Thread: 2nd straight day, with Dow losing 500 points

A 5-year low
U.S. stocks clobbered for 2nd straight day, with Dow losing 500 points, as





NEW YORK (CNNMoney.com) -- Wall Street's drubbing continued Tuesday, with a 500-point loss bringing the Dow's two-day scalding to nearly 900 points, as the Federal Reserve's plan to loosen credit markets failed to counter investor pessimism about the government's ability to rescue the markets.

Fed Chairman Ben Bernanke's dour economic outlook in an afternoon speech added to the day's weakness. And a report showed consumer borrowing in August fell for the first time since January 1998.

According to early tallies, the Dow Jones industrial average (INDU) lost 508 points or 5.1%, closing at lowest point since Sept. 30, 2003.

The Standard & Poor's 500 (SPX) index fell 5.7% and closed below 1,000 for the first time since Aug. 27, 2003. The Nasdaq composite (COMP) lost 5.8% and ended at its lowest point since Aug. 18, 2003.

"There is this feeling that no matter what is done, it won't be enough, " said Darin Pope, chief investment officer at United Advisors of Secaucus, N.J.

Credit markets remained tight Tuesday, but showed some improvement from the previous day. Treasury prices inched lower, with the yields modestly higher. The dollar slumped versus other major currencies. Oil and gold prices gained.

Stocks plunged nearly 370 points Monday, with the Dow losing as much as 800 points during the session, as the $700 billion bank bailout plan and European government attempts to prop up faltering banks failed to soothe investors.

Stocks initially rose Tuesday on the Fed's credit plan, but turned lower by midmorning.

"Nearly every day there is another announcement where something is going to be done to prop up the markets," Pope said. "Stocks might see an initial pop, but then the skepticism kicks in."

Bernanke's remarks exacerbated the stock selling. He said the economic outlook has worsened and the financial crisis will hurt the economy well into next year. He also implied that more interest-rate cuts are on the way. (Full story).

The minutes from the last Fed policy meeting were released shortly after Bernanke's speech. The minutes showed the bankers were equally worried about growth and inflation at the Sept. 16 meeting, in which they opted to hold interest rates steady. The meeting occurred one day after Lehman Brothers filed the biggest bankruptcy in history. (Full story)

Fed plan: The Federal Reserve said Tuesday it will buy commercial paper, short-term debt that companies use to finance daily operations, from individual companies. Panicky investors have been less willing to buy this kind of debt lately, making it hard for companies to get the money they need to operate.

The Fed move is aimed at creating a market for this kind of debt, ultimately loosening up the frozen credit markets. (Full story)

Businesses depend on the credit markets to function on a daily basis, and the absence of ready capital has stalled the broader financial system and hurts consumers.

"It's another step in the right direction, but it's hard to get too excited about this because nothing yet has worked," said Bill Stone, chief investment strategist at PNC Financial Services Group.

"Eventually, if they [the government] stack up enough things, something will work," he said.

The government has taken a number of dramatic steps of late to try to get the markets functioning properly again amid the housing collapse and subsequent credit crunch.

On Monday, the Fed made an additional $300 billion available to banks in return for a range of damaged assets, on top of another $300 billion already available. The Fed could expand that to $900 billion total by the end of the year.

And on Friday, President Bush signed into law the $700 billion bank bailout, which involves the Treasury buying bad debt directly from banks in order to get them to start lending to each other again.

Stone said that it's positive that the Fed and the Treasury are taking aggressive and creative approaches to handling the current crisis. However, people are exhausted after all that's happened and they are less willing to cheer initiatives that won't kick in for some time.

Company news: After the close Monday, Bank of America (BAC, Fortune 500) reported a steep drop in profit that was short of estimates and cut its dividend. The bank also said it will raise $10 billion through a stock sale and that the company will need to set aside money for bad loans through the coming year. Shares fell 18% Tuesday. (Full story)

Also late Monday, Wells Fargo (WFC, Fortune 500) and Citigroup (C, Fortune 500) both agreed to a legal standstill in their battle for Wachovia (WB, Fortune 500). (Full story)

AIG (AIG, Fortune 500) was in the spotlight Tuesday, in the second of several House hearings into what led to the current crisis. The government had to bail out the insurance giant with an $85 billion credit line last month to keep it from imploding. (Full story)

On Monday, the House Oversight Committee questioned Richard Fuld, chief executive of Lehman Brothers, which went bankrupt last month.

A variety of bank stocks fell Tuesday, including Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500), Merrill Lynch (MER, Fortune 500) and Morgan Stanley (MS, Fortune 500).

Morgan Stanley shares had fallen as much as 40% during the session on rumors that Japanese bank Mitsubishi UFJ was going to back out of its deal to buy a stake in the company. However, Morgan denied the rumor. (Full story).

But the declines were broad, with 28 of 30 Dow components sliding. Besides the financials, other losers included Walt Disney (DIS, Fortune 500), GM (GM, Fortune 500), Pfizer (PFE, Fortune 500), Home Depot (HD, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500), all of which lost between 4% and 5%.

A variety of transportation stocks slid, with airlines, truckers and railroads falling. The Dow Jones Transportation (DJTA) average lost 2.8%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners five to one on volume of 1.23 billion shares. On the Nasdaq, decliners topped advancers by three to one as 2.38 billion shares changed hands.

Global markets: Markets overseas were mixed Tuesday, a day after taking a drubbing everywhere.

Australian markets rallied after the government cut short-term interest rates by a full percentage point, surprising investors. Asian markets ended lower.

European markets were mixed. Russian markets opened late, but managed gains after having been shut down Monday following a steep selloff. (Full story)

(Europe: The new Wall Street?)

Credit markets: Measures of bank nervousness remained at elevated levels Tuesday, but showed some improvement.

The difference between the 3-month Libor and the Overnight Index Swaps fell to 2.93% from a record high of 2.97% earlier in the day. The Libor-OIS spread measures how much cash is available for lending between banks and is used by banks to determine rates. The bigger the spread, the less cash is available.

But 3-month Libor, the rate banks charge each other to borrow for three months, rose to 4.32% from 4.29% Monday.

The TED spread, which is the difference between 3-month Libor and what the Treasury pays for a 3-month loan, fell to 3.35% after hitting an all-time high of 3.95% Monday.

The wider the spread, the more reluctant banks are to lend to each other rather than from the federal government. When markets are fairly calm, banks charge each other premiums that are not much higher than the U.S. government.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, rose to 0.84% from 0.44% late Monday, with investors looking for a slightly better return on their money. Last month, the 3-month bill skidded to a 68-year low around 0% as panicked investors fled stocks.

Treasury prices dipped, propelling the yields. The benchmark 10-year note fell 6/32, lifting the corresponding yield to 3.47% from 3.45% Monday. Treasury prices and yields move in opposite directions.

Oil and gold: U.S. light crude oil for November delivery settled up $2.25 to $90.06 a barrel on the New York Mercantile Exchange, after ending the previous session at an eight-month low.

COMEX gold for December delivery rallied $15.80 to settle at $882 an ounce.

Other markets: In currency trading, the dollar slipped against the euro after hitting a 14-month high against the European currency on Monday. The dollar also slipped against the yen, giving up earlier gains. (Full story)

The price of gas decreased for the 20th consecutive day, according to a survey of credit card activity.
http://money.cnn.com/2008/10/07/markets ... topstories

HERE IS ANOTHER PRETTY GOOD LINK. YOU CAN LOOK UP INDIVIDUAL STOCKS. YOU CAN ALSO SET UP A SPREADSHEET WITH STOCKS ON THEM THAT YOU WOULD LIKE TO WATCH. THEY HAVE IT SET UP PRETTY GOOD, SO THAT YOU CAN GET NEWS AND COMMENTARY ON EACH STOCK.

http://finance.yahoo.com/

Oh, well now, this is a surprise. I thought we were in such a hurry to throw billions of taxpayer dollars into this pit to keep it from getting deeper! Uh, well, uh, did anybody notice this thing is getting deeper...uh, um, the faster we throw it in the faster it seems to be getting deeper. Well, um, uh, the only solution is to throw more in faster to fill it back up, yeah, that's it, lets throw more in faster to fill it up before we do ANY research to find out its being hauled out the bottom of this sink hole by world banks as fast as they can load it up. Let's add some words to our vocabulary.....Perotconomics-sound financial strategies, Smart-o-rhea-a disease that has apparently been cured by our government because it seems very few people in this country have it. Smart-o-rhea used to be caught early in public school and progressed to advanced stages with higher education.

Great site, red. They also have a superb stock price history which is important to any heir that receives and sells the stock a few years later. Cost basis, while the stock may have been purchased in the 1950s, is valued only on the date of death, when the stock passes to the heir, and if the heir sells the stock, the profit-loss determination for the IRS relies on the price on the date of death.

Originally Posted by vortex

Great site, red. They also have a superb stock price history which is important to any heir that receives and sells the stock a few years later. Cost basis, while the stock may have been purchased in the 1950s, is valued only on the date of death, when the stock passes to the heir, and if the heir sells the stock, the profit-loss determination for the IRS relies on the price on the date of death.

YES BECAUSE DURING THE PROBATE PROCESS, ANY TAX OWED ON PROFIT FROM STOCK IS CHARGED TO THE DECEASEDS ESTATE. SO UPON TRANSFER TO HEIRS, THE TAX UP TO THAT POINT IS PAID. SO THE HEIRS RECEIVE THE CURRENT VALUE, AND PAY TAX ON PROFIT FROM THAT DAY FORWARD.

I REALLY LIKE YAHOO FINANCE AS IT HAS MANY FEATURES. YOU CAN SET UP A PORTFOLIO AND WATCH HOW YOUR STOCKS ARE GOING UP AND DOWN. THIS MAKES IT VERY EASY TO KEEP UP WITH WHAT IS GOING ON WITH YOUR INVESTMENTS.

AND YOU CAN USE IT EVEN IF YOU DONT OWN ANY STOCKS....JUST TO SEE HOW THE STOCK MARKET WORKS ON A DAILY BASIS. VERY USEFUL FOR THOSE THINKING ABOUT GETTING INTO STOCKS....BUT DONT HAVE EXPERIENCE. YOU CAN GAIN EXPERIENCE USING THE PORTFOLIO FEATURE.

Stone said that it's positive that the Fed and the Treasury are taking aggressive and creative approaches to handling the current crisis.


How in the blazing Hell can it be called, in any way, "positive", what our government has just proceeded to do to the American people?

Further, while there are plenty of LEGAL definitions to describe this travesty and betrayal, I don't recall seeing "creative" amongst them





However, people are exhausted after all that's happened and they are less willing to cheer initiatives that won't kick in for some time


Perhaps a better choice of words would have been to point out that We The People are less than willing to CHEER the fact that we've been thoroughly betrayed by, and ground under the heel of, an out of control, corrupt-to-the-core government which has dropped any and all facade of even remotely representing and protecting the interests of the citizens of this country, abiding by the law or upholding our Constitution.

Does anyone REALLY expect us to be HAPPY about any of this?

However, people are exhausted after all that's happened and they are less willing to cheer initiatives that won't kick in for some time


Perhaps a better choice of words would have been to point out that We The People are less than willing to CHEER the fact that we've been thoroughly betrayed by, and ground under the heel of, an out of control, corrupt-to-the-core government which has dropped any and all facade of even remotely representing and protecting the interests of the citizens of this country, abiding by the law or upholding our Constitution.

Does anyone REALLY expect us to be HAPPY about any of this?

PEOPLE ARE LESS WILLING TO CHEER INITITATIVES THAT WONT KICK IN FOR SOME TIME BECAUSE IN THE PAST "IT WILL TAKE TIME" "IT WILL TRICKLE DOWN" YADDA YADDA....NEVER MATERIALIZED.

THEY ARE EMPTY PROMISES. THESE STATEMENTS ARE JUST PACIFIERS.

BY THE TIME IT IS KNOWN THAT THE "SOLUTION" FAILED, THE PERPETRATOR IS RETIRED OR DEAD. THEY NEVER HAVE TO PAY FOR THE CONSEQUENCES OF THEIR POOR DECISIONS. THEY NEVER HAVE TO CLEAN UP THE MESS THEY MADE.

WE THE PEOPLE HAVE TO LIVE WITH THE FAILED POLICIES AND ACTIONS.

AS FAR AS I CAN SEE, THE BAILOUT DID NOT WORK. IF IT DID, WE WOULD SEE SOME STABILITY STARTING TO TAKE PLACE. ALL I SEE IS FREE FALL. IT SEEMS TO ME IT GOT WORSE AFTER THE BAILOUT VOTE.