Archive for February, 2010

Stocks fight back from big losses - CNNMoney.com -- Stocks ended with modest losses Thursday, fighting off a bigger decline that surrounded the latest worries about Greece's debt crisis and weaker-than-expected reports on the economy.

The Dow Jones industrial average lost 53 points or 0.5%. The S&P 500 index fell 2 points, or 0.2%. The Nasdaq composite lost 2 points or 0.1%.

Treasurys gain on flight to safety - CNNMoney.com -- Treasurys rose Thursday as investors flocked to the safety of U.S. debt following a dour report on the job market and worries about Greece's fiscal problems.

What prices are doing: The benchmark 10-year note was up 14/32 to 99-28/32, pushing the yield down to 3.63% from 3.69% late Wednesday. Bond prices and yields move in opposite directions.

The 30-year bond rose 29/32 to trade at 100-23/32 and its yield was 4.58%. The 2-year note ticked up 2/32 to 100-2/32 and yielded 0.83%.

Higher than expected Jobless rate - The Labor Department released its weekly jobless claims report before the opening bell on Thursday.

Initial jobless claims surged to 496,000 in the week ended Feb. 20. That's much more than the 460,000 claims projected by a consensus of economist opinion from Briefing.com. It's also much larger than the revised tally of 474,000 claims reported for the prior week.

Stocks Hit as Confidence Slips - CNNMoney.com -- Stocks tumbled Tuesday after a key measure of consumer confidence plunged, reflecting investors' growing pessimism about the strength of the economic recovery.

The Dow Jones industrial average lost 100 points, or 1%. The 30-share Dow had lost as much as 115 points earlier. The S&P 500 index lost 13 points, or 1.2%. The Nasdaq composite fell 28 points, or 1.3%.

A mixed market turned negative after the late morning release of a weaker-than-expected reading on consumer confidence. The report reflected investor wariness this year amid some conflicting readings on the economy, debt issues at home and abroad, and lawmaker squabbling in Washington.

Nearly 25% of All Mortgages Are Underwater - CNNMoney.com -- More bad news on the housing bust front: Nearly 25% of all mortgage borrowers were underwater, meaning they more on their loans than their homes are worth.

First American CoreLogic, the research firm that monitors housing equity, reported Tuesday that 11.3 million homeowners -- or 24% of all homes with mortgages -- were underwater as of the end of 2009. That's up from 23% and 10.7 million borrowers three month earlier.

Nevada was the state with the worst record at 70% of all mortgaged properties underwater. That was followed by Arizona (51%), Florida (48%), Michigan (39%) and California (35%).

Get Ready For Higher Mortgage Rates - Even though signs of a housing recovery are uneven at best, the Federal Reserve is about to take off the training wheels it has had in place for more than a year to help the battered market.

The Fed has been buying mortgage-backed securities, the bundling of home loans that are used to fund mortgage lending, since late 2008. But next month it plans to complete its purchase of $1.25 trillion in mortgages.

That could be bad news. There is wide agreement that the removal of this support will mean higher mortgage rates, which could hit housing prices and sales hard. Some even worry that this could cause the broader economic recovery to stall.

The program was the largest single injection of cash into the economy by the Fed during the financial crisis, and it will be the longest-lasting source of funds as well. Even though the Fed intends to stop buying mortgages, few expect the central bank will start selling them to private investors any time in the next few years.

Higher rates on the way. But even if the Fed holds onto the mortgages it has already purchased, the act of no longer buying additional mortgages is likely to raise mortgage rates in the coming weeks. Experts say a jump of at least a quarter to a half percentage point is likely.

Stocks end volatile session lower - CNNMoney.com -- Stocks ended a choppy session lower Monday as investors weighed earnings news, President Obama's health care proposal and Schlumberger's $11 billion buyout deal for oil services rival Smith International.

The Dow Jones industrial average lost 19 points or 0.2%. Last week, the Dow surged 300 points for its biggest one-week gain since November. The S&P 500 index eased 1 point, or 0.1%. The Nasdaq composite slipped 2 points, or 0.1%.

Long-term Treasurys under pressure - CNNMoney.com -- Long-term Treasury prices remained lower Monday, while shorter-term notes gained modestly, after the government sold $8 billion worth of 30-year inflation-adjusted bonds in the first phase of a record weekly debt sale.

What prices are doing: The 10-year note was down 6/32 to 98-18/32 and its yield rose to 3.79% from 3.73% late Friday. Bond prices and yields move in opposite directions.

The 30-year bond fell 14/32 to 98-10/32 and its yield was 4.73%. The 2-year note ticked up 2/32 to 99-31/32, yielding 0.88%.

MBA Delinquency Survey Shows Signs of Stabilization - The Mortgage Bankers Association released the National Delinquency Survey for Q4 2009 today. Total mortgage delinquency rates, seasonally adjusted, were down 17 basis points during the fourth quarter, but up year-over-year by 159 basis points.

9.47 percent of all mortgages on one- to four-family homes are now in some state of delinquency. While that was the headline on the press release accompanying the results of the Mortgage Bankers Association's National Delinquency Survey, the real news was the 16 basis point drop in new delinquencies recorded during the 4th quarter.  

Stock rally: Three days and counting - CNNMoney.com -- Stocks rallied Thursday, ending higher for the third-straight session, as investors continued to dig back in after a month long retreat that left the Dow and other major indexes at three-month lows.
The Dow Jones industrial average rose 84 points, or 0.8%. The S&P 500 index added 7 points, or 0.7%. The Nasdaq composite added 15 points or 0.7%.

After the close, the Federal Reserve said it is raising the discount rate, the emergency rate it charges banks seeking loans, by a quarter-percentage point, to 0.75%. The Fed said the move reflects improvements in the economy. Fed Chairman Ben Bernanke indicated a move was coming late last week, however, such changes typically don't occur between Fed meetings.

The move does not reflect a change in policy, the central bank said, and won't impact consumer or corporate borrowing costs. The more widely used fed funds rate, the overnight rate banks charge each other, is expected to remain at historic lows near zero for the foreseeable future.

Bonds pare losses - Bond prices pared losses Thursday after the Federal Reserve raised the rate it charges banks that borrow from the central bank when they run short of funds.

What prices are doing: The benchmark 10-year note lost 1/32 to 98-12/32, pushing the yield up to 3.81% from 3.73% late Wednesday. Bond prices and yields move in opposite directions.

The 30-year bond fell 1/32 to trade at 98-10/32 and its yield was 4.73%. The 2-year note ticked down 1/32 to 100.

Home Owner Perceptions of Property Value "Overly Cynical" – Zillow, the Seattle-based company that collects data on home values throughout the country, has released results of it's homeowner confidence survey conducted during the 4th quarter of 2009. Zillow found that only 20 percent of the 2200 homeowners surveyed felt that their home's value had increased during 2009 while, based on its own data, Zillow believes that 28 percent of homes nationally had appreciated in value during the year.

Dow in Triple-Digit Rally - CNNMoney.com -- Stocks rallied Tuesday as better-than-expected quarterly results from Merck and Barclays reassured investors, and the weaker dollar boosted commodity prices and shares.

A bigger-than-expected rise in a measure of manufacturing activity in the New York area and some strength overseas added to the momentum.

The Dow Jones industrial average rose 170 points, or 1.7%, for its biggest one-day point gain since Nov. 9. The S&P 500 index rose 19 points, or 1.8%. The Nasdaq composite rose 30 points, or 1.4%.

Treasuries End Choppy Day Higher - Bond prices ended slightly higher on Tuesday, though the market experienced some flagging demand for longer-dated bills during last week's $81 billion in auctions.

The benchmark 10-year note gained 8/32 to 99-22/32, pushing the yield down to 3.66% from 3.69% late Friday. The Treasury market was closed yesterday in observance of Presidents Day.

The 30-year bond rose 10/32 to trade at 99-28/32 and its yield was 4.63%. The 2-year note ticked up 2/32 to 100-4/32. Bond prices and yields move in opposite directions.

Dow gains 100 points as Greek debt fears ebb - CNNMoney.com -- Stocks rallied Thursday after the European Union's promise to help debt-ridden Greece eased worries that a default might hurt global markets.

The Dow Jones industrial average rose 106 points, or 1%. The S&P 500 index gained 10 points, or 1.4% and the Nasdaq composite added 29 points, or 1.4%.

Stocks slid in the morning, but managed to turn up after the European leaders promised to help Greece, although details were scarce. The announcement gave investors the impetus to push the Dow back above the 10,000 mark, which it has been straddling for the last week.

Foreclosures Decline in January. Expecting Evictions to Increase in Months Ahead - What appears at first glance to be some good news on the foreclosure front may merely indicate a lull that is preceding new surge of activity. 

RealtyTrac, the Irvine California company that tracks such matters, reports that there was a 10 percent decline in foreclosure activity during January compared to the previous month.  However, the rate at which default notices, scheduled auctions, and bank repossessions were reported during the month was still 15 percent above the level one year earlier.  (MND comment: It is worth noting that all foreclosure activity on behalf of Freddie Mac and Fannie Mae was suspended from November 26, 2008 until January 9, 2009.)

James J. Saccacio, chief executive officer of RealtyTrac said "January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10 percent drop in January. If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works."

Stocks Dip on Bernanke Plan, Europe Worries -  CNNMoney.com -- Stocks struggled Wednesday as investors weighed the Greek debt situation, a strong dollar and Fed chairman Ben Bernanke's plan for eventually withdrawing some of the trillions of dollars used to bolster the nation's financial system.

The Dow Jones industrial average lost 20 points, or 0.2%. The S&P 500 index lost 2 points, or 0.2% and the Nasdaq composite lost 3 points, or 0.1%.

Stocks rallied Tuesday as growing bets that the European Union will rescue Greece from its debt problems reassured investors after a four-week selloff. But stocks were choppy Wednesday on concerns that Greece is just the first of many countries that is feeling the pressure of a growing deficit.

Bernanke Outlines Policy - Federal Reserve Chairman Ben Bernanke said in a statement Wednesday that the timing of the end of record-low interest rates would depend on economic conditions, but the Fed would be ready to move. The economy has been growing in the past six months, but many economists are worried it is not sustainable.

Bernanke wants to keep interest rates low until the economy gains traction. Wall Street has been clamoring for some information of the timing of the Fed's rate strategy. Bernanke stopped well short of giving the date, but provided plenty of technical details that will keep Fed watchers buzzing for days.

There is a wide range of estimates from Fed watchers on exactly when the Fed will tighten. The majority thinks the ultra-low interest rates are an emergency setting and the Fed will want to push them higher later this year.

Freddie Mac to Purchase $71 Billion in Seriously Delinquent Loans - Freddie Mac today announced it would purchase "substantially all" of the seriously delinquent loans (+120 days) from their fixed-rate and adjustable-rate mortgage Participation Certificate (PC) securities.(These are the main MBS securities at Freddie Mac).

The company made the announcement Wednesday, saying that the decision to purchase the loans was a cost saving move based on criteria established in December 2007.

At that time Freddie Mac said that it would, in the future, purchase loans that were 120 days or more delinquent at such time it was determined that the cost of guaranteeing payments to the holders of the securities, including advances of interest at the security coupon rate, exceeded the cost of holding the nonperforming loans in the company's mortgage related investment portfolio.

Freddie Mac said that the delinquent loan purchases will help it preserve capital and reduce the amount of any additional draws from the U.S. Department of the Treasury. The purchases would not affect Freddie Mac's activities under the Making Home Affordable Program.

Stocks Rally on Greek Bailout Hopes - CNNMoney.com -- Stocks rallied Tuesday as growing bets that European officials will rescue Greece from its debt problems reassured investors after a four-week selloff.

After the close, Dow component Walt Disney reported higher-than-expected quarterly earnings and revenue. Shares rose 2% in extended-hours trading.

The Dow Jones industrial average added 150 points, or 1.5%, after having risen as much as 230 points earlier in the session. It was the Dow's biggest one-day point advance since Jan. 4, when it gained 155.91.

The S&P 500 index rose 14 points, or 1.3% and the Nasdaq composite gained 25 points, or 1.2%.

Getting a Job Just Got a Little Easier - CNNMoney.com -- With 14.8 million people out of work, competition for new jobs is easing ever so slightly, according to a government report released Tuesday.

There are now about 5.9 job seekers, on average, competing for each job opening, according to the latest Job Openings and Labor Turnover survey from the Bureau of Labor Statistics. That's down from 6.4 the previous month -- the greatest differential since the Labor Department began tracking job openings in December 2000.

It's the first time the ratio of job seekers to jobs dipped below six to one since June of last year. While that's a step in the right direction, it's still a far cry from pre-recession levels. When the recession began in December 2007 there were only 1.7 workers per opening.

Debt Fears Drag Dow Below 10,000 - CNNMoney.com -- The Dow closed below 10,000 Monday for the first time in three months, with financial shares leading the way, as worries about the U.S. economy and European debt weighed on investor sentiment.

The Dow Jones industrial average tumbled 104 points, or 1%, ending at 9,908.39. The last time the Dow finished below 10,000 was Nov. 4, when it closed at 9802.14.

The S&P 500 index ended just below break-even. The Nasdaq composite shed 15 points, or 0.7%. Neither closed at notable lows. Since peaking at a rally high on Jan. 19, the Dow has lost 7.6%, the S&P 500 has lost 7.3% and the Nasdaq has lost 8.4%.

The major indexes have been on a decline for four weeks in a row. The optimism that propelled a 10-month rally off 12-year lows from last March has been replaced by cautiousness. Bets that an economic recovery was gaining momentum -- combined with trillions in fiscal and monetary stimulus -- fed the 2009 rally.

But so far in 2010, markets have been choppy and weak as investors wait for evidence that the still-germinating recovery is really taking hold, particularly amid the hard-hit labor market and housing industry.

Treasurys mixed ahead of auctions - CNNMoney.com -- Treasuries were mixed Monday as investors prepare for a weekly offering of U.S. debt, worth $81 billion, amid ongoing concerns about struggling European economies.

What prices are doing: The benchmark 10-year note fell 5/32 to 98-8/32, pushing the yield up to 3.58% from 3.56% late Friday. Prices and yields move in opposite directions.

The 2-year note ticked down 1/32 to 100-5/32, yielding 0.78%. But the 30-year bond held steady at 97-18/32. Its yield was 4.52%.

What's moving the market: The mixed action came one day before the Treasury plans to bring $40 billion worth of 3-year notes to market.

The U.S. will also offer $25 billion in 10-year notes Wednesday and $14 billion in 30-year bonds on Thursday. The auctions, which will settle on Feb. 16, are part of the government's quarterly refunding.

Bond prices often decline ahead of big auctions as investors adjust portfolios for the influx of new supply.

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Debt Fears Rattle Market - CNNMoney.com -- Fears about the fallout from a growing debt crisis in Europe dragged on Wall Street Thursday, sending the market to its lowest close in three months, with stocks hit across the board.

The Dow Jones industrial average tumbled 268 points, or 2.6%, closing at 10,002.26, its lowest point since Nov. 4. The blue-chip briefly dipped below 10,000 late in the day, falling to that level for the first time since early November.

The Dow's decline marked the biggest one-day point loss since March 5 of last year.

The S&P 500 index sank 34 points, or 3.1%, closing at the lowest point since Nov. 4. The one-day point loss was the biggest since April 20, 2009.

The Nasdaq composite fell 65 points, or 3%, and closed at its lowest point since Nov. 6. The one-day point loss was the largest since Feb. 10, 2009.

Debt woes propelled the dollar to a more than seven-month high versus the euro, which in turn pummeled dollar-traded commodities such as oil and gold. Treasury prices spiked, lowering yields, in a classic flight-to-safety move.

Bond yields and interest rates down by the most since mid-December – Yields on 10-year fell 10 basis points to 3.60%, so interests rates went down about an 1/8th of a point this morning.

Bonds also benefited from a Labor Department report showing jobless claims unexpectedly rose last week to the highest level since mid-December, adding to concerns that the economic recovery won't be smooth or swift. First-time unemployment claims rose 8,000 to 480,000 in the latest week.