U.S. Stocks had a six-session losing streak, especially in the stock investing and stock trading areas. The Dow Jones Industrial Average (DJIA) bounced back from 325-point deficit to end nearly 300 points ahead. Many investors chose to bet on another rate cut by the Federal Reserve.
The financial sector traded well Tuesday after the Fed slashed rates during an emergency move accelerated its advance late on Wednesday.
There was hope that the struggling bond insurers could be saved through acquisitions or cash infusions by regulators. Finally, equities turned after days of declines, which raised hopes for high returns on investment.
Crude futures fell $2.22 to end at $86.99 a barrel on the New York Mercantile Exchange (NYMEX). Gold futures were also down. They closed at $7.20 at $883.10 an ounce. This was a disappointing blow to the Gold futures industry.
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The New York Stock Exchange (NYSE) volume came to 2.83 billion shares, this on the second heaviest day at the stock market trading exchange. August 16, 2007 saw the heaviest volume day at 2.99 billion shares.
The dollar in currency, gained on the euro and pound. However, it slipped against Japan’s yen.
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Due to a global worry of recession, stocks suffered losses on Wednesday. This scare intensified after hopes of rate action at the European Central Bank (ECB) were smashed. This due to the Federal Reserve’s emergency rate cut and the upsetting outlook on Apple Inc.’s (AAPL).
Kevin Giddis, managing director of fixed income at Morgan Keegan & Co. said, “We are going to have a hard time holding this economy together, with or without the Fed’s cuts.”
Regional-bank stocks and insurers are getting some relief from rate cuts. These industries are benefiting by lowering their funding costs and offering more favorable lending rates to consumers. However, due to the fear of inflation and Apple’s (AAPL) negative outlook, they did not get a chance to co-ordinate with other banks.
The early January meeting for Bank of England reported its monetary policy committee voted 8 to 1 to keep interest rates unchanged, which indicated serious concerns for the outlook of inflation.
Motorola (MOT) reported an 84% fourth-quarter profit decline. Plus, it issued warning that the turnaround in its handset division would take longer than was expected. Shares of Motorola (MOT) were reported down 18%.
Texas Instruments (TXN) had more positive news during its fourth quarter profits. This is due to its stock reporting higher results from the world’s largest cell-phone chips maker. Investors, investing in Texas Instruments (TXN) can potentially enjoy high returns on investment with covered call option investing in the short term.
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