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| Market Summary |
Stocks ended mixed after declining for the majority of the session. Investors were able to push the Dow and S&P 500 into positive territory during the last hour of trading. Investors remained concerned that efforts by governments around the world are not enough to prevent a global recession. Stocks gyrated at the start of the session and were led lower by the Nasdaq during afternoon trading. Comments from former Federal Reserve Chairman Alan Greenspan helped reassure some investors. Greenspan stated that the economy will emerge from this “once-in-a century credit tsunami.” Investors had another round of corporate reports to digest during the session. Goldman Sachs (GS: Charts, News, Offers) announced that it will cut 10% of its workforce. General Motors (GM: Charts, News, Offers) also hinted at additional job cuts. Big tech stocks including Microsoft (MSFT: Charts, News, Offers) and Level 3 Communications (LVLT: Charts, News, Offers) declined. The Labor Department reported that requests for unemployment benefits increased 15,000 last week. U.S. light crude oil for November delivery rose 75 cents to $67.50 a barrel as investors speculated that OPEC will cut production. Demand for short-term Treasury bills increased as investors sought out safety from declining stocks. The yield on the 10-year note fell to 3.54% from 3.59% Thursday. The dollar ended mixed versus other major currencies and gold prices fell $20.50 to $714.70 an ounce.
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| Market News |
Xerox Corp. (XRX: Charts, News, Offers) plans to cut 3,000 jobs, or 5 percent of its work force, because a slowdown in orders from large U.S. companies has dragged down the printer and copier maker's profit margins. The restructuring the Norwalk, Conn.-based company announced Thursday will affect all departments except sales and is an example of how the economic turmoil is hurting companies outside the financial services industry. Xerox shares slid 25 cents, 3.1 percent, to $7.73 in late morning trading. Xerox had already been steadily cutting costs and jobs before the financial crisis dramatically worsened in the past month. The company has slashed 8,800 jobs since 2005, including 1,500 so far this year. But the recent sharp economic downturn intensified pressure on Xerox's profit margins and caused the company to accelerate its restructuring plans. (Source: Yahoo! Finance) Full Story
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Former Federal Reserve Chairman Alan Greenspan told a House committee Thursday that the nation will emerge from the current credit crisis with a "far sounder financial system." "We are in the midst of a once-in-a century credit tsunami," Greenspan told the House Oversight and Reform Committee. But he said that less-risky decisions by investors will help pull the markets out of their slump. "Investors, chastened, will be exceptionally cautious," he said. Committee members weren't buying Greenspan's rosy forecast, lambasting him and two other officials - SEC chairman Christopher Cox and former Treasury Secretary John Snow - for failing to prevent the credit crisis and for refusing to take responsibility for it. In his opening statement, Rep. Henry Waxman, D-Calif., committee chairman, said the current economic crisis could have been prevented "if regulators had paid more attention and intervened with responsible legislation. The list of regulatory mistakes and misjudgments is long and the cost to taxpayers and the economy is staggering." (Source: CNN Money) Full Story
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The number of homeowners ensnared in the foreclosure crisis grew by more than 70% in the third quarter of this year compared with the same period in 2007, according to data released Thursday. Nationwide, nearly 766,000 homes received at least one foreclosure-related notice from July through September, up 71% from a year earlier, said foreclosure listing service RealtyTrac Inc. By the end of the year, RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S. That's bad news for anyone who lives nearby and wants to sell their home. While foreclosure sales are booming in many areas, those properties are commanding deep discounts and pulling down neighboring property values. "It has a pretty significant impact in terms of pricing," said Rick Sharga, RealtyTrac's vice president for marketing. (Source: USA Today) Full Story
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| Market Analysis |
With their economies in recession and a credit crunch steepening the slide, policy makers around the world race to contain the damage. Calls for expansion of government spending, taxes and regulation, even for radical revision of our economic system, an end to capitalism, are rampant. The response to those calls will be shaped to an unusual degree by the next president, given the big spending, high tax, regulatory agenda of the Democratic majorities in Congress. Presidents, with occasional exceptions, accommodate a Congress controlled by their party (George W. Bush) and only triangulate to the center when the opposition controls it (Bill Clinton). The next few years will determine whether currently contemplated policy changes round off what their proponents view as the rough edges of the Reagan revolution and capitalism, or are a bridge to more radical re-engineering of the economy. If the latter, the eventual economic costs of permanently lower living standards -- 30% lower at European levels of taxes, spending and regulation -- would be far greater than those caused by even a severe recession. (Source: Wall Street Journal) Full Story
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You have to wonder who the people running Regions Financial Corp. (RF: Charts, News, Offers) think they're kidding. So far this year, the Birmingham, Alabama-based regional bank says it has earned $622.5 million, including $79.5 million of net income last quarter. In reality, Regions probably has lost billions. The bosses just won't admit it. It all comes down to that pneumatic, intangible asset known as goodwill, which is about as valuable as the air in a paper sack. As of Sept. 30, according to Regions, the bank's goodwill was worth $11.5 billion, slightly more than the quarter before. That's about 59 percent of Regions' book value, and $4.1 billion more than what the stock market says the entire company is worth. There is one scenario I can envision in which that goodwill figure would be justified. That would be if another big bank is offering right now to buy Regions for a huge premium. There's no reason for us to think that's happening, notwithstanding the Treasury Department's recent jawboning, encouraging U.S. banks to merge their way out of their problems. (Source: Bloomberg) Full Story
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In June, 157-year-old Antioch College decided to "suspend operations" at its flagship campus despite a push from alumni to rescue the flailing institution. At that point, only 60 students were enrolled, and their $40,000 per year tuition was being heavily subsidized by Antioch's five newer campuses. Antioch Chancellor Tony Murdoch said the plug had to be pulled. "It was a downward spiral where fewer students led to fewer professors, and eventually the deficit was projected to be so large that the other schools no longer wanted to subsidize their mother school." They may soon have company. Home builders and banks aren't the only ones facing economic headwinds these days. America's undercapitalized independent colleges are staring at a spiral of major threats to solvency as penny-pinching students and parents consider cheaper options, and funding sources dry up. As a result, they could be the next bubble industry to pop. (Source: Forbes.com) Full Story
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