More criticism on Fed action, IMF plan to sell it gold reserve.
Global Market
Federal Reserve anticipated that the economy would shrink with some concerned about a prolonged and severe economic downturn. They also found sign that housing markets have reached a bottom. Traders increased bets that the Fed will lower its interest rate half a point in the next meeting. Fed invoked rarely used authority to provide emergency financing in order to limit the impact on the broader economy. The Fed's March actions are definitely a major point of our understanding in the role of the lender-of-last- resort in modern markets.
Fed economists told that they had revised down their forecast to show a contraction in this year first half and a slow rise in the second half. In 2009, they projected growth above the economy's long-term potential pace.
The Fed took three steps in March to help offset money market constraints. First they announced to expand auctions of funds to commercial banks. Then they give favor to swap $200 billion of Treasuries out in exchange for mortgage securities. It could set a precedent to raise expectations of future actions in the future. Then they Fed reduced the premium on direct loans to banks. At last they approved financing Bear Stearns assets to facilitate the merger with JPMorgan Chase & Co.
The Fed's preferred inflation measure rose 2 percent for the next year period.
Paul Volcker questioned decision to rescue Bear Stearns Cos., he saying it was at the very edge of its legal authority. He had criticism Fed for allowed excesses of subprime mortgages to spread wider.
Lawmakers also questioned the plan to subsidize Wall Street while the goverment resists to assist homeowners in housing crisis.
Volcker said the financial system failed the test of the marketplace and we don't have to predict crisis, we already in crisis.''
Stock Market
U.S. stocks fell after signs of quarterly earnings disappointed investors, Washington Mutual Inc. slashed its dividend and Federal Reserve warned of a prolonged recession.
Washington Mutual led financial shares drop after they cut 93 percent payout following a $1.1 billion loss. Lennar Corp. led declines in Standard & Poor's homebuilder index after pending home sales fell more than forecast. Advanced Micro Devices Inc. retreated on a 22 percent slump in first-quarter sales.
The S&P 500 lost 7 points to 1,365.54. The Dow Jones Industrial Average slipped 35.99 to 12,576.44. The Nasdaq Composite Index declined 16.07 to 2,348.76.
Alcoa Inc. reports their first-quarter earnings with a worse- than-forecast. Analyst concerns that profits are shrinking. Fed thought an economic contraction was likely and they concerned about prolonged and severe economic downturn. Peabody Energy Corp. led energy companies to advance and raw-material producers rose.
Washington Mutual dropping $1.34 to $11.81. Their quarterly dividend slashed to 1 cent from 15 cents in order to preserving $490 million of capital annually and announced 3,000 job cuts. The company got loan from investors led by TPG Inc. after subprime market losses ate up capital and lower their market value. They sold 176 million shares at $8.75 a piece and $5.5 billion in convertible preferred shares.
Advanced Micro Devices slid 31 cents to $6.03 after their first-quarter revenue fell to $1.5 billion and announced plans to cut 10 percent of its staff. The decline may indicate they are losing market share to Intel Corp.
Homebuilders is falling 4.3 percent. Lennar lost $1.81 to $20. Pulte Homes Inc. decreased 92 cents to $14.94.
The number of contract to buy previously owned homes in US declined more than forecast, it is a sign that the U.S. real-estate still in trouble and led to recession. It decreased 1.9 percent to 84.6 while analyst had forecast a drop of 1 percent.
Alan Greenspan said the drop in U.S. home prices will probably end well before next year as the number of houses on the market diminishes, aiding an economic rebound. He added that the extent of damage from the collapse of subprime market won't be known for months and described the worst credit contraction.
Alcoa slipped 26 cents to $37.18. Their first-quarter profit tumbled on surging energy costs, a weaker U.S. dollar and lower metal prices. Profit was 44 cents a share, less than the 50-cent analyst estimate.
Intel Corp. lost 67 cents to $21.08. Their share-price forecast and 2008 profit estimates cut by analyst.
Novellus Systems Inc. slid $1.93 to $21.88. Their earnings will be lower than their prediction. Net income will be 15 to 17 cents a share, compared with their forecast of 21 to 24 cents. Meanwhile analysts had forecast 20 cents.
Fannie Mae slipped 85 cents to $29 and Freddie Mac lost $1.14 to $25.46. Lehman Brothers estimated that the stocks will soar to $45, while Goldman Sachs forecast that the shares will tumble to $16. Lehman analyst said the companies have reached inflection point and boosting the shares to overweight. Goldman Sachs analysts reiterated their sell recommendation on predicting credit losses will increase rapidly.
Financial shares also fell after Morgan Stanley said the credit crisis will last longer as it spreads to commercial real estate, European subprime holdings and U.S. midsized banks.
The International Monetary Fund said losses from the U.S. mortgage crisis may approach $1 trillion, citing a collective failure to predict the breadth of the crisis.
Peabody Energy added $2.93 to $59.92. They gained on optimism that a shortage of coal in China may bolster prices.
Citrix Systems Inc. is gaining $2.30 to $33.14. Analyst said Citrix may see substantial growth on virtualization market.
Health insurers gained after the government boosted the base payments on health plans for the elderly. Humana Inc. advanced to $45.20. Coventry Health Care Inc. added to $41.99. WellPoint Inc. increased to $46.57. UnitedHealth Group Inc. rose to $38.08.
Currencies
The dollar fall against the euro after minutes of the Fed meeting showed Fed anticipated a contraction. Fed indicated their concern about prolonged and severe economic downturn. The pound weakened against major currencies after report said that housing prices drop to the lowest level.
The dollar was little changed at $1.5708 per euro. The pound traded at 79.77 pence per euro. Sterling traded at $1.9696. The U.S. currency and the euro traded at 102.66 yen and 161.28 yen.
The dollar has risen against the euro and the yen on eased concern credit market crisis will deepen and a drop in the yield of European government debt over Treasuries. Euro struggled to maintain momentum against the dollar after rose to $1.5798.
Fed saw indication that the stabilization in housing markets had begun. It was a major source of uncertainty in their economic outlook.
Analyst predict that ECB will hold the rate steady at 4 percent. ECB said the current monetary- policy stance will help curb inflation.
The pound weakened after the U.K. housing report raised speculation that the Bank of England will reduce the benchmark lending rate. British house prices dropped as the seizure in credit markets forced banks to pull mortgage offers.
Alan Greenspan said that the drop in U.S. home prices will probably end this year. Meanwhile Paul Volcker said that US is in dollar crisis.
The G-7 are unlikely to buy or sell currencies to prop up the dollar.
Commodities
Oil
Crude oil was little changed as the U.S. government predicted a decline in the country's fuel demand. Surging oil prices and halted economy will drop gasoline consumption in summer. U.S. oil supplies probably rose last week.
Crude oil for May delivery rose 18 cents to $108.68 a barrel. Futures fell 59 cents to settle at $108.50 a barrel.
Crude-oil inventories may advanced 2.5 million barrels from 319.2 million barrels. The weekly report on US oil inventories will be release today.
Brent crude for May settlement fell 80 cents to $106.34 a barrel. The contract rose $2.24 to settle at $107.14 a barrel.
US gasoline demand fell as prices rose. Consumers purchased an average 9.04 million barrels of gasoline a day, down from 9.71 million last year. Average pump price for regular gasoline rose 3 cents to $3.30 a gallon. Average crude oil price is forecast at $100.61 a barrel.
Gold
Gold fell on speculation that the U.S. currency will strengthen. Silver also declined. The dollar is climbing 0.2 percent against all major currencies. Gold futures for June delivery fell $8.80 to $918 an ounce. Silver futures for May delivery tumbled 41.2 cents to $17.708 an ounce. The euro traded $1.5675.
The International Monetary Fund's board approved a plan to sell 403.3 metric tons of gold to cover financial deficit. The proposal still needs the approval of the U.S. Congress.
The structure of the sales would follow Central Bank Gold Agreement, which limits transactions to 500 metric tons each year. Analyst said the market will absorb that gold with no problem.
Federal Reserve anticipated that the economy would shrink with some concerned about a prolonged and severe economic downturn. They also found sign that housing markets have reached a bottom. Traders increased bets that the Fed will lower its interest rate half a point in the next meeting. Fed invoked rarely used authority to provide emergency financing in order to limit the impact on the broader economy. The Fed's March actions are definitely a major point of our understanding in the role of the lender-of-last- resort in modern markets.
Fed economists told that they had revised down their forecast to show a contraction in this year first half and a slow rise in the second half. In 2009, they projected growth above the economy's long-term potential pace.
The Fed took three steps in March to help offset money market constraints. First they announced to expand auctions of funds to commercial banks. Then they give favor to swap $200 billion of Treasuries out in exchange for mortgage securities. It could set a precedent to raise expectations of future actions in the future. Then they Fed reduced the premium on direct loans to banks. At last they approved financing Bear Stearns assets to facilitate the merger with JPMorgan Chase & Co.
The Fed's preferred inflation measure rose 2 percent for the next year period.
Paul Volcker questioned decision to rescue Bear Stearns Cos., he saying it was at the very edge of its legal authority. He had criticism Fed for allowed excesses of subprime mortgages to spread wider.
Lawmakers also questioned the plan to subsidize Wall Street while the goverment resists to assist homeowners in housing crisis.
Volcker said the financial system failed the test of the marketplace and we don't have to predict crisis, we already in crisis.''
Stock Market
U.S. stocks fell after signs of quarterly earnings disappointed investors, Washington Mutual Inc. slashed its dividend and Federal Reserve warned of a prolonged recession.
Washington Mutual led financial shares drop after they cut 93 percent payout following a $1.1 billion loss. Lennar Corp. led declines in Standard & Poor's homebuilder index after pending home sales fell more than forecast. Advanced Micro Devices Inc. retreated on a 22 percent slump in first-quarter sales.
The S&P 500 lost 7 points to 1,365.54. The Dow Jones Industrial Average slipped 35.99 to 12,576.44. The Nasdaq Composite Index declined 16.07 to 2,348.76.
Alcoa Inc. reports their first-quarter earnings with a worse- than-forecast. Analyst concerns that profits are shrinking. Fed thought an economic contraction was likely and they concerned about prolonged and severe economic downturn. Peabody Energy Corp. led energy companies to advance and raw-material producers rose.
Washington Mutual dropping $1.34 to $11.81. Their quarterly dividend slashed to 1 cent from 15 cents in order to preserving $490 million of capital annually and announced 3,000 job cuts. The company got loan from investors led by TPG Inc. after subprime market losses ate up capital and lower their market value. They sold 176 million shares at $8.75 a piece and $5.5 billion in convertible preferred shares.
Advanced Micro Devices slid 31 cents to $6.03 after their first-quarter revenue fell to $1.5 billion and announced plans to cut 10 percent of its staff. The decline may indicate they are losing market share to Intel Corp.
Homebuilders is falling 4.3 percent. Lennar lost $1.81 to $20. Pulte Homes Inc. decreased 92 cents to $14.94.
The number of contract to buy previously owned homes in US declined more than forecast, it is a sign that the U.S. real-estate still in trouble and led to recession. It decreased 1.9 percent to 84.6 while analyst had forecast a drop of 1 percent.
Alan Greenspan said the drop in U.S. home prices will probably end well before next year as the number of houses on the market diminishes, aiding an economic rebound. He added that the extent of damage from the collapse of subprime market won't be known for months and described the worst credit contraction.
Alcoa slipped 26 cents to $37.18. Their first-quarter profit tumbled on surging energy costs, a weaker U.S. dollar and lower metal prices. Profit was 44 cents a share, less than the 50-cent analyst estimate.
Intel Corp. lost 67 cents to $21.08. Their share-price forecast and 2008 profit estimates cut by analyst.
Novellus Systems Inc. slid $1.93 to $21.88. Their earnings will be lower than their prediction. Net income will be 15 to 17 cents a share, compared with their forecast of 21 to 24 cents. Meanwhile analysts had forecast 20 cents.
Fannie Mae slipped 85 cents to $29 and Freddie Mac lost $1.14 to $25.46. Lehman Brothers estimated that the stocks will soar to $45, while Goldman Sachs forecast that the shares will tumble to $16. Lehman analyst said the companies have reached inflection point and boosting the shares to overweight. Goldman Sachs analysts reiterated their sell recommendation on predicting credit losses will increase rapidly.
Financial shares also fell after Morgan Stanley said the credit crisis will last longer as it spreads to commercial real estate, European subprime holdings and U.S. midsized banks.
The International Monetary Fund said losses from the U.S. mortgage crisis may approach $1 trillion, citing a collective failure to predict the breadth of the crisis.
Peabody Energy added $2.93 to $59.92. They gained on optimism that a shortage of coal in China may bolster prices.
Citrix Systems Inc. is gaining $2.30 to $33.14. Analyst said Citrix may see substantial growth on virtualization market.
Health insurers gained after the government boosted the base payments on health plans for the elderly. Humana Inc. advanced to $45.20. Coventry Health Care Inc. added to $41.99. WellPoint Inc. increased to $46.57. UnitedHealth Group Inc. rose to $38.08.
Currencies
The dollar fall against the euro after minutes of the Fed meeting showed Fed anticipated a contraction. Fed indicated their concern about prolonged and severe economic downturn. The pound weakened against major currencies after report said that housing prices drop to the lowest level.
The dollar was little changed at $1.5708 per euro. The pound traded at 79.77 pence per euro. Sterling traded at $1.9696. The U.S. currency and the euro traded at 102.66 yen and 161.28 yen.
The dollar has risen against the euro and the yen on eased concern credit market crisis will deepen and a drop in the yield of European government debt over Treasuries. Euro struggled to maintain momentum against the dollar after rose to $1.5798.
Fed saw indication that the stabilization in housing markets had begun. It was a major source of uncertainty in their economic outlook.
Analyst predict that ECB will hold the rate steady at 4 percent. ECB said the current monetary- policy stance will help curb inflation.
The pound weakened after the U.K. housing report raised speculation that the Bank of England will reduce the benchmark lending rate. British house prices dropped as the seizure in credit markets forced banks to pull mortgage offers.
Alan Greenspan said that the drop in U.S. home prices will probably end this year. Meanwhile Paul Volcker said that US is in dollar crisis.
The G-7 are unlikely to buy or sell currencies to prop up the dollar.
Commodities
Oil
Crude oil was little changed as the U.S. government predicted a decline in the country's fuel demand. Surging oil prices and halted economy will drop gasoline consumption in summer. U.S. oil supplies probably rose last week.
Crude oil for May delivery rose 18 cents to $108.68 a barrel. Futures fell 59 cents to settle at $108.50 a barrel.
Crude-oil inventories may advanced 2.5 million barrels from 319.2 million barrels. The weekly report on US oil inventories will be release today.
Brent crude for May settlement fell 80 cents to $106.34 a barrel. The contract rose $2.24 to settle at $107.14 a barrel.
US gasoline demand fell as prices rose. Consumers purchased an average 9.04 million barrels of gasoline a day, down from 9.71 million last year. Average pump price for regular gasoline rose 3 cents to $3.30 a gallon. Average crude oil price is forecast at $100.61 a barrel.
Gold
Gold fell on speculation that the U.S. currency will strengthen. Silver also declined. The dollar is climbing 0.2 percent against all major currencies. Gold futures for June delivery fell $8.80 to $918 an ounce. Silver futures for May delivery tumbled 41.2 cents to $17.708 an ounce. The euro traded $1.5675.
The International Monetary Fund's board approved a plan to sell 403.3 metric tons of gold to cover financial deficit. The proposal still needs the approval of the U.S. Congress.
The structure of the sales would follow Central Bank Gold Agreement, which limits transactions to 500 metric tons each year. Analyst said the market will absorb that gold with no problem.
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