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| Market Summary |
Stocks advanced late on Thursday after oil reached its lowest level since 2007 and investors scooped up battered shares. Stocks tumbled earlier in the session after a number of companies including Merrill Lynch (MER: Charts, News, Offers) and Citigroup (C: Charts, News, Offers) reported record losses. A weak manufacturing report, which showed the largest decline in 34 years, also pulled the market lower. Investors appeared optimistic and pushed the market higher after the Labor Department reported a better-than-expected reading on consumer prices. The September Consumer Price Index (CPI) was flat versus the 0.1% rise economists expected. The government also reported that the number of Americans filing for unemployment benefits declined by 16,000. In corporate news, eBay (EBAY: Charts, News, Offers) reported better-than-expected quarterly profit, but issued a warning about fourth quarter results. General Motors (GM: Charts, News, Offers) announced that it would lay off 1,500 workers from factories in Michigan and Delaware. Lending rates continue to improve, but remained elevated. The TED spread declined to 4.11% from 4.31% late Wednesday. Oil prices fell $4.65 to settle at $69.85 after an inventory report showed a larger gain in supplies. The dollar was mixed against other major currencies and gold prices fell $34.50 to $804.50 an ounce.
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| Market News |
Hershey (HSY: Charts, News, Offers), the nation's second-largest candymaker, on Thursday reported higher profits and sales, helped as costs from a major restructuring project subsided and customers ordered extra shipments to beat a price increase in August. However, The Hershey Co.'s margins are still being squeezed by high commodity costs and heavy spending to try to revive two years of flat sales, and it said its sales volumes will be hurt by the August price increase. In the three months ended Sept. 28, Hershey said it doubled its earnings to $124.5 million, or 54 cents a share, on revenue of $1.49 billion. (Source: Yahoo! Finance) Full Story
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Citigroup's (C: Charts, News, Offers) losing streak continued after reporting a $2.8 billion loss Thursday, as the bank found itself stung yet again by credit and mortgage-related writedowns. During the third quarter, the company said it lost $2.8 billion, or 60 cents a share. A year ago, the company reported a profit of $2.21 billion, or 44 cents a share. This marked the fourth-consecutive loss for Citigroup, the nation's largest bank by assets. The company has lost more than $20 billion in the past four quarters. The latest results, however, were somewhat encouraging as the loss was smaller-than-expected. Analysts were expecting a loss of 70 cents a share, according to Thomson Reuters. (Source: CNN Money) Full Story
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Merrill Lynch (MER: Charts, News, Offers) Thursday reported a loss from continuing operations of $5.1 billion, or $5.56 a share, compared with a year-earlier loss from continuing operations of $2.4 billion, or $2.99 a share. The net loss in the quarter was $5.2 billion, or $5.58 a share. A year earlier the firm reported a loss of $2.2 billion. Analysts surveyed by Thomson Reuters expected Merrill to report a loss of $5.22 a share in the third quarter. Merrill said results in the latest quarter included a $2.5 billion nontax deductible payment to Temasek Holdings related to a common stock offering, and a $425 million expense, including a $125 million fine, from Merrill's settlement with regulators over auction rate securities. (Source: TheStreet) Full Story
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| Market Analysis |
The late Senator Russell Long used to say that the core truth of tax policy was "Don't tax you, don't tax me, tax the fellow behind the tree." Substitute political blame for the financial meltdown for taxes, and you will understand what Senator Chris Dodd is attempting today with his Banking Committee hearing on the causes of the panic. In February 2004, while Republican colleagues warned of the systemic risks posed by Fannie Mae and Freddie Mac, Mr. Dodd pronounced the mortgage market "one of the great success stories of all time." A year later, the Connecticut Democrat voted against a reform that would have limited the size of Fan and Fred's mortgage portfolios. Now that Fan and Fred have collapsed at a cost to taxpayers that could run to $200 billion or more, Mr. Dodd is also under fire for accepting sweetheart loans from Countrywide Financial, the subprime mortgage factory. (Source: Wall Street Journal) Full Story
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Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and market participants who were formerly averse to government interference agree that a more robust regulatory framework must be constructed to cage the destructive forces of capitalism. For the political left, which has long championed the need for such limits, this crisis is the opportunity of a lifetime. Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders were irresponsible, and they should pay. (Source: Washington Post) Full Story
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Anyone who lost money in the collapse of Lehman Brothers Holdings Inc. (LEH: Charts, News, Offers) should probably be reaching for their lawyers about now. Our money -- yours and mine -- is now keeping the global financial system afloat. In a capitulation that beggars belief, governments all around the world have pledged our money -- yours and mine -- to fund a "No Bank Left Behind'' program. And no matter what the politicians say, that means our money -- yours and mine -- is now at risk in the casino. So the decision to let Lehman go to the wall last month looks increasingly like (a) an experiment in brinkmanship gone wrong (b) a worthless sacrifice to the angry gods of moral hazard (c) the biggest mistake that the authorities have made during the current crisis (d) all of the above. (Source: Bloomberg) Full Story
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