the central bank left interest rates at 4 percent.
Commodities
Oil
Crude oil fell on concern the slowing U.S. economy will curb demand and boost stockpiles. U.S. crude-oil supplies probably gained as imports rebounded and refiners performed seasonal maintenance.
Crude oil for May delivery declined as much as $1.20 to $99.66 a barrel. Yesterday, Nymex crude futures dropped 98 cents to settle at $100.86 a barrel.
Oil refiners schedule repairs and upgrades as heating-fuel use slows and before warmer weather spurs an increase in gasoline use.
Crude-oil supplies probably rose 1.5 million barrels from 311.8 million barrels. The Energy Department is scheduled to release its inventories on March 26. The report on March 19 showed that U.S. fuel demand was down 3.2 percent from a year earlier.
Brent crude for May settlement fell $1.16 to $98.70 a barrel. Yesterday, Brent crude settled at $99.86 a barrel.
Gasoline futures rose in New York yesterday on the expectation of lower inventories and weak processing profits cause refiners to limit their output of the fuel.
Gasoline for April delivery gained 0.58 cent to $2.6470 a gallon. Futures touched $2.7435.
The price difference between gasoline and crude oil turned negative, it happen only five time in 20 years. Analysts believe this is a signal to buy.
Gasoline inventories are 10 percent above average and are near the highest since February 1994. Gasoline stockpiles probably fell 1.55 million barrels from 232.5 million barrels the week before.
Gold
Gold rose in Asia enticed buying from jewelers and as the dollar fell on concern that U.S. consumer confidence dropped. Bullion often moves in the opposite direction to the dollar. Gold lost 8.3 percent last week as concern that a U.S.-led global economic slowdown will reduce consumption of raw materials. At the lowest, gold traded as low as $905.53 an ounce. Gold traded as high as $927.20 an ounce.
Analyst estimate that The Conference Board's confidence index declined to 73.5 from 75 in February. The figure would be the lowest since March 2003.
Gold fell earlier as a drop in crude oil reduced the appeal of bullion as a hedge against inflation. Oil in New York fell for a fourth day today on concern that the slowing U.S. economy will cut fuel demand.
Crude oil for May delivery declined 53 cents to $100.33 a barrel. Oil is still up 59 percent from a year ago. Gold for April delivery rose to $925.40 an ounce.
Hedge-fund managers and other large speculators reduced their net-long position in New York gold futures. Net positions fell by 4,334 contracts, or 2.2 percent.
Gold for February 2009 delivery on the Tokyo Commodity Exchange gained 53 yen to 3,030 yen a gram ($938 an ounce). June-delivery gold on the Shanghai Futures Exchange settle at 209.59 yuan a gram ($924 an ounce).
The Federal Reserve further expanded its role as a backstop to Wall Street dealers, setting up a new company to manage and sell $30 billion of Bear Stearns Cos. assets. In disclosing terms of a financing arrangement to speed JPMorgan Chase & Co.'s purchase of Bear Stearns, it hired BlackRock Inc. to oversee and sell the assets, which will be placed in a new company created by the central bank.
Fed trying to restore confidence to financial markets by averting a collapse of Bear Stearns, is pushing the central bank into new territory. It shows the Fed acting like a bank liquidator for Bear Stearns.
The Fed agreed to help JPMorgan acquire Bear Stearns after a run on Bear. In an effort to shore up other firms, it also agreed to become lender to all 20 primary dealers in Treasury notes.
The Fed would provide financing to JPMorgan for $30 billion of Bear Stearns assets. It also released terms of the funding managed by BlackRock. The Fed said JPMorgan will shoulder the first $1 billion of any losses, disclosed that the loan will be for 10 years and carry the 2.5 percent interest rate charged to commercial banks at the discount window.
Fed officials defended their role in the Bear Stearns rescue necessary to prevent a broader financial panic. Credit markets have been roiled by concerns that borrowers won't repay debt, and funding has dwindled for securities firms, hedge funds, and mortgage banks.
Still Fed may have overstepped and altered the role of the government in financial markets. Under the terms of the deal, the Fed will loan $29 billion, and JPMorgan will loan $1 billion, to a new company based in the U.S. state of Delaware.
The new company will send $30 billion to JPMorgan in exchange for some Bear Stearns assets. BlackRock has been hired by the central bank to manage and liquidate the assets to repay the loans, interest, and management expenses of the company. JPMorgan will be first to absorb losses on the assets. The structure resembles that of the Resolution Trust Corp. to dispose of the assets of insolvent savings and loans banks.
Stock Market
U.S. stocks rallied to the highest level as JPMorgan Chase & Co.'s increased bid for Bear Stearns Cos. and a gain in home sales boosted speculation the economy will recover from credit losses.
Bear Stearns nearly doubled after JPMorgan raised its offer to about $10 a share from $2.52. Tiffany & Co. climbed after better-than-forecast earnings. Monsanto Co. posted its steepest advance after UBS AG advised buying the shares.
The Standard & Poor's 500 Index added 20.37 points to 1,349.88. The Dow Jones Industrial Average increased 187.32 to 12,548.64. The Nasdaq Composite Index gained 68.64 to 2,326.75.
The S&P 500 trimmed its loss to 8.1 percent and posted its first gains of the month. The market rally after a report showed existing home sales climbed for the first time in seven months. Asian shares advanced, led by Taiwan's increase. All major European markets were closed for a holiday.
Yields on Treasury securities climbed, the dollar advanced against the yen, and gold fell as traders pared bets on additional interest-rate cuts by the Federal Reserve.
Bear Stearns climbed $5.29 to $11.25. JPMorgan will exchange stock worth about $10 for each Bear Stearns share. Under the terms of the deal the two firms struck the takeover price had been $2.52 a share.
Banks, brokerages and insurance companies in the S&P 500 rose 0.7 percent. Citigroup Inc. contributed the most to the gain 3.4 percent to $23.27.
Financial shares also gained after Federal Home Loan Banks were freed to increase their purchases of mortgage-backed bonds by about $150 billion.
Lehman Brothers Holdings Inc. fell $2.01 to $46.64 after being downgraded by analyst.
Tiffany rallied $4.05 to $42.65 after saying ongoing earnings were $1.27, six cents better than estimate.
Monsanto climbed $7.13 to $104.26 after analyst said results from the company businesses may help boost the shares to $125 in the next 12 months.
Sales of existing homes in the U.S. rose in February, easing concern credit restrictions and falling prices would hurt demand. Purchases increased 2.9 percent. Economists in a survey had forecast a decline of 0.8 percent.
D.R. Horton Inc. climbed $1.02 to $16.70. Home Depot climbed $1.20 to $29.26. Lowe's added $1.06 to $24.29.
CIT Group Inc. surged $3.40 to $13.03. They climbed after analyst said it may be a takeover target. Walgreen Co. added $1.83 to $38.61. Their second-quarter profit was bigger than analysts estimated because of increased sales of prescription drugs.
Best Buy Co. rose 86 cents to $43.27. They are benefiting from growth in sales of video-game software. Best Buy shares may climb to $52 once investors overcome fears of how the retailer will fare in a recession.
HCP Inc. increased $1.37 to $33.11. They will replace Commerce Bancorp Inc. in the S&P 500. Commerce Bancorp added 9 cents to $36.44.
Sirius Satellite Radio Inc. rose 25 cents to $3.15. Its proposed acquisition of XM Satellite Radio Holdings Inc. to create a single U.S. satellite-radio provider won U.S. antitrust clearance. XM Satellite Radio surged 15 percent to $13.79.
The S&P 500 climbed 3.2 percent last week after the Federal Reserve injected more cash into the banking system and Wall Street's largest securities firms reported earnings that topped estimates.
Currencies
The dollar fell against the euro on speculation industry reports will show U.S. consumer confidence dropped and a housing slump deepened.
The currency dropped again against the yen as analyst forecast the economy will suffer a recession. It also weakened against the Australian and New Zealand dollars, as a rally in Asian stocks encouraged investors to carry trade asset.
The dollar fell to $1.5547 per euro. It declined to 100.35 yen. The euro rose to 156.03 yen. The pound gained to $1.9934.
The MSCI Asia-Pacific index of shares rose 3.2 percent after JPMorgan Chase & Co. quadrupled its bid for Bear Stearns Cos. to about $10 a share, bolstering confidence in financial assets.
Before today's slump, the dollar had rebounded 5 cents from $1.5903 per euro on March 17. The Dollar Index traded on ICE Futures in New York fell to 72.405 today from 72.949.
The Conference Board confidence index fell to 73.5 from 75 in February. Home-price index fall 10.5 percent from a year earlier. Money supply growth is weakening the dollar and a stimulus to an economy entering a recession.
The yen rebounded as some traders bought to protect options if yen weaken beyond 101.
The euro extended gains before European Central Bank speech to Parliament's economic and monetary affairs committee tomorrow. ECB anchoring inflation expectations at highest priority after the central bank left interest rates at 4 percent.
Commodities
Oil
Crude oil fell on concern the slowing U.S. economy will curb demand and boost stockpiles. U.S. crude-oil supplies probably gained as imports rebounded and refiners performed seasonal maintenance.
Crude oil for May delivery declined as much as $1.20 to $99.66 a barrel. Yesterday, Nymex crude futures dropped 98 cents to settle at $100.86 a barrel.
Oil refiners schedule repairs and upgrades as heating-fuel use slows and before warmer weather spurs an increase in gasoline use.
Crude-oil supplies probably rose 1.5 million barrels from 311.8 million barrels. The Energy Department is scheduled to release its inventories on March 26. The report on March 19 showed that U.S. fuel demand was down 3.2 percent from a year earlier.
Brent crude for May settlement fell $1.16 to $98.70 a barrel. Yesterday, Brent crude settled at $99.86 a barrel.
Gasoline futures rose in New York yesterday on the expectation of lower inventories and weak processing profits cause refiners to limit their output of the fuel.
Gasoline for April delivery gained 0.58 cent to $2.6470 a gallon. Futures touched $2.7435.
The price difference between gasoline and crude oil turned negative, it happen only five time in 20 years. Analysts believe this is a signal to buy.
Gasoline inventories are 10 percent above average and are near the highest since February 1994. Gasoline stockpiles probably fell 1.55 million barrels from 232.5 million barrels the week before.
Gold
Gold rose in Asia enticed buying from jewelers and as the dollar fell on concern that U.S. consumer confidence dropped. Bullion often moves in the opposite direction to the dollar. Gold lost 8.3 percent last week as concern that a U.S.-led global economic slowdown will reduce consumption of raw materials. At the lowest, gold traded as low as $905.53 an ounce. Gold traded as high as $927.20 an ounce.
Analyst estimate that The Conference Board's confidence index declined to 73.5 from 75 in February. The figure would be the lowest since March 2003.
Gold fell earlier as a drop in crude oil reduced the appeal of bullion as a hedge against inflation. Oil in New York fell for a fourth day today on concern that the slowing U.S. economy will cut fuel demand.
Crude oil for May delivery declined 53 cents to $100.33 a barrel. Oil is still up 59 percent from a year ago. Gold for April delivery rose to $925.40 an ounce.
Hedge-fund managers and other large speculators reduced their net-long position in New York gold futures. Net positions fell by 4,334 contracts, or 2.2 percent.
Gold for February 2009 delivery on the Tokyo Commodity Exchange gained 53 yen to 3,030 yen a gram ($938 an ounce). June-delivery gold on the Shanghai Futures Exchange settle at 209.59 yuan a gram ($924 an ounce).
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