| Market Summary |
Stocks soared as investors embraced signs of a recovering credit market and encouraging statements from Federal Reserve Chairman Ben Bernanke. The Dow Jones Industrial Average gained over 400 points, finishing more than 4.6% ahead for the day, while the NASDAQ and S&P 500 tacked on 58.74 and 44.85 points, respectively. Bernanke suggested that Congress seriously consider another stimulus package as a means of improving the economy, saying that a spike of government spending would be "appropriate" at this time. Other signs that soothed investors were further easing of the bank-to-bank lending rates, which fell for a sixth consecutive day, and decreased demand for the Treasury bills, which have become the safest bet for returns. In corporate news, energy stocks such as Chevron and Exxon Mobil (XOM: Charts, News, Offers) reversed the losses they suffered last week and each rose more than 10 percent on the day. Although oil prices increased slightly on news that OPEC may cut output, gasoline prices continued to dip today. Investors have been erratic at best in their trading over the past weeks so they'll be keeping a close eye on the markets tomorrow for further signs of economic improvement.
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| Market News |
Federal Reserve Chairman Ben Bernanke told Congress on Monday that another wave of government spending may be needed as the economy limps through what could be an extended period of subpar growth.
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke told a congressional panel.
It was the first time the central bank chairman had explicitly endorsed a second stimulus package. The government sent out about $100 billion in tax rebate checks over the summer to try to jump-start the economy, but consumer spending has struggled since then. Retail sales fell for three consecutive months through September.
The White House also appeared to be warming to the idea of another spending program. (Source: Reuters) Full Story
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The price of oil rose Monday as investors weighed a potential OPEC supply cut against longer-term concerns about weakening demand.
Light, sweet crude for November delivery settled up $2.40 to $74.25 a barrel on the New York Mercantile Exchange. Oil has fallen sharply from recent highs, losing roughly half its value since it topped $147 in July.
Retail gasoline prices, meanwhile, continued to come down. The national average price for a gallon of regular gasoline fell more than 3 cents overnight to $2.923, according to a survey by the American Automobile Association.
Gas prices have retreated about 30%, or $1.19, from the all-time high of $4.114 that AAA reported in July. (Source: CNNMoney.com) Full Story
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General Motors Corp.(GM: Charts, News, Offers), with its cash pile increasingly depleted, reportedly hasn't yet been able to secure the necessary funding to close a merger deal with rival automaker Chrysler LLC. That could put a damper on the companies' goal to close a transaction before the Nov. 4 presidential election, which was reported over the weekend by the Detroit News. GM's shares were on the rise to start the week, up 1.6% to close at $6.53. The Dow component has lost 74% of its value since the beginning of the year.
GM, its lenders and Chrysler's owner Cerberus Capital Management have been pitching the deal to investors, citing anticipated cost savings of up to $10 billion, an immediate boost in revenue and increased cash availability to the combined firm. (Source: MarketWatch) Full Story
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| Market Analysis |
The U.S. may be on its way to becoming a nation of savers, whether Americans like it or not.
With home and stock prices declining and credit hard to come by, consumers who have fallen out of the savings habit are being forced to curb borrowing and rein in spending.
That is bad news for companies catering to them, which will have to retrench as well. Detroit automakers may need to slash costs and merge as Americans hold onto their cars longer. Shopping malls might be forced to shut as retail traffic trails off. Hotels may have to shelve expansion plans as vacationers become stingier with their dollars. (Source: Bloomberg) Full Story
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Just four months ago, a conference here on electric cars drew four times as many people as expected. District fire marshals ordered some of the crowd to leave, and the atmosphere was more like that of a rock concert than an energy conference. A brief film depicted an electric car owner driving off with a beautiful woman to the strains of "The Power of Love" while her original companion struggles to pay for gasoline. The audience cheered.
One discordant note in the series of enthusiastic speeches came from Bill Reinert, one of the Toyota Prius (TM: Charts, News, Offers)designers. He cautioned that designing and ramping up production of a new car takes five years.
"If oil goes down to $60 or $70 a barrel and gasoline gets back to $2.50 a gallon, and that very possibly could happen," he said, "will that demand stay the same or will we shift back up?" (Source: Washington Post) Full Story
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Prices of food commodities have plummeted recently by an average of 50 percent from the highs they reached over the summer. Will that mean lower prices at the grocery store?
Of course not. "People still need to eat. I don't know how else to say it," said Joseph Victor, vice president of marketing at the commodity research company Allendale, interviewed by the Wall Street Journal.
Food companies and grocers want to keep high prices locked in for as long as possible, of course. And there is an information lag. As the Journal notes, consumers in general "aren't as savvy about the costs of food ingredients as they are, say, about the price of oil versus the price at their corner gas station." (Source: Daily Bread) Full Story
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