Wall Street Addict

Wall Street skidded further Friday as investors again succumbed to anxiety over tight credit conditions even after the Federal Reserve said it would do all it can to "facilitate the orderly functioning of financial markets." The Dow Jones industrials at times was off more than 200 points.
The market, which has been gyrating for weeks over fears that credit is drying up, moved lower although the Fed also injected cash into the banking system early Friday. The drop showed the depths of fear that have investors yanking money out of stocks.
Federal Reserve policy makers "are trying to do everything they can short of cutting the federal funds rate" to try to calm the markets, said Ed Yardeni, president of Yardeni Research in Great Neck, N.Y.
But, he said, "I think they probably have to cut rates, and probably before their scheduled September meeting."
He noted that it was Fed rate cuts that calmed the market after the 1998 Russian debt crisis and the implosion of the hedge fund Long-Term Capital Management.
In midmorning trading, the Dow Jones industrials dropped 188.92, or 1.42 percent, to 13,081.76, adding to a 387-point plunge on Thursday and extending a series of triple-digit moves that began in late July.
Friday's pullback followed the zigzag trading and triple-digit moves in the Dow since the index closed at a record 14,000.41 on July 19.

Labels: Consumer Credit, Dow Jones, Fed, Wall Street

U.S. stocks headed for a lower open Tuesday, following a big rally, as Wall Street sought reassurance from the Federal Reserve about the debt market.
The August meeting of the Fed's Open Market Committee, which sets short-term interest rates, follows two weeks of volatile trading amid unease about the availability of credit and the health of subprime loans, which are made to borrowers with weak credit.
While the Fed meeting Tuesday will likely dominate investors' attention, Wall Street was also digested a Labor Department report that found the productivity of U.S. workers rose to a 1.8 percent annual rate in the spring -- more than double the 0.7 percent pace of the first quarter -- while wage pressures lessened.
Unit labor costs rose at a 2.1 percent pace, which was the second straight quarter in which wage pressures have cooled. A drop in wage pressures could help assuage some of the Fed's concerns about inflation.
The Fed's report on June consumer credit is due after the Fed's interest rate decision Tuesday afternoon.
While observers don't expect the Fed will move the benchmark rate from 5.25 percent, where it has been since last summer, many will be looking to the central bank's economic policy statement for comments about the lending concerns that have prompted big swings in stocks and bonds.

Labels: Consumer Credit, Debt, Fed, Wall Street

While Wall Street has been on a wild roller-coaster ride and housing troubles continue to mount, the Federal Reserve still seems to be most concerned about inflation.
For that reason, most economists believe Fed Chairman Ben Bernanke and his colleagues will keep interest rates unchanged for a ninth consecutive time when they wrap up their meeting Tuesday.
That would mean that the federal funds rate will remain at 5.25 percent, where it has been for more than a year. It would also mean that the prime lending rate, the benchmark for millions of consumer and business loans, will remain unchanged at 8.25 percent.
Both rates have remained at that level since June 2006 when the Fed raised the funds rate for a record-setting 17th consecutive time, capping a two-year campaign to push rates high enough to slow the economy and keep inflation under control.

Labels: Ben Bernanke, Fed, Housing, Wall Street

Stocks fluctuated in early trading Monday following a sharp pullback Friday brought by concerns about the credit market and ahead of the Federal Reserve's meeting Tuesday.
Wall Street is looking for signs of encouragement after the fractious trading of the past two weeks. In a day devoid of economic news and with few earnings reports, investors are likely to remain cautious, especially with the Fed's meeting on interest rates slated for Tuesday. Policy makers are widely expected to hold the benchmark rate steady at 5.25 percent; as usual, the greater concern is with the Fed's economic assessment statement.
In the first hour of trading, the Dow Jones industrial average rose 40.32, or 0.31 percent, to 13,222.23.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 2.09, or 0.15 percent, to 1,435.15, and the Nasdaq composite index fell 2.34, or 0.09 percent, to 2,508.91.
Stocks have endured a volatile couple of weeks as troubles in the global credit markets -- rooted in the rise of subprime loan defaults in the U.S. -- have unfolded.
The yield on the 10-year note rose to 4.69 percent from 4.68 percent late Friday. Bond prices move opposite their yields.

Labels: Credit, Dow Jones, Fed, Nasdaq

The economy nearly stalled in the first quarter with growth slowing to a pace of just 0.6 percent. That was the worst three-month showing in over four years.
The new reading on the gross domestic product, released by the Commerce Department Thursday, showed that economic growth in the January-through-March quarter was much weaker. Government statisticians slashed by more than half their first estimate of a 1.3 percent growth rate for the quarter.
The main culprits for the downgrade: the bloated trade deficit and businesses cutting investment in supplies of the goods they hold in inventories. For nearly a year, the economy has been enduring a stretch of subpar economic growth due mostly to a sharp housing slump. That in turn has made some businesses act more cautiously in their spending and investing.
The economy's 0.6 percent growth rate in the opening quarter of this year marked a big loss of momentum from the 2.5 percent pace logged in the final quarter of last year.
Federal Reserve Chairman Ben Bernanke doesn't believe the economy will slide into recession this year, nor do Bush administration officials. But ex Fed chief Alan Greenspan has put the odds at one in three.

Labels: Alan Greenspan, Ben Bernanke, Economy, Fed