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| Market Summary |
Stocks closed out the week higher despite additional quarterly losses and a dismal October jobs report. The market was able to bounce higher after two consecutive days of losses. The Dow Jones Industrial Average added 248.02 points to close the session at 8,943.81. Broader stock indicators also gained. The Standard and Poor’s 500 Index rose by 26.11 points and the Nasdaq rose by 38.70 points. Stocks initially surged at the start of the session, but cut some of those gains after General Motors (GM: Charts, News, Offers) posted a $4.2 billion third-quarter loss. The automaker also warned that if current economic conditions persist, they might run out of money in 2009. A number of other companies also reported lower third-quarter profit. Qualcomm (QCOM: Charts, News, Offers) announced falling profit and lowered its outlook. Sprint-Nextel (S: Charts, News, Offers) swung to a $326 million third-quarter loss. Investors were expecting stocks to fall deep into red after the much anticipated jobs report from the Labor Department showed that employers cut 240,000 jobs in October. Despite the news, stocks continued to stay in positive territory. U.S. light crude oil for December delivery rose 42 cents to $61.19 a barrel after declining for two days. Treasury prices declined, raising the benchmark on the 10-year note to 3.78% from 3.69%. The dollar fell against the euro and gained versus the yen.
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| Market News |
General Motors Corp. (GM: Charts, News, Offers) said Friday it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn't get government aid. GM also said it has suspended talks to acquire Chrysler. While it didn't specifically name the automaker, GM said it was setting aside considerations for a "strategic acquisition." "While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside," the company's said in a statement. The automaker said its cash burn for the quarter accelerated to $6.9 billion, and government aid will be "essential" because of the slow economy and credit crisis. (Source: Yahoo! Finance) Full Story
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Panasonic and smaller Japanese rival Sanyo said Friday they are starting talks on a buyout deal that would create one of the world's largest electronics companies as soon as year-end. Panasonic President Fumio Ohtsubo and Sanyo President Seiichiro Sano shook hands at a news conference in Osaka, monitored by satellite TV in Tokyo, underlining their willingness for Panasonic's acquisition of Sanyo. The companies have much to gain by combining their technologies and production expertise to boost global competitiveness, they said, appearing together before a traditional Japanese folding golden screen. Speculation has been rife cash-rich Panasonic Corp. is interested in buying Sanyo Electric Co., which has been struggling to turn itself around. But more time is likely needed for a deal with Sanyo's biggest stakeholders, Goldman Sachs Group Inc. of the U.S. and Japanese banks Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC. Those companies invested $3 billion in Sanyo in 2006, and hold about a combined 70% stake in Sanyo. (Source: CNN Money) Full Story
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The nation’s unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace. The new snapshot, released Friday by the Labor Department, showed the crucial jobs market quickly eroding. The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994. Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003. October’s decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported. (Source: MSNBC) Full Story
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| Market Analysis |
Why is it that when the stock market was hitting new highs just about every day, Washington rang with proposals to put Social Security money into the stock market? And now with stocks in the tank, why has the idea vanished off the radar screen? If the idea is to buy low and sell high, why isn't now, in the middle of a bear market, an even better idea? Reader Steve Foltz brought this up in an e-mail to Jubak's Journal a little more than a week ago. His specific question was a good one: Why isn't anyone talking about putting Social Security money into stocks now that they're down 40% from their October 2007 highs? Thinking about that specific question, though, raised an even larger issue: If we're in the midst of the greatest financial crisis since the Depression, why aren't we doing more outside-the-box thinking about how to resolve the crisis? (Source: MSN Money) Full Story
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It was bound to happen. And it should surprise no one that the French were the ones to initiate it. French President Nicolas Sarkozy last month proposed that European countries establish sovereign wealth funds to purchase stakes in key companies in the region to foil overseas "predators" seeking control at knockdown prices. "I wouldn't want to see European citizens wake up in a few months and discover that a European company is owned by non-European investors who bought at a rock-bottom price," Sarkozy told the European Parliament on Oct. 21. The good news is that Germany, Europe's biggest economy, shot down the idea. Still, that didn't deter the French head of state from going it alone. "I will not be the French president who wakes up in six months' time to see that French industrial groups have passed into other hands," Sarkozy told French business leaders in Argonay in the French Alps two days later. (Source: Bloomberg) Full Story
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A day before General Motors (GM: Charts, News, Offers) was expected to report a nearly $4 billion loss for its latest quarter, top executives of GM, Ford (F: Charts, News, Offers), Chrysler, and the United Auto Workers union came to Washington to press their case for at least $25 billion in federal loans. Without the help, the car companies argued, they may not survive 2009. General Motors has been trying to convince congressional leaders to include the auto companies in the parade of industries-including banking and insurance-being bailed out through the Treasury Dept.'s $700 billion Troubled Asset Relief Plan. Up to now, GM has been basing its argument for the cash in part on its acquiring the troubled Chrysler. But in the Washington meetings on Nov. 6, car-industry executives focused on simply getting the three companies through the next year with enough cash to stay in business. (Source: BusinessWeek) Full Story
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