Archive for January, 2010

Stocks Manage Gains After Fed - CNNMoney.com -- Stocks climbed Wednesday, ending a choppy session higher after the Federal Reserve held interest rates steady and hinted it would continue to do so for the foreseeable future. Meanwhile, Apple introduced its new iPad tablet computer.

The Dow Jones industrial average gained 42 points, or 0.4%. The S&P 500 index gained 5 points, or 0.5%. The Nasdaq composite rose 18 points, or 0.8%.

Dollar Strengthens After Fed Statement - CNNMoney.com -- The dollar extended its gains against the euro and rose against the yen Wednesday, after the Federal Reserve announced plans to hold interest rates steady as it said economic conditions continued to pick up.

The dollar rose less than half a percent against the euro to $1.4023. It recovered earlier losses against the yen and rose a third of a percent to ¥90.01. The greenback erased some losses versus the pound, but remained weak at $1.6169.

Fed: Recovery Gaining Strength - On Wednsday the Federal Reserve said the U.S. economy continues to show signs of modest improvement but signaled it will stay the course and keep interest rates low to help spur a recovery.

As expected, the central bank left its key interest rate, the federal funds rate, near 0%, the level it has been at since December 2008. That rate is used as a benchmark for a broad range of business and consumer loans.

In a statement released at the end of its two-day meeting, the Fed pointed to improvement in business spending, but said that the "recovery is likely to be moderate for a time."

Treasurys Mostly Higher on Stronger Dollar - CNNMoney.com -- Bond prices were mostly higher Tuesday on a stronger dollar and amid speculation that China will continue to tighten its credit policy.

The benchmark 10-year note rose 4/32 to 98-1/32, and the yield fell to 3.61% from 3.63% late Monday. Bond prices and yields move in opposite directions.

The 30-year bond fell 7/32 to 96-29/32, and its yield was 4.56%. The 2-year note edged up less than 1/32 to 100-12/32 and yielded 0.80%.

Oil Continues Its Slide - CNNMoney.com -- Oil prices fell below $75 Tuesday as concerns about global economic growth overshadowed a rebound in U.S. stock markets.
Oil prices fell in early trading, tracking losses in Asian stock markets, following reports that some Chinese banks have stopped making new loans for the rest of the month.

S&P Case-Shiller: Home Prices Lose Momentum in November - Standard and Poor's released the Case-Shiller Home Price Index this morning. On a month over month basis, home prices in 20 US cities fell 0.2% in November. The 10 city index also fell by 0.2%. On a year over year basis, the 20 city index declined 4.5% while the 10 city index fell 5.3%. While home prices are still falling on a year over year basis, this marks the 10th consecutive month of improved annual readings and the third straight month these statistics have registered single digit declines. This follows 20 consecutive months of double digit declines.

Existing Home Sales Give Back Incentivized Gains. Jobs Still the Main Roadblock - After a rising surge from September through November, existing-home sales fell as expected in December after first-time buyers rushed to complete sales before the original November deadline for the tax credit. Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.

The national median existing-home price for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. The median existing single-family home price was $177,500 in December, which is 1.4 percent above a year ago.

Looking ahead, nothing has changed, the same old issues are seen as being roadblocks to expansion in the housing market and macroeconomy.

We need to work off current supply of all homes available on the market. In order for that to happen we need qualified buyers and borrowers. Those buyers and borrowers need stable jobs.

Until jobs are being created for the herd of citizens on unemployment benefits, the housing market will likely undergo a slow, frustrating recovery process.

The first time home buyer tax credit has been a huge help in this effort, so too has the Fed's MBS Purchase Program. While the extension and expansion of the home buyer tax credit is progressive, from a buyer's perspective we still have several issues that will deter demand.

Stocks muster gains - CNNMoney.com -- Stocks managed slim gains Monday as investors weighed recent worries about the bank sector and the likelihood of Federal Reserve Chairman Ben Bernanke serving for a second term.

The Dow Jones industrial average added 23 points or 0.2%. The S&P 500 index added 5 points or 0.5%. The Nasdaq composite gained 5 points or 0.3%.

Gains in large bank stocks, techs and big industrial firms helped give stocks a leg up, But a weaker-than-expected housing market report put a lid on any gains.

Stocks Get Knocked Back - CNNMoney.com -- Stocks slumped Wednesday as a strong dollar and questions about China's lending practices slammed commodities, one of the leaders of the recent rally.

IBM dragged on the tech sector as investors picked apart the company's outlook one day after sending the stock higher.

The Dow Jones industrial average fell 122 points, or 1.1%, after having fallen as much as 207 points in the morning. The S&P 500 index lost 12 points, or 1%. The Nasdaq composite gave back 29 points, or 1.3%.

Harder to Get a Government-Backed Mortgage From Now On - Looking to shore up its weakening finances, the Federal Housing Administration announced stricter standards on Wednesday.

The agency will increase its up-front mortgage insurance premium to 2.25%, from 1.75%. It will also ask Congress for the right to hike its ongoing premium, currently as much as .55% monthly. The agency will then shift some of the increase in the up-front premium to the ongoing charge.

The FHA will also require borrowers to have at least a credit score of 580 to qualify for the agency's 3.5% downpayment program. Those with lower scores will have to pay at least 10%.

The new policy also will reduce the amount of money sellers can provide to homebuyers at closing to 3%, down from 6%, of the home's price.

Finally, officials plan to clamp down on lenders offering FHA mortgages. The agency will more closely monitor their performance, as well as seek legislative authority to require mortgage firms to assume liability for all loans they originate and underwrite. It will also publicly report lender performance data.

One thing the agency did not do is to broadly increase the downpayment requirement. Many industry observers said such a step is necessary to reduce FHA loans' high delinquency rates. Borrowers with little equity in their homes are more likely to default or walk away.

Wall Street Recharges the Rally - CNNMoney.com -- Stocks rallied Tuesday, with IBM leading a tech charge ahead of its quarterly results, released after the close of trade. A variety of health care and consumer product companies also added to the run, as investors sought to restart the run.

Citigroup's quarterly loss, a stronger dollar and Kraft's buyout of Cadbury were also in the mix.

The Dow Jones industrial average gained 115 points, or 1.1%. The S&P 500 index added 14 points, or 1.3%. The Nasdaq composite rose 32 points, or 1.4%. The Dow and the S&P 500 ended at fresh 15-month highs and the Nasdaq ended at a new 16-month high.

Rates Have Been Quite Stable After Martin Luther King Jr. Holiday

Rates have been quite stable for the month of January. After the Martin Luther King Jr. holiday there has been very little volatility as the American public gets back to work.

At the present time the 30 year fixed mortgage rate is still well bellow 5%. However, many analysts have predicted that mortgage rates are going to move higher in the very near future so it would be a good idea to take action sooner rather than later.

Stocks Manage Gains in Choppy Session - CNNMoney.com -- Stocks rose Thursday, led by technology shares, as investors looked past the day's ho-hum economic news and geared up for Intel's quarterly report, released shortly after the bell.

The Dow Jones industrial average added 30 points, or 0.3%. The S&P 500 index added 3 points, or 0.2%. Both closed at the highest point since Oct. 1, 2008. The Nasdaq composite rose 9 points, or 0.4%, ending at the highest point since Sept. 3, 2008.

You Can't File For Your $8,000 Homebuyer Tax Credit - CNNMoney.com -- Did you purchase a home after Nov. 6? Don't expect your $8,000 homebuyer tax credit any time soon.

Since Congress passed the tax credit last February as part of the stimulus program, more than 1.4 million buyers have scrambled to take advantage of it, according to the IRS.
All they had to do was file an amendment to their 2008 tax returns (the ones they filed last spring) and claim the promised refund of 10% of the purchase price -- up to $8,000.
"I closed on a Friday and I filed an amendment to my taxes on Monday," said Valatisha Jacinto, who purchased her Waco, Texas, home last March.

But that all changed on Nov. 6. One CNNMoney.com reader wrote: "I bought a new home to get the $8,000 tax credit like many others. However the IRS has NOT ALLOWED ANYONE TO FILE since November 6th!! It has been over 2 MONTHS!!"

He's right. Nov. 6 marked the date that the rules changed because an extended -- and expanded -- version of the homebuyer tax credit went into effect. And that put filing for the credit on hold.

Dow Closes at 15-Month High - CNNMoney.com -- Stocks rallied Wednesday as investors resumed the advance after a one-day selloff, scooping up tech and financial shares despite Google's potential shutdown of its China operations and mea culpas from the nation's major bank executives.

The Dow Jones industrial average rose 53 points, or 0.5%, closing at its highest point since Oct. 1, 2008. The S&P 500 index rose 9 points, or 0.8%. The Nasdaq composite gained 26 points, or 1.1%.

Stocks fell Tuesday after Alcoa's weaker-than-expected profit report and a profit warning from Chevron raised worries about the strength of the fourth-quarter reports.

Oil Closes Below $80 on Supply Concerns - CNNMoney.com -- Oil prices dipped below $80 a barrel Wednesday after a government report showed a larger-than-expected increase in the nation's fuel supplies.

Crude oil for February delivery dropped $1.14 to settle at $79.65 a barrel after falling to a low of $78.39 earlier in the session.

In its weekly report, the U.S. Energy Information Administration said U.S. crude supplies rose by 3.7 million barrels. The report highlighted concerns about swelling U.S. fuel inventories as the weak economy has kept a lid on energy demand.

Refinance Loan Applications Rebound 21% After Holiday Season - The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending January 8, 2010.

Mortgage applications increased 14.3 percent on a seasonally adjusted basis. The Refinance Index increased 21.8 percent from last week's holiday adjusted index and increased 73.9 percent from last week's unadjusted index. The seasonally adjusted Purchase Index increased 0.8 percent from one week earlier. The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.13 percent from 5.18 percent, with points decreasing to 1.17 from 1.28.

Stocks Sink on Earnings Woes - CNNMoney.com -- Stocks fell Tuesday in a broad-based selloff, after Alcoa's worse-than-expected profit report and Chevron's profit warning unnerved investors at the start of the quarterly profit reporting period.

The Dow Jones industrial averagesank 37 points, or 0.3%. The S&P 500 index lost 11 points, or 0.9%. The Nasdaq composite slid 30 points, or 1.3%.

Disappointing profit news from Alcoa and Chevron, two big Dow components, was unnerving at the start of a quarterly reporting period that is expected to bring strong growth.

The reports follow last week's weaker-than-expected December payrolls report, which raised worries about growth in the fourth quarter.

At the same time, the financial sector is under pressure as the FDIC, the top banking regulator, considers requiring lenders to pay if they tie compensation to risky practices. Meanwhile, the White House is debating taxing companies that took bailout funds to make sure they pay back the money.

MBA Reduces 2010 Origination Outlook Again  - It was only a month ago that the Mortgage Bankers Association (MBA) projected that the industry would complete about $1.5 trillion in mortgage originations in 2010 compared to $2.0 in new mortgages in 2009. This 25 percent decline was bad news at the time, but the MBA's Mortgage Finance Commentary released this morning paints an even grimmer outlook.

The new figures call for a decline in mortgage originations to their lowest level in a decade, a drop of 40 percent over the 2009 figure. The forecast is now for a total of $1.3 trillion mortgage originations this year compared to an updated estimate of $2.1 trillion in 2009.
In the original estimate released on December 14, purchase originations during the year were estimated to increase from $718 billion to $804 billion. The new report still anticipates an increase in the origination of these mortgages, but only from an updated figure of $742 billion in 2009 to $776 billion this year. This slight increase will be overwhelmed by plummeting originations for refinancing, projected to fall from $1.372 trillion to $502 billion this year. The original projection was for refinancing totally from $1.246 trillion to $693 billion.

The report said that data showing strong existing home sales in November reflected expectations that the homebuyer tax credit was ending but that home sales are likely to continue to adjust downward in upcoming months in spite of the fact that the tax credit was extended.

The Federal Reserve will meet their commitment to purchase $1.25 trillion in agency MBS during the first quarter and will not be likely to raise interest rates this year. The report projects that rates will increase by about a percentage point over the year, ending at just 6.1 percent as a result of widening mortgage spreads and an increase in treasury rates driven by federal budget deficits. Once the Fed stops buying MBS, yields will have to increase before private investors come back into the market.

Stocks Churn As Results Start to Pour In - CNNMoney.com -- Stocks seesawed Monday as investors eyed a weak dollar, higher commodity prices and a selloff in technology shares ahead of the start of the quarterly reporting period, which began after the closing bell with Alcoa.

The Dow Jones industrial average gained 46 points, or 0.4%. The S&P 500 index added 2 points, or 0.2%. The Nasdaq composite lost 5 points, or 0.2%.

The fourth-quarter reporting period got underway Monday after the close, when Dow component Alcoa issued its results.

Stocks gained Friday as a tech rally helped investors look past a surprisingly weak jobs report, leaving all three major indexes at 15-month highs.

Obama May Use Bank Tax to Recoup Bailout - The White House is considering a tax on financial institutions to ensure that taxpayers who bailed out banks get paid back, a senior administration official said Monday.

The law that created the $700 billion Troubled Asset Relief Program empowered the president to ask Congress to recoup money if bailouts were not paid back in full.

TARP dictates that the Office of Management and Budget consider such action five years after TARP went into effect in October 2008 to prevent the federal bailout from adding to the deficit.

Robert Gibbs, the White House press secretary, said it is the president's "goal" to ensure the "money that taxpayers put up will be paid back in full."