Stock Trading Investing Information

NEW YORK (AP) -- Investors turned cautious again Monday as a staggering $61.7 billion in quarterly losses at insurer American International Group Inc. touched off fresh worries about the health of the nation's financial system.

The Dow Jones industrial average fell below 7,000 for the first time in more than 11 years as investors grew pessimistic about the health of banks, and in turn the economy. The blue chips hadn't traded below 7,000 since Oct. 28, 1997, and last closed below that mark on May 1 of that year.

The credit crisis and recession have now slashed half the average's value since it hit a record high over 14,000 in October 2007.

Investors are fleeing financials after the government said it would give AIG another $30 billion in loans, besides the $150 billion it has already given the company.

Investors are worried about European financial companies, too.

HSBC PLC, Europe's largest bank by market value, reported a 70 percent drop in 2008 profit and said it needs to raise $17.7 billion and cut 6,100 jobs.

"As bad as things are, they can still get worse, and get a lot worse," said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he believes there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.

The "game-changer," he said, will be the housing market and whether it can stabilize.

In midmorning trading, the Dow fell 153.96, or 2.18 percent, to 6,908.97.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 17.18, or 2.34 percent, to 717.91, and the Nasdaq composite index fell 23.42, or 1.70 percent, to 1,354.42.

Mixed economic readings on Monday weren't enough to prop up stocks.

Personal spending rose 0.6 percent in January and incomes rose 0.4 percent, while construction spending fell 3.3 percent, more than twice as much as economists expected. Manufacturing contracted in February for the 13th straight month, but at a slower pace than expected.

Meanwhile, billionaire investor Warren Buffett wrote in his annual letter to investors Saturday he is sure "the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond -- but that conclusion does not tell us whether the stock market will rise or fall."

Tim Paradis, AP Business Writer

Labels: dow jones, stock trading investing, stocks, wall street

LONDON (Reuters) - World stocks fell to nearly six-year lows on Monday and the dollar hit 3-year peaks after a 12.5 billion pound ($17.75 billion) rights issue by HSBC (HSBA.L) and another cash injection to U.S. insurer AIG (AIG.N).

Oil fell more than 3 percent while government bonds rose across the board after HSBC, Europe's biggest bank, launched the rights issue to shore up its balance sheet after it reported a 18 percent fall in adjusted pretax profit for 2008 and cut its dividend.

American International Group (AIG.N) is set to take a $30 billion lifeline from the U.S. government as the embattled insurer is expected to report the biggest quarterly loss in corporate history of about $60 billion later on Monday.

The AIG move follows a new rescue plan for Citigroup (C.N), adding to fears that more financial firms may need similar bailouts.

"There's a roll call of reasons to stay risk averse -- the news from AIG, HSBC and worries about Eastern Europe and that is benefiting the dollar," UBS currency strategist Geoffrey Yu said.

Concerns about the impact of a sharp economic deterioration in Eastern Europe have also weighed on the euro and euro zone stocks in recent weeks.

European Union leaders rejected a mass bailout of central and eastern European countries at a summit on Sunday, but held out the prospect of bringing them under the protection of the euro zone more quickly. MSCI world equity index (.MIWD00000PUS) fell 1.9 percent to hit its lowest level since April 2003.

The index lost more than 10 percent last month, compared with a rise of 0.1 percent in February 2008.

The FTSEurofirst 300 index (.FTEU3) fell 3.2 percent. HSBC shares fell 11 percent in early trade.

The dollar index (.DXY), which measures the currency's strength against a basket of major currencies, hit its highest level since April 2006. The single currency fell to $1.2562.

March Bund futures rose 65 ticks, benefiting from flows seeking safer investments.

"Clearly the environment for fixed income, Bunds in particularly, is still extremely bullish. We've strong faith in our call that historic low in yields are still ahead of us," Christoph Rieger, short-end rate strategist at Dresdner Kleinwort in Frankfurt.

Emerging stocks (.MSCIEF) fell 3.5 percent and U.S. crude oil fell 3.6 percent to $43.15 a barrel.

Labels: emerging stocks, global stocks, stock trading investing, stocks

NEW YORK – Federal Reserve Chairman Ben Bernanke has reassured Wall Street by telling Congress the recession might end this year.

In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009. But he also said "there is a reasonable prospect" the recession will end this year. He warned that a recovery will require getting credit and financial markets to operate normally.

While Bernanke's assessment of the economy helped ease some pressure on the market, it also came after days of heavy selling that left the Dow Jones industrial average and the Standard & Poor's 500 index near 12-year lows, so a bounce in stocks wasn't a surprise. Stocks made cheaper by the selloff attracted bargain-hunting traders. Also, some, better-than-expected quarterly numbers from Home Depot Inc. helped cool some anxiety about the economy.

Stocks were also up ahead of a speech by President Barack Obama. Beaten-down financial shares gained as investors hoped for better insight into the government's plans to aid the industry which is struggling with bad debt.

The White House said Tuesday that Obama will provide more details about his plans to help stabilize the financial system. He is also expected to make the case that more has to be done to revive the economy. The speech is scheduled for 9 p.m. EST.

The continued focus on the stability of the financial system comes a day after the government moved closer to dramatically expanding its ownership stakes in the nation's banks, including Citigroup Inc. The Treasury Department, the Fed and other banking regulators said Monday they could convert the government's stock in the banks from preferred shares to common shares.

Investors are hoping Obama's speech will give them a better sense of how the government will proceed in its efforts to alleviate the effects of a recession now in its 14th month.

In mid afternoon trading, the Dow rose 151.81, or 2.1 percent, to 7,266.59. On Monday, the major indexes tumbled more than 3 percent, including the Dow, which fell 251 points. It was the lowest close for the blue chips since May 7, 1997.

Broader stock indicators also rose Tuesday. The S&P 500 index rose 19.79, or 2.7 percent, to 763.12. On Monday, it logged its lowest finish since April 11, 1997.

The Nasdaq composite index rose 30.40, or 2.2 percent, Tuesday to 1,418.12.
The Russell 2000 index of smaller companies rose 10.00, or 2.5 percent, to 404.58.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume amounted to 762.1 million shares.

Many analysts expect the market to remain volatile for the foreseeable future.

Ryan Larson, head of equity trading at Voyageur Asset Management, said the market is looking for insights into the Treasury Department's plans to "stress test" the banks and remove the toxic assets from their books.

"The market is desperately looking for more clues to piece together this bailout," he said.
Rich Hughes, co-president of Portfolio Management Consultants in Los Angeles, said the stock market's rallies are likely to be based on hope or on rebounds from selloffs. He contends Wall Street still hasn't seen the wrenching decline that is often needed to scare investors from the market and set the ground for a lasting recovery.

"The underlying fundamentals just aren't there to support anything that's sustainable right now," he said. "We haven't seen the capitulation that you'd want to see before you'd get thoroughly enthused."

The market's slide has been tough on long-term savers. An investor who in 1997 had $50,000 in a fund that tracks the S&P 500 would have lost money; the fund would now be worth $46,256. Still, stocks tend to perform better after steep pullbacks and their long-term returns often outpace other investments.

Bond prices fell Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.77 percent from 2.76 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.30 percent from 0.29 percent Monday.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 65 cents to $39.09 per barrel on the New York Mercantile Exchange.
Home Depot posted a loss but the nation's largest home improvement retailer's results topped expectations when excluding costs for shutting four home-improvement brands. The stock rose $1.79, or 9.6 percent, to $20.50.

Target Corp. and Macy's Inc. said fiscal fourth-quarter earnings fell sharply as shoppers cut back on purchases. Office Depot Inc. posted a loss for the quarter. Target fell 15 cents, or 0.5 percent, to $28.28, while Macy's rose 78 cents, or 10.5 percent, to $8.18.

JPMorgan Chase Co. rose 99 cents, or 5.1 percent, to $20.50 after announcing late Monday it would slash its quarterly dividend to 5 cents from 38 cents in a move to preserve capital to protect itself should the ongoing recession worsen. The decision will save the bank about $5 billion per year.

Stocks fell in Europe after Monday's drop on Wall Street. Britain's FTSE 100 fell 0.78 percent, Germany's DAX index fell 0.73 percent, and France's CAC-40 fell 0.73 percent. Earlier, Japan's Nikkei stock average fell 1.5 percent.

Labels: ben bernanke, recession, stock trading investing, stocks