| Market Summary |
Stocks ended mixed on Friday as investors digested a weak March jobs report with hopes that the economy has braved the storm and will now make a turnaround. According to the Labor Department, employers cut 80,000 jobs from their payrolls last month. While the news was disappointing, investors were relieved the total was not higher. The unemployment rate also shot up to 5.1 percent, the highest since September 2005. The Standard & Poor's 500 Index rose, capping its biggest weekly gain in more than two months, as a rally in commodity producers overshadowed a worsening outlook for bank profits and a jump in unemployment. Exxon Mobil Corp. (XOM: Charts, News, Offers) led energy shares to a five-week high after oil climbed above $106 a barrel. A variety of technology shares gained, lifting the Nasdaq. Advancers included Google (GOOG: Charts, News, Offers), eBay (EBAY: Charts, News, Offers), and Cisco Systems (CSCO: Charts, News, Offers). GM (GM: Charts, News, Offers) fell after a private equity group said it terminated its agreement to invest $2.55 billion in its largest auto parts supplier. Treasury prices jumped after the jobs report, as investors moved back into the bond market. The yield on the benchmark 10-year note fell to 3.49 percent from 3.59 percent.
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| Market News |
The government has lifted a week-old ban that prevented IBM (IBM: Charts, News, Offers) from getting new federal contracts in an exchange for an agreement from the company to drop its protest of an $84 million Environmental Protection Agency contract it lost last year. The ban stemmed from an alleged ethical violation in connection with IBM's protest of the EPA contract. Under a reciprocal agreement among federal agencies, when one issues a ban, the others follow it. International Business Machines Corp. said it is continuing to cooperate with the EPA and the U.S. Attorney's Office for the Eastern District of Virginia, which served grand jury subpoenas seeking documents and testimony relating to the contract. (Source: Yahoo! Finance) Full Story
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More Americans have fallen behind on consumer loans than at any time in nearly 16 years, as credit problems once concentrated in mortgages spread into other forms of debt. In a quarterly study, the American Bankers Association said the percentage of loans at least 30 days past due rose to 2.65% in the fourth quarter from 2.44% in the third quarter, and from 2.23% a year earlier. The rate of delinquencies was the highest since a 2.75% rate in the first quarter of 1992. It provides a fresh sign the nation's economy is slowing, and may be in recession. "There's no question that the economy is weakening beyond housing, resulting in the loss of household purchasing power," said John Lonski, chief economist at Moody's Investors Service. (Source: USA Today) Full Story
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UBS AG, (UBS: Charts, News, Offers) already wincing from massive write-downs caused by the subprime crisis, has taken another blow as a former CEO is pushing the Swiss bank to separate its private client operations from the stumbling investment unit. A shareholder group cheered the proposal from the bank’s former CEO Luqman Arnold and investors agreed, sending its stock higher on Friday. UBS has reported write-downs of $37.4 billion for the past nine months — so far the largest reported by any bank with exposure to U.S. defaults on risky mortgages. It expects first-quarter losses of $12.1 billion and said it would seek $15.1 billion in new capital. (Source: MSNBC) Full Story
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| Market Analysis |
Mickey Mouse sold municipal bonds last month. So did Minnie Mouse, for that matter, and Donald Duck, and Pluto, and Goofy, and the Seven Dwarfs and the whole gang who got their start on Walt Disney's drafting table. On March 24, the California Infrastructure and Economic Development Bank sold $58 million in revenue bonds for the Walt Disney Family Museum. The museum is currently under construction at the former Army base -- the Presidio -- in San Francisco, and is slated to open in August 2009. The tax-exempt bonds were underwritten by JP Morgan Securities Inc., and were priced to yield from 2.84 percent in 2011 to 5.35 percent in 2028, with term bonds offering 5.42 percent in 2033 and 5.50 percent in 2038. (Source: Bloomberg) Full Story
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Bear Stearns (BSC: Charts, News, Offers) did not die alone. Regulators were watching closely. They had pushed the bank to raise capital levels and liquidity, and the firm met those conditions even up to its collapse. But the SEC and others had never considered what might happen if the bank was unable to borrow from trading partners, even using loans secured by high-quality assets. And that's exactly what happened to Bear Stearns the week of March 10. Amid a sea of rumors, firms stopped trusting the Bear's ability to repay, and the bank collapsed. In the wake of the Bear Stearns blow-up, rule makers will put renewed emphasis on the cash positions of major financial institutions--a traditional gauge of a bank's ability to weather crisis. But the testimony of government officials Thursday made clear that even a firm meeting regulatory standards for capital and liquidity can fall prey to a collapse in confidence, making it virtually impossible to raise capital to stop the damage fast enough to matter. (Source: Forbes.com) Full Story
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An unemployment rate at 5% used to be called full employment. Today it's considered the sign of a recession. When the Labor Department gives its March employment report Friday, it's important to keep in mind that the relatively low unemployment rate isn't telling the whole story about the weakness of the U.S. labor market. Economists surveyed by Briefing.com are forecasting a loss of 50,000 jobs from the nation's payrolls in the month. That would mark the third straight month of job declines. The unemployment rate is expected to jump to 5.0% from 4.8% in February. But some economists point to other readings, which show that the market is much weaker than the unemployment rate would suggest. (Source: CNN Money) Full Story
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