Greenspan to answer increasing criticism for his past policies
Global Market
Alan Greenspan said the drop in U.S. home prices will probably end at early next year as the number of houses on the market diminishes. He added that the extent of damage from the the subprime-mortgage market won't be known for months and the credit crisis is the worst in 50 years.
The yield on the 10-year Treasury note fell to 3.53 percent. Fed have highlighted declining home prices as a major risk that may further hurt household wealth and consumer spending. The health of the U.S. housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities. The median price of an existing home was dropped 8.7 percent.
Greenspan said inflation will be contained during the current slowdown before picking up as the world economy recovers. He has come under increasing criticism for his past policies as subprime-loan meltdown spread into a broader financial crisis. Some argues the former Fed chief helped inflate stock and home prices. In response to the bursting of the Internet and technology bubble and the Sept. 11 terrorist attacks, Greenspan lowered the Fed's rate from 6.5 percent to 1.75 percent, then reduced in 2003 to 1 percent.
He left the rate low before starting to raise borrowing costs, leaving it Bernanke to decide when to stop. Some Fed critics say rates were too low for too long, encouraging the easy credit that helped inflate a housing bubble and has now returned to burn investors.
Bernanke told that the U.S. economy may contract and he acknowledged the chance of a recession. Later today, the Fed releases minutes of its March 18 meeting.
Stock Market
U.S. stocks rose as speculation Washington Mutual Inc. will get a $5 billion investment overshadowed slowing economic growth will hurt technology company earnings.
Washington Mutual rallied as they negotiated for a cash infusion. Exxon Mobil Corp. gained as crude oil jumped above $109 a barrel. Speculation that memory chip demand will weaken and Alcoa Inc. would report profit below forecasts pared the Dow Jones Industrial Average.
The Standard & Poor's 500 Index climbed 2.14 to 1,372.54. The Dow average added 3.01 to 12,612.43. The Nasdaq Composite Index slipped 6.15 to 2,364.83.
Washington Mutual gained $2.98 to $13.15. Washington Mutual needs the funds after home-mortgage writedowns and loan losses. Negotiations are at an advanced stage.
Financial shares also advanced after analyst raised European banks to neutral. Analyst saying credit markets are past their worst and banks have acknowledged the extent of the crisis. Citigroup gained 52 cents to $24.60. Bank of America Corp. added 9 cents to $39.50.
Alcoa Inc. fell $1.56 to $37.44 on speculation their earnings would trail analyst estimates. Alcoa posted profit of 44 cents a share, less than estimate projections. They said higher energy costs and a weaker dollar caused profit to tumble.
Earnings at S&P 500 companies probably fell 11.3 percent on average. That would be the third consecutive quarterly decline.
Exxon added 18 cents to $88.92 and Chevron Corp. gained 22 cents to $88.27. Crude oil rose and gasoline climbed to a record as investors looking for an inflation hedge and higher returns flocked to commodity markets.
Stocks pared their gains after report said that there is no doubt that the economy has slowed down dramatically and risks remain in housing and capital markets.
Dillard's Inc. dropped $1.44 to $20.59. Family Dollar Stores Inc. lost 62 cents to $19.76.
Tesoro Corp. is dropping $2.06 to $29.19. Analyst lowered his rating to neutral. It reflects the challenging refining environment expected to persist in 2008 because of record crude oil prices, weak gasoline demand and the introduction of ethanol to regional markets.
Broadcom Corp. dropped 73 cents to $20.68 after analyst said sales for the industry will rise less than forecast as consumer spending slows.
U.S. Steel Corp. gained $3.02 to $143.72 after being upgraded to overweight as increasing steel prices will boost earnings. The same condition apply to Steel Dynamics Inc. as overweight coverage, while Nucor Corp. to equal-weight. Steel Dynamics rose $1.45 to $37.38. Nucor added 74 cents to $71.28.
General Motors Corp. had gain on speculation a supplier's strike may end. Meanwhile Ford Motor Co. advanced after analyst said the stock may double. GM added 43 cents to $21.01 and Ford rose 24 cents to $6.73.
Apple Inc. added $2.81 to $155.89. Analyst raised their grade to overweight. Yahoo! Inc., fell 66 cents to $27.70 after Microsoft threatened to cut its bid if directors fail to give in soon. If Yahoo's directors refuse to negotiate a deal, Microsoft plans to nominate a board slate and take its case to investors. The deal's value might decline if Microsoft take those steps. Microsoft bid was unchanged at $29.16.
Currencies
The euro traded stronger against the dollar on speculation ECB signal to keep interest rates on hold as the Federal Reserve reduces borrowing costs.
The euro climbed to $1.5798. It gained to 161.73 yen. The dollar was at 101.99 yen.
The U.S. currency declined to 1.0081 Swiss francs, after Alan Greenspan told that the extent of losses in the subprime-mortgage market won't be known for months. U.S. pending home sales fell 1 percent.
The pound fell on speculation the Bank of England will lower interest rates as U.K. economic growth slows. British home prices tumbled 2.5 percent. The pound traded 79.75 pence per euro. The ECB will keep its rate at 4 percent, compared with the Fed's rate of 2.25 percent.
Bank of America Corp. predicted the ECB will lower rates in September, a change from previous forecast for cuts in July and September. The euro may advance to 163.10 yen and should it break through 162.30.
Losses in the dollar may be limited by speculation minutes of the Fed's March 18 meeting due to be published today will show Fed are concerned about higher prices. The Fed lowered rates to 2.25 percent at the meeting and said that uncertainty about the inflation outlook had increased. They preferred less aggressive action.
The yen fell on speculation Japan economy is weakening. Forecast believe that The central bank will keep its rate unchanged.
Analyst forecast that The Bank of England will cut its rate to 5 percent. Analyst said policy maker is overestimating economic growth and tax receipts because they don't give weight to the risk from financial-market turmoil.
Commodities
Oil
Crude oil traded around $109 a barrel as investors looked to commodity markets for higher returns. Commodity Index gained 1.3 percent to 1470.86. Crude oil for May delivery was at $109.16 a barrel. Brent crude for May settlement was at $106.91 a barrel.
U.S. crude oil supplies probably climbed because of higher imports and reduced refinery operations amid low processing profits. Crude oil inventories advanced 2.5 million barrels from 319.2 million barrels. Gasoline inventories probably dropped 2.75 million barrels from 224.7 million barrels. Supplies of distillate fuels fell 1.5 million barrels from the prior week.
Refineries may have operated at 83 percent of their capacity. The price difference between gasoline contract and crude oil futures is at $7.82 a barrel, much less than last year margin.
Gold
Gold gained as the dollar declined against the euro and crude oil traded within $3 of its record, boosting the appeal of the precious metal.
The U.S. currency fell against the euro on speculation the European Central Bank's focus on curbing inflation will widen interest-rate advantage. Crude oil was little changed as investors looked to commodity markets for higher returns.
Bullion for immediate delivery gained $4.60 to $924.60 an ounce. Silver gained to $18.105 an ounce. The euro rose 0.5 percent to $1.5789. Analyst forecast that The ECB will keep its rate at 4 percent after an April 10 meeting.
Crude oil for May delivery traded at $108.85 a barrel. Gold for June traded at $927.80 an ounce.
Alan Greenspan said the drop in U.S. home prices will probably end at early next year as the number of houses on the market diminishes. He added that the extent of damage from the the subprime-mortgage market won't be known for months and the credit crisis is the worst in 50 years.
The yield on the 10-year Treasury note fell to 3.53 percent. Fed have highlighted declining home prices as a major risk that may further hurt household wealth and consumer spending. The health of the U.S. housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities. The median price of an existing home was dropped 8.7 percent.
Greenspan said inflation will be contained during the current slowdown before picking up as the world economy recovers. He has come under increasing criticism for his past policies as subprime-loan meltdown spread into a broader financial crisis. Some argues the former Fed chief helped inflate stock and home prices. In response to the bursting of the Internet and technology bubble and the Sept. 11 terrorist attacks, Greenspan lowered the Fed's rate from 6.5 percent to 1.75 percent, then reduced in 2003 to 1 percent.
He left the rate low before starting to raise borrowing costs, leaving it Bernanke to decide when to stop. Some Fed critics say rates were too low for too long, encouraging the easy credit that helped inflate a housing bubble and has now returned to burn investors.
Bernanke told that the U.S. economy may contract and he acknowledged the chance of a recession. Later today, the Fed releases minutes of its March 18 meeting.
Stock Market
U.S. stocks rose as speculation Washington Mutual Inc. will get a $5 billion investment overshadowed slowing economic growth will hurt technology company earnings.
Washington Mutual rallied as they negotiated for a cash infusion. Exxon Mobil Corp. gained as crude oil jumped above $109 a barrel. Speculation that memory chip demand will weaken and Alcoa Inc. would report profit below forecasts pared the Dow Jones Industrial Average.
The Standard & Poor's 500 Index climbed 2.14 to 1,372.54. The Dow average added 3.01 to 12,612.43. The Nasdaq Composite Index slipped 6.15 to 2,364.83.
Washington Mutual gained $2.98 to $13.15. Washington Mutual needs the funds after home-mortgage writedowns and loan losses. Negotiations are at an advanced stage.
Financial shares also advanced after analyst raised European banks to neutral. Analyst saying credit markets are past their worst and banks have acknowledged the extent of the crisis. Citigroup gained 52 cents to $24.60. Bank of America Corp. added 9 cents to $39.50.
Alcoa Inc. fell $1.56 to $37.44 on speculation their earnings would trail analyst estimates. Alcoa posted profit of 44 cents a share, less than estimate projections. They said higher energy costs and a weaker dollar caused profit to tumble.
Earnings at S&P 500 companies probably fell 11.3 percent on average. That would be the third consecutive quarterly decline.
Exxon added 18 cents to $88.92 and Chevron Corp. gained 22 cents to $88.27. Crude oil rose and gasoline climbed to a record as investors looking for an inflation hedge and higher returns flocked to commodity markets.
Stocks pared their gains after report said that there is no doubt that the economy has slowed down dramatically and risks remain in housing and capital markets.
Dillard's Inc. dropped $1.44 to $20.59. Family Dollar Stores Inc. lost 62 cents to $19.76.
Tesoro Corp. is dropping $2.06 to $29.19. Analyst lowered his rating to neutral. It reflects the challenging refining environment expected to persist in 2008 because of record crude oil prices, weak gasoline demand and the introduction of ethanol to regional markets.
Broadcom Corp. dropped 73 cents to $20.68 after analyst said sales for the industry will rise less than forecast as consumer spending slows.
U.S. Steel Corp. gained $3.02 to $143.72 after being upgraded to overweight as increasing steel prices will boost earnings. The same condition apply to Steel Dynamics Inc. as overweight coverage, while Nucor Corp. to equal-weight. Steel Dynamics rose $1.45 to $37.38. Nucor added 74 cents to $71.28.
General Motors Corp. had gain on speculation a supplier's strike may end. Meanwhile Ford Motor Co. advanced after analyst said the stock may double. GM added 43 cents to $21.01 and Ford rose 24 cents to $6.73.
Apple Inc. added $2.81 to $155.89. Analyst raised their grade to overweight. Yahoo! Inc., fell 66 cents to $27.70 after Microsoft threatened to cut its bid if directors fail to give in soon. If Yahoo's directors refuse to negotiate a deal, Microsoft plans to nominate a board slate and take its case to investors. The deal's value might decline if Microsoft take those steps. Microsoft bid was unchanged at $29.16.
Currencies
The euro traded stronger against the dollar on speculation ECB signal to keep interest rates on hold as the Federal Reserve reduces borrowing costs.
The euro climbed to $1.5798. It gained to 161.73 yen. The dollar was at 101.99 yen.
The U.S. currency declined to 1.0081 Swiss francs, after Alan Greenspan told that the extent of losses in the subprime-mortgage market won't be known for months. U.S. pending home sales fell 1 percent.
The pound fell on speculation the Bank of England will lower interest rates as U.K. economic growth slows. British home prices tumbled 2.5 percent. The pound traded 79.75 pence per euro. The ECB will keep its rate at 4 percent, compared with the Fed's rate of 2.25 percent.
Bank of America Corp. predicted the ECB will lower rates in September, a change from previous forecast for cuts in July and September. The euro may advance to 163.10 yen and should it break through 162.30.
Losses in the dollar may be limited by speculation minutes of the Fed's March 18 meeting due to be published today will show Fed are concerned about higher prices. The Fed lowered rates to 2.25 percent at the meeting and said that uncertainty about the inflation outlook had increased. They preferred less aggressive action.
The yen fell on speculation Japan economy is weakening. Forecast believe that The central bank will keep its rate unchanged.
Analyst forecast that The Bank of England will cut its rate to 5 percent. Analyst said policy maker is overestimating economic growth and tax receipts because they don't give weight to the risk from financial-market turmoil.
Commodities
Oil
Crude oil traded around $109 a barrel as investors looked to commodity markets for higher returns. Commodity Index gained 1.3 percent to 1470.86. Crude oil for May delivery was at $109.16 a barrel. Brent crude for May settlement was at $106.91 a barrel.
U.S. crude oil supplies probably climbed because of higher imports and reduced refinery operations amid low processing profits. Crude oil inventories advanced 2.5 million barrels from 319.2 million barrels. Gasoline inventories probably dropped 2.75 million barrels from 224.7 million barrels. Supplies of distillate fuels fell 1.5 million barrels from the prior week.
Refineries may have operated at 83 percent of their capacity. The price difference between gasoline contract and crude oil futures is at $7.82 a barrel, much less than last year margin.
Gold
Gold gained as the dollar declined against the euro and crude oil traded within $3 of its record, boosting the appeal of the precious metal.
The U.S. currency fell against the euro on speculation the European Central Bank's focus on curbing inflation will widen interest-rate advantage. Crude oil was little changed as investors looked to commodity markets for higher returns.
Bullion for immediate delivery gained $4.60 to $924.60 an ounce. Silver gained to $18.105 an ounce. The euro rose 0.5 percent to $1.5789. Analyst forecast that The ECB will keep its rate at 4 percent after an April 10 meeting.
Crude oil for May delivery traded at $108.85 a barrel. Gold for June traded at $927.80 an ounce.
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