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| Market Summary |
Stocks ended lower on Monday as more job cuts and recession worries fueled a volatile session. Stocks were able to cut major losses during afternoon trading as investors bargain shopped, but still did not manage to reach higher ground. Investors also hesitated to push the market higher ahead of a decision to bailout automakers, which Congress will be debating this week. A number of companies are implementing cost-cutting plans to help during these troubling times and with those plans come more layoffs. Citigroup (C: Charts, News, Offers) announced that it would cut an additional 53,000 jobs, which brings the amount of individuals laid off from the struggling bank to 76,000. Several top executives at Goldman Sachs (GS: Charts, News, Offers) have decided to opt out of receiving bonuses this year. UBS (UBS: Charts, News, Offers) has taken a similar approach and will stop bonus payments to executives. In economic news, The New York Empire State index fell to negative 25.4 in November from negative 24.6 in October. After months of trying to avoid it, a majority of economists have declared that the U.S. economy is indeed in a recession. The observation was not a big surprise to investors. U.S. light crude oil for December delivery fell $1.79 to $55.25 a barrel on the New York Mercantile Exchange. The dollar fell against most other major currencies.
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| Market News |
Citigroup Inc. (C: Charts, News, Offers) is shedding approximately 53,000 more employees in the coming quarters as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt. The New York-based bank, which has already reduced its assets by about 20 percent since the first quarter of the year, also plans to trim expenses by 19 percent in 2009 from third-quarter levels, to $50 billion. The plans, posted on the company's Web site, were discussed by CEO Vikram Pandit at the company's town hall meeting in New York Monday with employees. The company said it is shrinking its work force by 20 percent from its 2007 peak of 375,000. The company had already announced in October that it was eliminating about 22,000 jobs from that level. (Source: Yahoo! Finance) Full Story
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Industrial production grew in October, after September produced the worst dropoff in factory output in 62 years, according to a report released Monday by the Federal Reserve. Industrial production grew a seasonally adjusted 1.3% from the previous month, surpassing the economists' consensus estimate of a 0.2% increase, according to Briefing.com. It was the largest monthly increase in factory output since October 1999. Factory output in October only increased because production in September fell by a revised 3.7%. The Fed said September's poor output was due mainly to Hurricanes Gustav and Ike's disastrous effects on the Gulf Coast industry as well as a Boeing workers' strike that month. September's was the worst month-to-month decline since February 1946. (Source: CNN Money) Full Story
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Target Corp. (TGT: Charts, News, Offers) and Lowe's Companies (LOW: Charts, News, Offers) both reported profit declines of 24 percent Monday, amid a sharp pullback in consumer spending. Target also said that weak results from its credit-card segment contributed to its drop in earnings. For the three months ended Nov. 1, the discount retailer's profit fell to $369 million, or 49 cents per share, from $483 million, or 56 cents per share, last year. That was just above the average of 48 cents per share predicted by analysts polled by Thomson Reuters. Revenue rose 2 percent to $15.11 billion from $18.4 billion last year, falling short of the $15.24 billion analysts expected. (Source: MSNBC) Full Story
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| Featured Article from the InvestorGuide University |
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| Market Analysis |
On Nov. 14, 2008, the Dow Jones Industrial Average closed at 8497.31. On Nov. 13, 1998, the adjusted (for dividends and split) close was 8919.59. There has been great volatility, but no net capital accumulation as measured by the Dow in a decade. Other indexes, such as the Nasdaq, tell a similar story. Capital has been invested but as much value has been destroyed as created. The U.S. cannot afford to have another lost decade. Or to see the dreams of another generation of Americans who had been told to take responsibility for their financial health by investing in the stock market dashed by failed monetary and fiscal polices. Today, the most urgent task facing President-elect Barack Obama is stabilizing financial markets by instituting policies that foster economic growth and prevent the type of boom and bust cycle that has just wiped out a decade's worth of wealth accumulation. (Source: Wall Street Journal) Full Story
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Unfortunately, despite some 12 financing facilities created by the Treasury and the Fed, massive interest rate cuts and various bailouts, the government has little to show for its attempts to dictate where markets should trade. The Fed's own balance sheet has exploded from roughly $900 billion worth of debt in August to around $2 trillion as of last week. Knowledgeable sources expect that to reach $3 trillion by the end of the year. That means that it will have grown from approximately 6% of gross domestic product to more than 20% in the space of four months. (For perspective, Japan's balance sheet grew from roughly 9% of GDP to 29% over the 10-year period from 1994 to 2004, as it pursued "quantitative easing," which basically involves the central bank making more cash available to banks to ease lending.) (Source: MSN Money) Full Story
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In a grand compromise reflecting a bi-partisan awakening in Washington, congressional leaders outlined a bold new plan designed to stem the rising tide of home foreclosures while averting the imminent bankruptcy of American manufacturing icons Ford (F: Charts, News, Offers) and General Motors (GM: Charts, News, Offers). Calling on citizens to simultaneously sacrifice and spend more, the Whip Depression Now (WDN) Act heading to the President's desk for signature is being hailed by both outgoing President George Bush and President-elect Barack Obama as the most decisive Federal intervention in the nation's economy since Franklin Delano Roosevelt saved the world from the ravages of unbridled capitalism. While some details remain to be worked out, Fannie Mae will acquire all the assets of the Ford Motor Company while Freddie Mac (FRE: Charts, News, Offers) will do the same for General Motors Corp., pouring the full faith and credit of the US Treasury into these backbones of American Manufacturing. (Source: Real Clear Markets) Full Story
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