Fed hikes discount rate, says loose policy to stay
Topics:Economy, Government & Policy
The U.S. Federal Reserve Building is pictured in Washington, January 26, 2010. REUTERS/Jason Reed
On Thursday February 18, 2010, 10:13 pm
By Emily Kaiser
WASHINGTON (Reuters) - The Federal Reserve raised its emergency lending rate for the first time since the financial crisis, lifting the dollar and hitting bonds as markets brushed off Fed assurances it was not a prelude to a rise in the main policy rate.
The Fed cast its decision to raise the discount rate it charges banks by 25 basis points to 0.75 percent as a response to improved market conditions that allowed it to scale back emergency aid for financial institutions.
It took pains to distinguish its efforts to foster market liquidity from monetary policy and to draw the distinction between the discount rate and its main federal funds rate, which remains near zero to help a fragile U.S. economic recovery. Fed officials also insisted the move that takes effect on Friday was not a sign that a policy tightening was forthcoming.
"They do not signal any change in the outlook for monetary policy and are not expected to lead to tighter financial conditions for households and businesses," Fed Governor Elizabeth Duke said in an address, echoing the Fed statement.
Global market soars!!
Great News for Global Equity market!
Stephen Bernard, AP Business Writer, On Tuesday February 16, 2010, 5:49 pm EST
NEW YORK (AP) -- Signs that the economy is indeed strengthening gave investors a surge of optimism and sent stocks sharply higher.
The Dow Jones industrials soared almost 170 points Tuesday on upbeat earnings reports and corporate deals. Investors who have been anxious in recent weeks about economic problems overseas were able to put aside their concerns for the time being. They focused instead on the domestic economy.
The dollar fell as investors felt less of a need to stash their money in safer investments. Oil, gold and other commodities joined stocks as the beneficiaries of the market's renewed confidence. And the stocks of energy and materials producers were among the day's big winners.
European markets also rose following new plans by European Union leaders to push Greece to get its budget under control. European officials gave Greece one month to prove it can cut its deficits. Debt problems in European countries including Greece, Portugal and Spain have been a major factor behind weakness in global stock markets in recent weeks.
A strong earnings report from Barclays, a major European bank, also gave the market some relief. European banks have been slower to recover than their U.S. counterparts, and investors saw the bounceback at Barclays as an encouraging sign.
In the U.S., Kraft Foods Inc. and apparel retailer Abercrombie & Fitch reported earnings that beat expectations, while drugmaker Merck & Co. said profits jumped after the company bought its longtime partner Schering-Plough Corp.
Earnings reports over the past month have mostly come in better than expected, but problems in the global economy have overshadowed that good news and pushed the market lower.
"Earnings have been good, but pushed to the back seat," behind Europe's problems, said Alan B. Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio. The strong reports Tuesday "superseded some of these worries."
Meanwhile a bold acquisition move by the nation's largest mall owner raised hopes that businesses are feeling more confident about the economy.
Simon Property Group has offered to acquire its ailing rival, General Growth Properties, for $10 billion. General Growth, the No. 2 mall operator, filed for bankruptcy protection last year.
The Dow rose 169.67, or 1.7 percent, to 10,268.81. The Standard & Poor's 500 index rose 19.36, or 1.8 percent, to 1,094.87, while the Nasdaq composite index rose 30.66, or 1.4 percent, to 2,214.19.
About five stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.2 billion shares, down from 4.5 billion Friday.
In other deal news, JPMorgan Chase & Co. said it was buying RBS Sempra Commodities' global oil, global metals and European power and gas assets in a deal worth about $1.7 billion. The move nearly doubles JPMorgan's corporate client base for commodities.
Economic reports throughout the holiday-shortened week will also provide insight into the economy. Market were closed Monday for President's Day.
A report on manufacturing in the New York area was stronger than expected. The Empire State manufacturing index rose to 24.91 this month, compared with a forecast of 18, according to economists polled by Thomson Reuters. The index was 15.92 last month.
Reports on housing starts, jobless claims and inflation are due out later this week.
Merck rose 74 cents, or 2 percent, to $37.66. In addition to its earnings results Merck also announced details of the combined company's restructuring plans, the first phase of which expected to bring annual savings of up to $3 billion in 2012.
Barclays' New York-listed shares jumped $2.35, or 13 percent, to $19.03.
Simon Property rose $2.82 or 3.9 percent to $74.82 after announcing its hostile offer for General Growth. General Growth's best known centers include the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.
Simon Property's bold move "sends a signal that the economy might be doing better," said Giri Cherukuri, a portfolio manager and head trader at OakBrook Investments in Lisle, Ill. The Simon Property deal is especially positive because it shows mall operators are upbeat about the retail industry and employment.
Among energy companies, Exxon Mobil Corp. rose $1.48, or 2.3 percent, to $66.28. Occidental Petroleum Corp. rose $1.38, or 1.7 percent, to $81.18.
Aluminum producer Alcoa Inc. rose 46 cents, or 3.5 percent, to $13.74. DuPont rose 46 cents, or 1.4 percent, to $32.74.
Bond prices edged higher as concerns about the Greek debt crisis began to wane. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.67 percent from 3.70 percent late Friday.
The dollar fell. Crude oil jumped $2.88 or 4 percent to settle at $77.01 a barrel.
The Russell 2000 index of smaller companies rose 10.12, or 1.7 percent, to 620.84.
Overseas, Britain's FTSE 100 rose 1.5 percent, Germany's DAX index gained 1.7 percent, and France's CAC-40 rose 1.7 percent. Japan's Nikkei stock average rose 0.2 percent.
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Simon Property offers $10 billion for General Growth - Reuters
On the Call: Kraft Foods CEO Irene Rosenfeld - AP
Rex W. Tillerson Recognized by Woodrow Wilson Center as Winner of 2010 Corporate Citizenship Award - Business Wire
Dow Rallies 169.67, Aided by U.S. Economics, Hope for Greece - at The Wall Street Journal Online
Berkshire reveals several changes in investments - AP
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Copyright © 2010 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.
Stephen Bernard, AP Business Writer, On Tuesday February 16, 2010, 5:49 pm EST
NEW YORK (AP) -- Signs that the economy is indeed strengthening gave investors a surge of optimism and sent stocks sharply higher.
The Dow Jones industrials soared almost 170 points Tuesday on upbeat earnings reports and corporate deals. Investors who have been anxious in recent weeks about economic problems overseas were able to put aside their concerns for the time being. They focused instead on the domestic economy.
The dollar fell as investors felt less of a need to stash their money in safer investments. Oil, gold and other commodities joined stocks as the beneficiaries of the market's renewed confidence. And the stocks of energy and materials producers were among the day's big winners.
European markets also rose following new plans by European Union leaders to push Greece to get its budget under control. European officials gave Greece one month to prove it can cut its deficits. Debt problems in European countries including Greece, Portugal and Spain have been a major factor behind weakness in global stock markets in recent weeks.
A strong earnings report from Barclays, a major European bank, also gave the market some relief. European banks have been slower to recover than their U.S. counterparts, and investors saw the bounceback at Barclays as an encouraging sign.
In the U.S., Kraft Foods Inc. and apparel retailer Abercrombie & Fitch reported earnings that beat expectations, while drugmaker Merck & Co. said profits jumped after the company bought its longtime partner Schering-Plough Corp.
Earnings reports over the past month have mostly come in better than expected, but problems in the global economy have overshadowed that good news and pushed the market lower.
"Earnings have been good, but pushed to the back seat," behind Europe's problems, said Alan B. Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio. The strong reports Tuesday "superseded some of these worries."
Meanwhile a bold acquisition move by the nation's largest mall owner raised hopes that businesses are feeling more confident about the economy.
Simon Property Group has offered to acquire its ailing rival, General Growth Properties, for $10 billion. General Growth, the No. 2 mall operator, filed for bankruptcy protection last year.
The Dow rose 169.67, or 1.7 percent, to 10,268.81. The Standard & Poor's 500 index rose 19.36, or 1.8 percent, to 1,094.87, while the Nasdaq composite index rose 30.66, or 1.4 percent, to 2,214.19.
About five stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.2 billion shares, down from 4.5 billion Friday.
In other deal news, JPMorgan Chase & Co. said it was buying RBS Sempra Commodities' global oil, global metals and European power and gas assets in a deal worth about $1.7 billion. The move nearly doubles JPMorgan's corporate client base for commodities.
Economic reports throughout the holiday-shortened week will also provide insight into the economy. Market were closed Monday for President's Day.
A report on manufacturing in the New York area was stronger than expected. The Empire State manufacturing index rose to 24.91 this month, compared with a forecast of 18, according to economists polled by Thomson Reuters. The index was 15.92 last month.
Reports on housing starts, jobless claims and inflation are due out later this week.
Merck rose 74 cents, or 2 percent, to $37.66. In addition to its earnings results Merck also announced details of the combined company's restructuring plans, the first phase of which expected to bring annual savings of up to $3 billion in 2012.
Barclays' New York-listed shares jumped $2.35, or 13 percent, to $19.03.
Simon Property rose $2.82 or 3.9 percent to $74.82 after announcing its hostile offer for General Growth. General Growth's best known centers include the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.
Simon Property's bold move "sends a signal that the economy might be doing better," said Giri Cherukuri, a portfolio manager and head trader at OakBrook Investments in Lisle, Ill. The Simon Property deal is especially positive because it shows mall operators are upbeat about the retail industry and employment.
Among energy companies, Exxon Mobil Corp. rose $1.48, or 2.3 percent, to $66.28. Occidental Petroleum Corp. rose $1.38, or 1.7 percent, to $81.18.
Aluminum producer Alcoa Inc. rose 46 cents, or 3.5 percent, to $13.74. DuPont rose 46 cents, or 1.4 percent, to $32.74.
Bond prices edged higher as concerns about the Greek debt crisis began to wane. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.67 percent from 3.70 percent late Friday.
The dollar fell. Crude oil jumped $2.88 or 4 percent to settle at $77.01 a barrel.
The Russell 2000 index of smaller companies rose 10.12, or 1.7 percent, to 620.84.
Overseas, Britain's FTSE 100 rose 1.5 percent, Germany's DAX index gained 1.7 percent, and France's CAC-40 rose 1.7 percent. Japan's Nikkei stock average rose 0.2 percent.
Buzz up! 0 SendSharePrintShare this page
DeliciousTwitterMyspaceDiggStumbleUponFacebook
Related Headlines
Simon Property offers $10 billion for General Growth - Reuters
On the Call: Kraft Foods CEO Irene Rosenfeld - AP
Rex W. Tillerson Recognized by Woodrow Wilson Center as Winner of 2010 Corporate Citizenship Award - Business Wire
Dow Rallies 169.67, Aided by U.S. Economics, Hope for Greece - at The Wall Street Journal Online
Berkshire reveals several changes in investments - AP
Related Message Boards
Alcoa, Inc.
JPMorgan Chase & Co.
Kraft Foods Inc.
Merck & Co. Inc.
Occidental Petroleum Corporation
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Stock Market Data
Wall Street Courier - the site for market technicians. Daily and weekly Stock Market Data and technical indicators for day traders, market timers and commodity traders.
www.wallstreetcourier.comTop Stories
Simon Property offers General Growth $10B buyout - AP
US demands Toyota turn over recall documents - AP
Whole Foods Market's profit surges in 1Q - AP
Berkshire reveals several changes in investments - AP
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Brace Yourself for a Decade of Higher Taxes, FT Columnist Says - Heesun Wee
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It's only a minor market correction!
The debt problem in Europe is being addressed by EU and recieved well by global stock market. (Pls read on)..
Stocks jump on hopes for Greece debt rescue
Stocks leap on hopes EU will help Greece with debt; Dow jumps 150, moves back above 10,000
AP - Traders Robert Maher, left, and Anthony Alvarino work on the floor of the New York Stock Exchange Tuesday, ...
By Tim Paradis, AP Business Writer , On Tuesday February 9, 2010, 6:09 pm EST
NEW YORK (AP) -- The Dow Jones industrial average jumped back above 10,000 on hope that a resolution was near for Greece's debt crisis.
The Dow rose 150 points Tuesday, a day after closing below 10,000 for the first time in three months. The major indexes all gained more than 1 percent. Treasury prices slid as demand for safer investments fell.
Global markets bounced back on reports that plans are being developed in the European Union to rescue Greece. That raised hopes that policymakers will take bigger steps to contain debt troubles in other weak European economies including Portugal and Spain.
Though Greece's economy is small, that country's yawning budget gaps were undermining faith in the euro, Europe's common currency. Investors also believed that other countries might have trouble raising money in debt markets, which would hamper efforts to get their economies going again.
.
Stocks jump on hopes for Greece debt rescue
Stocks leap on hopes EU will help Greece with debt; Dow jumps 150, moves back above 10,000
AP - Traders Robert Maher, left, and Anthony Alvarino work on the floor of the New York Stock Exchange Tuesday, ...
By Tim Paradis, AP Business Writer , On Tuesday February 9, 2010, 6:09 pm EST
NEW YORK (AP) -- The Dow Jones industrial average jumped back above 10,000 on hope that a resolution was near for Greece's debt crisis.
The Dow rose 150 points Tuesday, a day after closing below 10,000 for the first time in three months. The major indexes all gained more than 1 percent. Treasury prices slid as demand for safer investments fell.
Global markets bounced back on reports that plans are being developed in the European Union to rescue Greece. That raised hopes that policymakers will take bigger steps to contain debt troubles in other weak European economies including Portugal and Spain.
Though Greece's economy is small, that country's yawning budget gaps were undermining faith in the euro, Europe's common currency. Investors also believed that other countries might have trouble raising money in debt markets, which would hamper efforts to get their economies going again.
.
Market is going thru some correction ahead of CNY
Subject: Investors seen locking in profits ahead of festival
Investors seen locking in profits ahead of festival
Malaysian investors are likely to remain cautious in the week running up to the Lunar New Year, after Asian equity markets fell late last week following overnight losses on Wall Street.
Analysts expect investors to continue locking in their profits this week, while volumes will ease due to the cautious sentiment.
Kenanga Investment Bank Bhd research head Yeonzon Yeow said that small/mid-cap stocks were likely to outperform the rest of the stock market, after the substantial sell-down in big-caps.
Analysts also expect global market volatility to continue as investors appear uncertain whether world growth can support the equities market, given the release of bearish economic data last week.
On the home front, stocks that will continue to draw interest this week include Scomi Marine Bhd and KNM Group Bhd. The two companies made major announcements last week.
Scomi Marine said late last Friday that it was selling its entire 29.07 per cent stake in the Singapore-listed CH Offshore Ltd for close to RM350 million.
The disposal will result in net gain of RM63.6 million after accounting for estimated expenses of RM3.4 million.
The stock, which will resume trading today, last traded at 47.5 sen on Thursday.
Meanwhile, KNM gained 6.5 sen to 81.5 sen on Friday, after its founder and other investors said they planned to take the company private.
The Malaysian stock market benchmark was on an uptrend at the start of last week, but began a downward slide on Thursday as weakness on Wall Street weighed on sentiment.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell 17.13 points to end at 1,247.9 points on Friday, in line with weak Asian equity markets that took their cue from Wall Street, which fell after news of a rise in US unemployment benefits.
Markets were also affected by concern over the European sovereign debt problems.
However, a late rally on Wall Street last Friday saw US stocks ending slightly higher after a volatile week.
The Dow Jones Industrial Average erased its intra-day losses by ending 10.05 points higher at 10,012.23. The Standard & Poor's 500 Index was 0.29 per cent up at 1,066.19, while the Nasdaq Composite Index was 0.74 per cent higher at 2,141.12.
While the FBM KLCI may slide to 1,220 points, analysts expect the index to find its support level at 1,200 points.
--------------------
Investors seen locking in profits ahead of festival
Malaysian investors are likely to remain cautious in the week running up to the Lunar New Year, after Asian equity markets fell late last week following overnight losses on Wall Street.
Analysts expect investors to continue locking in their profits this week, while volumes will ease due to the cautious sentiment.
Kenanga Investment Bank Bhd research head Yeonzon Yeow said that small/mid-cap stocks were likely to outperform the rest of the stock market, after the substantial sell-down in big-caps.
Analysts also expect global market volatility to continue as investors appear uncertain whether world growth can support the equities market, given the release of bearish economic data last week.
On the home front, stocks that will continue to draw interest this week include Scomi Marine Bhd and KNM Group Bhd. The two companies made major announcements last week.
Scomi Marine said late last Friday that it was selling its entire 29.07 per cent stake in the Singapore-listed CH Offshore Ltd for close to RM350 million.
The disposal will result in net gain of RM63.6 million after accounting for estimated expenses of RM3.4 million.
The stock, which will resume trading today, last traded at 47.5 sen on Thursday.
Meanwhile, KNM gained 6.5 sen to 81.5 sen on Friday, after its founder and other investors said they planned to take the company private.
The Malaysian stock market benchmark was on an uptrend at the start of last week, but began a downward slide on Thursday as weakness on Wall Street weighed on sentiment.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell 17.13 points to end at 1,247.9 points on Friday, in line with weak Asian equity markets that took their cue from Wall Street, which fell after news of a rise in US unemployment benefits.
Markets were also affected by concern over the European sovereign debt problems.
However, a late rally on Wall Street last Friday saw US stocks ending slightly higher after a volatile week.
The Dow Jones Industrial Average erased its intra-day losses by ending 10.05 points higher at 10,012.23. The Standard & Poor's 500 Index was 0.29 per cent up at 1,066.19, while the Nasdaq Composite Index was 0.74 per cent higher at 2,141.12.
While the FBM KLCI may slide to 1,220 points, analysts expect the index to find its support level at 1,200 points.
--------------------
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