Wall Street witnessed modest losses during the holiday shortened week that ended on Friday, 20 February, 2009. The financial sector remained in focus during the week with the issue of nationalization of banks taking the front seat. The fear of such possibility kept investors quite at unease throughout the entire week. Economic and earning reports checked in mostly in line with expectations. President Obama signing the $787 billion stimulus plan to bring the US economy back on track was one of the major events of the week.
The Dow Jones Industrial Average lost 484 points (6.2%) for the week to end at 7,365. Tech - heavy Nasdaq lost 93 (6.1%) to end at 1,441. S&P 500 lost 57 (6.9%) to end at 770.
All the ten economic sectors ended in the red during the week led by the consumer staples and financial sectors.
During the week, President Obama announced the details of his mortgage relief plan which is considered as the root of almost the entire recession. The Homeowner Affordability and Stability Plan has three main components - Refinancing for up to 4 to 5 million homeowners to make their mortgages more affordable, a $75 billion homeowner stability initiative to reach up to 3 to 4 million at-risk homeowners and supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
In its latest plan for aiding the ailing housing sector, the government is increasing funding to Fannie Mae and Freddie Mac by expanding the allowable size of the GSEs' retained mortgage portfolios to $900 billion from $850 billion, while also purchasing Fannie Mae and Freddie Mac mortgage-backed securities. Fannie Mae and Freddie Mac will receive increased preferred stock purchase agreements from the Treasury as well.
During the week, comments came from Fed Chairman Bernanke. Bernanke noted the Fed has developed a second set of policy tools that involve the provision of liquidity directly to borrowers and investors in key credit markets.
In the US market on Friday, 20 February, 2009, stocks ended in the red. The Dow Jones Industrial Average ended lower by 100 points at 7,365, the Nasdaq closed lower by 1.5 points at 1,441 and the S&P 500 closed lower by 8.9 points at 770.
Stocks plunged earlier during the day after fear gripped the US economy that US banks might be nationalized. The fear eased a bit after President Barack Obama said that he is in favour of "privately owned" banks. Bank of America, Citigroup and JP Morgan Chase were the main Dow laggards on that day.
Among earning report for the day on Friday, Lowe's reported earnings that missed expectations, and issued downside guidance. JC Penney beat earnings estimates, but forecast a deeper loss in the coming quarter.
Among economic reports for the day the Labor Department reported today that U.S. consumer prices were unchanged over the past 12 months, the lowest inflation rate since 1955. The dame was mainly due to the 20% drop in energy price over the period.
The consumer price report checked in on that day. In January, 2009 the consumer price index rose a seasonally adjusted 0.3% and was the first increase since July, 2008. The report also detailed that the core CPI, the measure of retail-level inflation that strips out food and energy prices increased 0.2% on a seasonally adjusted basis. It's the largest gain in the CPI since August. Over the past 12 months, the core CPI is up 1.7%, the lowest rate seen for core inflation since mid-2004.
On Friday, crude-oil futures for light sweet crude for April delivery closed at $40.03/barrel (lower by $0.15 or 0.37%) on the New York Mercantile Exchange. For the week, crude ended higher by 3.8%.
For the year 2009, Dow, Nasdaq and S&P 500 are down by 16.1%, 8.6% and 14.7% respectively.
0 comments:
Post a Comment