February 13, 2009

Better Trades US News

Heading into the holiday weekend, the markets could not sustain their upward momentum, shortly after the opening bell, as Wall Street sits and waits for the outcome of the stimulus vote and news form the G-7 conference in Rome.

As the world’s financial leaders meet to discuss possible solutions to the global economic crisis, the markets continued to trade in the red, once they fell below the breakeven mark mid-morning. With the markets showing signs of wanting to rally, now could be an optimal time for investors to get in when prices are this low.

In an announcement during the last half of the trading session, the House of Representatives passed the proposed stimulus package with a 246-183 vote, with not one Republican voting “yes” on the bill. Upon its approval, the bill will now go to the Senate for its approval.

Today’s only economic data came from a report released by Reuters/University of Michigan, which stated that consumer sentiment declined again as concerns over the country’s future remain high.

Within the report, the sentiment index showed a reading of 56.2 for February, down from January’s reading of 61.2. Economists were anticipating a reading of 60.0. A reading of current conditions was also released, revealing a reading of 67.1 for the month, up from 66.5 in the prior month. However, the expectations of consumers’ index showed a weakened reading of 49.1, well below January’s reading of 57.8.

A preliminary reading for the one-year inflation expectations index currently stands at 1.6%, down from a 2.2% reading in January, while the five-year index on inflation increased marginally, from 2.9% to 3.0%.

With consumer sentiment reaching record lows, the final vote on the proposed $789B stimulus package, due out today, should hopefully give the nation something to look forward to, as it is intended to create some 3.5 million jobs.

The plan, now revised at $787B, would propose $281B worth of tax cuts, with $308B to the appropriations committee. Additionally, the bill calls for $198B in spending on such programs as unemployment.

Falling below the $34 mark in yesterday’s trading session, oil rebounded from a steady decline during the week to gain heading into the extended weekend. By the close of the markets today, the price for a barrel of light, sweet crude for March delivery gained $3.53 to settle at $37.51. With demand continuing to decline, the price of oil will decrease right along with weakening demand.

With a shortened trading session heading into Presidents Day, the bond markets were lower in prices today as investors continue to wait for the outcome of the stimulus package. By the closing bell, the benchmark 10-year note slipped 29/32 to 98 24/32 as its yield advanced to 2.89%. Additionally, the 30-year note, which was reissued today, decreased in price as well, falling 2 13/32 to 96 27/32 as its yield increased to 3.67%. Finally, the 2-year note dropped 3/32 to 99 26/32 as its yield advanced to 0.96%.

Within Forex trading, the Dollar retreated against all major currencies today, despite disheartening news about Europe’s economy released earlier in the day. By late afternoon, the 16-nation Euro increased in value against the greenback today, buying $1.2884 up from last night’s price of $1.2854. Furthermore, the British pound advanced versus the Dollar as well today, buying 1.4417, up from Thursday’s price of 1.4272. Against the Japanese yen, the Dollar slipped to 91.86, down from yesterday’s price of 92.77.

By the sound of the closing bell, the major indices were all trading in the red, albeit up from their intraday lows. At the conclusion, the Dow Jones Industrial average slipped by 82.35 points, or 1.04%, to end the week at 7,850.41, after being down more than 90 points during the morning session.

Furthermore, the broader market indicators concluded the day in the red as well, as the S&P 500 index retreated by 8.35 points, or 1.00%, to finish the day at 826.85, while the NASDAQ composite index lost 7.35 points, or 0.48%, to close out the week at 1,534.36.

In a shortened trading week coming up, in observance of Presidents Day, the markets will see numerous economic reports released that may have a hand in the direction of the markets. Included in those are Housing Starts and Building Permits, along with the PPI and the CPI reports.

2009 Better Trades Article

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BRIAN MULLIN