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Nickelless
Administrator
USA
5580 Posts |
 Posted - 10/28/2008 : 18:17:43
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By CHRISTOPHER S. RUGABER and J.W. ELPHINSTONE, Associated Press Writers
Wall Street's best day in two weeks and one of its best ever was a joyless rally. Even a manic, final-hour stampede of buying that sent the Dow Jones industrials soaring almost 900 points did nothing to dispel the feeling that the market could turn on investors in an instant.
But the extraordinary, lurching volatility that has gripped Wall Street since the financial meltdown began in mid-September meant there were no guarantees the rally would hold, not even for a few days.
Investors are expecting a cut in interest rates when the Federal Reserve announces its decision Wednesday. But they're also staring into an economic abyss, bracing for a recession of a depth no one knows for sure.
Any other day like this the Dow and the Standard and Poor's 500 both rose almost 11 percent might have ended with boisterous cheers and paper tossed into the air. On Tuesday, 4 p.m. came with meager applause.
"I don't think it will be a sustained move," said Matt King, chief investment officer at Bell Investment Advisors.
The Dow finished 889 points higher to close at 9,065. On Oct. 13, the Dow rose 936 points, its best ever; no other single-day rally has come close in terms of points to what happened Tuesday.
Analysts ventured a number of explanations for the sudden rally including coming interest rate cuts, bargain hunting, a market desperate to find a bottom and the expectation that banks, at the urging of the White House, will quit hoarding money and start making loans.
"There is nothing fundamental that came out today or yesterday that would take it up or down. We're all groping for something meaningful to talk about," said Bob Andres, chief investment strategist at Portfolio Management Consultants. "The market is exhausted from going down."
The mood on Main Street is decidedly more pessimistic, and new data Tuesday showed Americans are more depressed than market analysts had expected.
The Conference Board's consumer confidence index plunged to the lowest level in its 41-year history in the wake of this month's financial meltdown, the sharp drop in home prices and increasing job losses.
The index fell to 38, down from a September reading of about 61 the third-steepest monthly decline since the board started the measure in 1967. Analysts, way off the mark, had expected 52.
"It's the worst consumer environment since the 1981-1982 recession," said Adam York, an economist at Wachovia Corp. Americans believe "there's a very dire situation in the U.S. economy right now, and they're not far from being right," he added.
Financial market turmoil and falling housing prices have wiped out trillions of dollars of household wealth in recent months. The S&P 500 had fallen 27 percent in October, and 40 percent for the year, before Tuesday's jump.
In addition, companies cut 760,000 jobs in the first nine months this year, sending the unemployment rate to 6.1 percent last month. Many economists expect layoffs to continue and the unemployment rate to rise to 8 percent or higher in 2009.
After the last recession, in 2001, the unemployment rate rose as high as 6.3 percent in June 2003.
On Tuesday, Whirlpool Corp. said it will cut 5,000 jobs. That's on top of other recent layoffs of thousands of workers by Xerox Corp., drugmaker Merck & Co. Inc. and financial services firm National City Corp.
"The collapse in confidence is directly tied to perceptions about economic conditions and that is likely to mean that households will keep their wallets closed," said Joel Naroff, an economist with Naroff Economic Advisors.
If they do, it'll happen at a bad time. The holiday season is just weeks away, and it's expected to be anemic.
"I don't know how long this is going to last," said Johnny Hunt, 50, a carpenter in Deltona, Fla., who says he is cutting back on a lot of things. "So I got to save money. You've got to hold onto what you do have."
S&P said in a report earlier this week that holiday retail sales would probably fall 2 percent to $250 billion this year, "the most difficult holiday season in memory for U.S. retailers."
Holiday sales have increased an average of 4.4 percent a year in the past decade, the report said.
Meanwhile, the housing slump, which set off the mortgage crisis that has consumed Wall Street for more than a year, shows no sign of abating. A closely watched index of home prices fell Tuesday by its steepest ever annual rate in August.
The Standard & Poor's/Case-Shiller 20-city housing index dropped a record 16.6 percent from August last year, the largest drop since its inception in 2000.
In addition, the Census Bureau reported that 2.8 percent of U.S. homes excluding rental properties were vacant and for sale in the third quarter, unchanged from the second quarter. That works out to 2.22 million properties, the second-highest quarterly number in records going back to 1956.
The first quarter clocked in at a 2.9 percent vacancy rate. In a normal market, it's about 1.7 percent, said Patrick Newport, an economist at IHS Global Insight. That means there's more than 800,000 excess vacant homes on the market.
Exacerbating the pricing environment is a rash of foreclosures, especially in once-hot markets like California, Las Vegas, Florida and Phoenix. Home prices are falling fastest there, according to Case-Shiller dropping as much as 30 percent in August.
To move foreclosed properties off their books, lenders are sharply discounting prices, which is weighing down median prices.
On Thursday, the Commerce Department will provide its first estimate of the economy's third quarter performance, and many economists think the economy shrank. Economic contraction for the third and fourth quarters consecutively would meet the classic definition of recession.
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Associated Press writers Tim Paradis in New York and Jeannine Aversa in Washington contributed to this report.
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fasTTcar
Penny Hoarding Member
Canada
573 Posts |
Posted - 10/28/2008 : 22:56:50
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"The Conference Board's consumer confidence index plunged to the lowest level in its 41-year history in the wake of this month's financial meltdown, the sharp drop in home prices and increasing job losses."
"The index fell to 38, down from a September reading of about 61 the third-steepest monthly decline since the board started the measure in 1967. Analysts, way off the mark, had expected 52."
And the market was up... |
www.londongoldbuyer.com |
Edited by - fasTTcar on 10/28/2008 23:00:18 |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 10/29/2008 : 00:10:34
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Guess there were just more buyers than sellers today. That happens sometimes.  |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 10/29/2008 : 07:23:58
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If we inflate enough, the market will go up. If stuff on the market drops, but the dollar drops more than the market get the illusion of upness.
For example, the Zimbabwe stock market looks like a rocket, but if you convert the chart to dollar terms or gold terms you see the real story. The real story being that the purchasing power of people in the stock market is dropping even as their stocks soar.
This is the chart the matters right now. The fate of just about everything else is in its hands. If the current (last gasp?) rally fails, those that haven't hedged themselves against dollar losses are in deep kimshee... IMHO
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Edited by - horgad on 10/29/2008 07:24:24 |
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fasTTcar
Penny Hoarding Member
Canada
573 Posts |
Posted - 10/29/2008 : 20:36:46
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Short term, the daily movement of the markets mean nothing. They mean less than nothing when you have government interference.
Currently, the US markets are a train wreck. Just like any catastrophe, there is some sick pleasure in watching it unfold.
BTW, Horgad, you correct, the USD index is the big game in town right now (same as LIBOR). It was smacked down hard today.
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 10/29/2008 : 22:56:55
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I heard the TSX/TSE (Toronto - Canada's main stock exchange) was up today too. The next shoe is about to drop though.
Top of the front page in the Globe and Mail (Canada's equivilent to the Wall Street Journal) was all about businesses demanding relaxation of thier pension funding obligations. Market is way down (37% on the year according to the article). Law says companies and agencies like NAV CANADA must fund thier pension obligations. This means they have to have enough money set aside in the pension plan to pay expected draws. With stocks worth so much less, they will have to add a bunch more cash. The article stated this would bankrupt some of these companies and agencies.
So either the government relaxes the funding obligations = not enough money to pay future pension obligations OR
the government insists they fund the pensions and the companies have to send thier cash into the pensions = risk of failure/running out of cash for operations.
Pretty sure this is a worldwide issue, not just Canada. |
The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
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Dow ends up almost 900, but no one is exhaling
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