| Market Summary |
Wall Street was able to cut major losses, but still ended in negative territory. Recession fears increased as global stocks markets declined sharply. The Dow Jones Industrial Average lost over 500 points at the start of the session, but was able to recoup some losses and end at 8,378.95. Broader stocks indicators also declined. The Standard & Poor's 500 index fell 31.34 points to 876.77 and the Nasdaq composite index fell 51.88 points to 1,552.03. Stocks have been mostly lower the entire week as investors processed a number of disappointing corporate results and remained concerned about a global economic slowdown. Additional disappointing news from Sony and Chrysler ended the week on a sour note. Shares of Sony Corp. (SNE: Charts, News, Offers) declined 14% after the company cut its annual profit and sales projections. Chrysler LLC announced plans to reduce its white-collar workforce by 25% by the end of the year. This will result in 5,000 salaried and supplemental employees being laid off. U.S. light crude oil for December delivery fell $3.69 to $64.15 despite OPEC announcing that it was cutting production by 1.5 million barrels a day. Investors are speculating that the Central Bank will cut interest rates when they meet next week to help with the global economic slowdown. If the rates are cut, it will be the first time that they have been below 1%. The dollar rallied against the euro, but declined versus the yen.
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| Market News |
PNC Financial Services Group Inc. (PNC: Charts, News, Offers) said Friday it is acquiring National City Corp. (NCC: Charts, News, Offers) for $5.58 billion, the first bank to use fresh investments from a federal bailout program to make an acquisition. The deal comes within hours of PNC Financial receiving approval for $7.7 billion in cash from the government under the $750 billion government program aimed at relieving the ongoing credit crisis. The agreement is the latest deal in the rapidly consolidating banking industry. It combines Pittsburgh-based PNC, which has weathered the ongoing credit crisis better than most regional banks, with National City, a large, Cleveland-based regional bank weighed down by high-risk mortgage loans. The acquisition makes PNC Financial the nation's fifth largest bank by deposits and will give it the fourth most branches, said James Rohr, PNC's chairman and chief executive, during a conference call with investors and analysts. The combined bank will have about $180 billion in deposits and more than 2,700 branches. (Source: Yahoo! Finance) Full Story
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Sales of existing homes rose sharply in September, offering a glimmer of hope for the troubled housing market, but analysts cautioned that many of the sales were driven by foreclosures that are still pushing prices lower. The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom. It was the first year-over-year sales increase in since November 2005. But home prices are still falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago. Lawrence Yun, chief economist for the Realtors, said a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island. (Source: MSNBC) Full Story
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As they waited for Microsoft's Oct. 23 quarterly earnings call to begin, analysts and others were treated to a rousing rendition of the theme from The Lone Ranger. Nostalgia for the heroic masked avenger might seem ill-suited to these dour economic times. And yet while the software giant didn't exactly come to the rescue of worried investors, its results left many feeling reassured. As other tech bellwethers have done, Microsoft has cut its forecasts and is having difficulty predicting the future. Still, the company's fiscal first-quarter numbers show the floor is not falling out from under global IT spending. Microsoft (MSFT: Charts, News, Offers) not only beat analysts' revenue and profit expectations in the period that ended in September, but its forecast for this quarter is based on an assumption that the recession will be mild. (Source: BusinessWeek) Full Story
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Filing Your Taxes
Details on when and how to file your tax return. Describes often used tax return terminology and processes, including electronic filing, estimated payments, withholding, and alternate minimum tax (AMT).
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| Market Analysis |
Home sales are booming once again in Prince William County, Virginia, an area hit hard by the housing bust. Foreclosures are responsible. The same is true in counties across Southern California and inland areas east of San Francisco Bay. Sales in Southern California were up two-thirds from a year earlier, the largest increase in at least two decades. It's all part of a nasty adjustment in the wake of the bursting of the housing bubble. The federal government is trying to find a way to mitigate the impact on families losing their homes, a difficult task because many of them can't afford their mortgages and, in some cases, never could. While politicians look for a solution, market forces are generating their own. Many homeowners who were counting on appreciation to create equity, letting them refinance into cheaper mortgages, got stuck once housing prices fell. Defaults and then foreclosures shot up, sending prices even lower. (Source: Bloomberg) Full Story
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Stock prices are low, sure enough. But are stocks cheap? For most growth stocks, I think the answer is "not yet." But I've found three that are close. One of these I'd buy if it dropped back to its Oct. 15 low. One I'm putting on my Jubak's Picks watch list. And one I already own in that portfolio and will hold on to even in this tough environment. Classic growth stocks such as Apple (AAPL: Charts, News, Offers), Coach (COH: Charts, News, Offers), Google (GOOG: Charts, News, Offers) and Whole Food Market (WFMI: Charts, News, Offers) certainly look cheap. As of Oct. 21, these four stocks were down 53%, 31%, 46% and 67%, respectively, for the year. You could say they're selling for about half off. But with the economy headed into what looks like the deepest recession since it contracted by 3% in the fourth quarter of 1990 and 2% in the first quarter of 1991, I don't think these stocks are bargains. (Source: MSN Money) Full Story
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Amid the financial crisis, some 40,000 of New York's 185,700 Wall Street jobs could be lost. The bailout is not exactly offering a great deal of confidence to the financial markets. We are all losing a lot of money. Fear runs through the system like a chilling shiver in the middle of the night. But is there a silver lining in this nightmare? I have long been troubled by the fact that Wall Street recruits some of the most highly educated talent in America into jobs that do not involve "building" or "leading." Rather, these professionals spend their lives "trading"--buying and selling equities, for example, in companies that other people have built with their blood, sweat and hearts. And of late, it appears that the best and the brightest have been applying their creativity and innovation into scams, mostly. (Source: Forbes.com) Full Story
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