Reply #105: a side of gambling blather to go with those numbers [View All]

[UpInArms]

The stock market opened on a down note, following three consecutive sessions of gains. Investor sentiment was lifted, however, when regulators announced the lending caps on Fannie Mae (FNM 27.27, +0.30) and Freddie Mac (FRE 25.09, -0.12) would be removed to promote additional lending in the housing market. Despite the announcement, stocks slipped in afternoon trading to finish the day slightly lower.

Fed Chairman Bernanke made no surprises at his semiannual testimony before the Financial Services Committee on Capitol Hill. Bernanke indicated that the economy continues to face challenging headwinds and the Fed will likely move to continue fighting those challenges with further rate cuts, rather than hold back as a result of inflationary pressures.

January durable goods fell 5.3% when compared with December orders, which had shown an increase of 4.4% from the previous month. Though the drop was steeper than economists expected, the news is not entirely grim as the trailing three-month average indicates orders are flat.

New home sales in January fell to 588,000 from 605,000 in December, on a seasonally adjusted annualized basis. The results were worse than expected as economists pegged January sales at 600,000 units.

New home sales remain one of the weakest segments in the housing industry. Such weakness was made further evident by a first quarter earnings loss of $0.61 per share by luxury homebuilder Toll Brothers (TOL 23.83, +0.71). Analysts were calling for a loss of just $0.50 per share.

According to subsidized home lender Fannie Mae, the housing industry is unlikely to improve any time soon. The company announced today a loss of $2.1 billion, or $2.63 per share, in 2007. Last year the company earned $4.1 billion, or $3.65 per share. Fannie Mae believes there will be further tightening in the mortgage lending market in 2008. Should current conditions persist, the company will likely face additional write-downs.

In a move to help restore the home-lending market, the Office of Federal Housing Enterprise Oversight (OFHEO) will remove the portfolio growth caps for both Fannie Mae and its smaller cousin Freddie Mac, effective March 1, 2008. OFHEO is also considering relaxing the capital requirements the two lenders adhere to. OFHEO's move should bode well for the mortgage market since increased capital availability adds liquidity to the secondary mortgage market.

In other regulatory news, Microsoft (MSFT 28.26, -0.12) was slapped with a $1.35 billion fine by the European Union for violating antitrust laws. The penalty was the largest ever levied by European regulators. Microsoft had already announced efforts to increase product openness and interoperability.

A bearish report from the Department of Energy induced oil to pull off the $100 mark. The report indicated that oil stores increased by 3.2 million barrels, or 1%, to 308.5 million barrels. Analysts were anticipating a build of 2.7 million barrels, according to Bloomberg.com. Prior to the announcement, oil hit an all-time intraday high of $102.08 per barrel.

Gold also hit an all-time high of $967.70 per ounce in intraday trading. Commodities have been stretching higher partly as a result of a weak dollar.

The dollar index hit an all-time low today, falling to 74.07. Meanwhile, the euro hit an all-time high against the dollar, stretching upward to $1.514. DJ30 +9.36 NASDAQ +8.63 NQ100 +0.5% R2K -0.1% SP400 -0.5% SP500 -1.27 NASDAQ Dec/Adv/Vol 1504/1388/2.22 bln NYSE Dec/Adv/Vol 1707/1411/1.46 bln

3:30 pm : The stock market has broken back into positive territory. After paring earlier losses, the S&P 500 had been struggling to break through the unchanged mark.

The S&P 500 has been unable to register gains in four straight sessions since December.

Crude prices settled $1.31 lower at $99.57 per barrel. Crude hit an all time intraday high of $102.08 after a bearish inventory report.DJ30 +30.69 NASDAQ +13.30 SP500 +1.42 NASDAQ Dec/Adv/Vol 1438/1408/1.85 bln NYSE Dec/Adv/Vol 1631/1469/1.14 bln

and, Prag, there's a huge difference in investing and gambling - hang in there!