CNN wrote:NEW YORK (CNNMoney.com) -- Stocks tumbled Monday, with the Dow Jones industrial average falling below 10,000 for the first time in nearly four years, as European governments' rush to prop up failing financial firms underscored the global reach of the credit crunch.
Credit markets remained tight, with two key measures of bank jitters hitting an all-time high. Treasurys rallied, lowering the corresponding yields as investors sought safety in government debt. Gold rallied for the same reason. Oil dipped. The dollar was mixed versus other major currencies.
The Dow Jones industrial average (INDU) lost around 400 points or 4% in the early going, and fell below 10,000 for the first time since Oct. 29, 2004. The Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) both lost more than 5%.
Stocks slumped Friday, as the Wall Street's worst week in seven years ended with President Bush signing the historic $700 billion bailout bill after weeks of contentious debate. The bill involves the Treasury buying bad debt directly from banks in order to get them to start lending to each other again. (Full story)
But the bill won't help loosen up credit markets in the near term, and with cash still scarce, investors remained on edge.
The Federal Reserve attempted to address this Monday by making an additional $300 billion available to banks in return for a broad range of damaged assets. That raises the amount available to banks to $600 billion as of Monday and the Fed could expand that to $900 billion by the end of the year. (Full story)
Underlining the global scope of the market malaise, Germany negotiated on Sunday a $69 billion deal for commercial lender Hypo Real Estate AG. Europe's second-largest economy also guaranteed all private bank accounts.
French BNP Paribas said it would buy 75% of troubled Fortis's Belgium bank after a government bailout failed to reassure investors.
Meanwhile in the United States, the battle for Wachovia (WB, Fortune 500) continued, with Wells Fargo (WFC, Fortune 500) and Citigroup (C, Fortune 500) both looking to stake their claims. (Full story)
Credit markets: Measures of bank nervousness remained at elevated levels Monday.
The difference between the 3-month Libor and the Overnight Index Swaps rallied to an all-time high of 2.94% before pulling back. 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.
Libor - the rate banks charge each other to borrow overnight - rose to 2.37%. But 3-month Libor - what banks charge each other to borrow for three months - dipped slightly to 4.29% from a nine-month high of 4.33% last January, according to Bloomberg.
The TED spread, which is the difference between 3-month Libor and what the Treasury pays for a 3-month loan, briefly hit an all-time high of 3.93%, before pulling back a bit.
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, fell to 0.39% from 0.49% late Friday, with investors willing to take a slim return on their money rather than risk stocks. Last month, the 3-month bill skidded to a 68-year low around 0%.
Long-term government debt prices gained and the yields slipped. The benchmark 10-year Treasury note rose 23/32, lowering the corresponding yield to 3.52% from 3.60% Friday. Treasury prices and yields move in opposite directions.
Oil and gold: Oil prices were lower, with U.S. light crude oil for November delivery $3.61 to $90.24 a barrel on the New York Mercantile Exchange. The contract briefly fell below $90 for the first time since February.
COMEX gold for December delivery rallied $44.30 to $877.50 an ounce.
Other markets: In currency trading, the dollar gained against the euro and fell versus the yen.
In global trading, European markets tumbled, while Asian markets ended lower.
The price of gas decreased for the 19th consecutive day, according to a survey of credit card swipes.
So the economy is still tanking. GD2, here we come. But the price of gas is down! Yay, that means everything will be ok!
I had a Bill Maher quote here. But fuck him for his white privelegy "joke".
It gets even worse, now the Dow has fallen below 9800 and there seems no end to the drop.
I guess today the Americans are reminded that the economy is in shramles, and "let's change the game by throwing mud" will be seen as really the wrong things at such dire times.
The last time it fell was around 2001. Either after the bursting of the electronic bubble, or after 9/11.
Markets were falling through the world. The US is paying catch up.
STGOD: Byzantine Empire Your spirit, diseased as it is, refuses to allow you to give up, no matter what threats you face... and whatever wreckage you leave behind you.
Kreia
Admiral Valdemar wrote:It's still over nine-thousand...
That's the worst use of a meme I've ever seen
How much would it have to drop in a single day to suspend trading?
PRFYNAFBTFCP
Captain of the MFS Frigate of Pizazz +2 vs. Douchebags - Est vicis pro nonnullus suscito vir
"Are you an idiot? What demand do you think there is for aircraft carriers that aren't government?" - Captain Chewbacca
"I keep my eighteen wives in wonderfully appointed villas by bringing the underwear of god to the heathens. They will come to know God through well protected goodies." - Gandalf
"There is no such thing as being too righteous to understand." - Darth Wong
How much would it have to drop in a single day to suspend trading?
The NYSE removed trading curbs in October 2007, a couple days before Halloween. Bloomberg quote:
Oct. 26 (Bloomberg) -- The New York Stock Exchange said it will no longer impose curbs on computer-program trading that were put in place after the crash of 1987, claiming they're no longer as effective in damping swings in prices.
The exchange will stop prohibiting brokerages from entering some program trades when the NYSE Composite Index rises or falls more than 2 percent, according to a notice sent to member firms today. The so-called collars had been in effect since 1988 and were triggered 17 times this year, according to a filing with the Securities and Exchange Commission.
NASDAQ followed the NYSE's lead, but never had its own curbs in place.
The only people who were safe were the legion; after one of their AT-ATs got painted dayglo pink with scarlet go faster stripes, they identified the perpetrators and exacted revenge. - Eleventh Century Remnant
I think that's different from what he's talking about - that seems to be referring to automatic computerized trading (i.e. a computer is programmed to dump or buy shares once X, Y, and Z conditions are met), not the "circuit breakers" that kick in after a 10% drop in the market.
"There is no "taboo" on using nuclear weapons." -Julhelm
What is Project Zohar? "On a serious note (well not really) I did sometimes jump in and rate nBSG episodes a '5' before the episode even aired or I saw it."- RogueIce explaining that episode ratings on SDN tv show threads are bunk
This is only the beginning, we still haven't had a bonds market dislocation. Expect the circuit breakers to be exercised when that happens.
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The slight variations in spelling and grammar enhance its individual character and beauty and in no way are to be considered flaws or defects
I'm not sure why people choose 'To Love is to Bury' as their wedding song...It's about a murder-suicide
- Margo Timmins
When it becomes serious, you have to lie
- Jean-Claude Juncker
FireNexus wrote:So the economy is still tanking. GD2, here we come. But the price of gas is down! Yay, that means everything will be ok!
Oh relax, according to the economists we're not even in a recession yet, in fact our economy is still healthy and growing!
This post is a 100% natural organic product.
The slight variations in spelling and grammar enhance its individual character and beauty and in no way are to be considered flaws or defects
I'm not sure why people choose 'To Love is to Bury' as their wedding song...It's about a murder-suicide
- Margo Timmins
When it becomes serious, you have to lie
- Jean-Claude Juncker
At this rate we'll take out 8000 with room to spare by the end of the week.
aerius: I'll vote for you if you sleep with me. Lusankya: Deal!
Say, do you want it to be a threesome with your wife? Or a foursome with your wife and sister-in-law? I'm up for either.
Tribun wrote:Wow, the Dow has now fallen below 9700! :shock:
This looks like a REALLY bad day for Wall Street.
It's not that bad. The Dow just closed at 10,021.77. It'll all be okay. Just drink the Kool-Aid and take a deep breath.
Ok, but do you think it's a warning shot to remind everyone that the economy will stay a problem (thus ruining McShame's plans)?
The economic warning light came on, and was blithely ignored, years ago. This is just the part of the flight where both engines are on fire, the controls have gone all wonky, and you've just discovered that not only are the wings about to fall off, but both the pilot and copilot have jumped ship and mice have gotten into all the remaining parachutes.
The sudden "rally" up over 10k points again was on rumours of an emergency G8 meeting to cut rates. It's funny, but I was under the impression central banks did that and they tried to be independent from government.
My dad's already sold the bulk of his retirement accounts and put the money into money market accounts and other FDIC-insured devices. As such, he only lost $5000 last week. He figured that if he'd kept his money where it was, he would've lost somewhere in the neighborhood of $25000 by the end of last Friday. And we're not talking millions of dollars, either; it's a modest nest-egg that's literally lost 25% of its value in the last six months, so he figured it was time to stop the hemorrhaging. The only reason he kept it in that long was because it had done so well in the last five or so years that he's still "up" on his original investment.
"There is a principle which is a bar against all information, which is proof against all arguments and which cannot fail to keep a man in everlasting ignorance--that principle is contempt prior to investigation." -Herbert Spencer
"Against stupidity the gods themselves contend in vain." - Schiller, Die Jungfrau von Orleans, III vi.
Bank of America reports profit drop, capital raise
Monday October 6, 4:38 pm ET
By Madlen Read, AP Business Writer
Bank of America profits fall 68 pct; Will raise cash by selling stock, cutting dividend
NEW YORK (AP) -- Bank of America Corp.'s third-quarter profit fell 68 percent and the bank says it's selling stock and halving its dividend to boost capital.
Like most other major financial institutions, Bank of America has been hit by significant losses in mortgages, credit cards and other souring debt.
Profit fell to $1.18 billion, or 15 cents per share, for the July-to-September period from $3.7 billion, or 82 cents per share, in the same period last year. That's much lower than analysts' estimates of 62 cents per share, according to Thomson Financial.
To raise capital, the Charlotte, N.C.-based company says it plans to sell $10 billion of common stock and cut its quarterly dividend to 32 cents from 64 cents.
I know of another Bank who started a descent in exactly the same manner *coughWaMucough*
Admiral Valdemar wrote:It's still over nine-thousand...
Other than the old meme I do have a basic question.
At this point would it not be healthier for the economy if a few large financial companies to go under to better much the size of the market? Or am I simply understating the impact of investor confidence?
Why on Earth do people continue to use the Dow instead of market weighted indexes like the Wilshire 5000?
In any event, it appears that the market has spoken and people are scared to death about Q3 numbers causing stocks to free fall even further than they already have. In many ways it is a self fulfilling prophecy as consumer and market confidence are two sides of the same coin. The fact that the credit markets have locked themselves up tight isn't helping either.
I think the real indicator of economic health is going to come when the bulk of the Q4 (not Q3) numbers are released to see how much legs this recession really has. In the meantime it's probably wise to pull anything you need in the next five years out of the market; this sucker looks like it could take a while.
At this point would it not be healthier for the economy if a few large financial companies to go under to better much the size of the market? Or am I simply understating the impact of investor confidence?
wouldn't that take the rest of the economy down with it via cascading failure, which would be bad for the global market as everything is connected? Someone correct me if I am wrong please.
"Opps, wanted to add; wasn't there a study about how really smart people lead shitty lives socially? I vaguely remember something about it, so correct me if I'm wrong. Frankly, I'm of the opinion that I'd rather let the new Newton or new Tesla lead a better life than have him have a shitty one and come up with apple powered death rays."
-Knife, in here
TC Pilot wrote:Sounds like a great time to start buying some stocks. Any recommendations?
Apple, I'd say. It's a great company (all my bitching about their products is irrelevent) and it's artifically low recently. I'd buy it if I had the money to spare, but I don't--I'll need my savings in the relative future so I can't afford to invest.
TC Pilot wrote:Sounds like a great time to start buying some stocks. Any recommendations?
Apple, I'd say. It's a great company (all my bitching about their products is irrelevent) and it's artifically low recently. I'd buy it if I had the money to spare, but I don't--I'll need my savings in the relative future so I can't afford to invest.
Apple is also extremely sensitive to consumer demand, so I'd be careful there. On the other hand, they have plenty of cash in the bank and should be able to weather this storm.
PRFYNAFBTFCP
