Friday, February 19, 2010

Markets steady after Federal Reserve rate hike

Stocks fell on the news about increased lending rates, then buying limited losses. Dow slid 5, decliners over advancers 3-2 & NAZ was off 4 (hurt by Dell (DELL) earnings). Banks took the news about the rate hike pretty well, the Financial Index was pretty much even.


% Change

The Alerian MLP Index slipped 1¼ to 290, flat for 3 days. The REIT index was down a fraction. Junk bond funds were essentially flat. The yield on the Treasury 10-year bond was up a fraction of a basis point to 3.81%, but in higher territory.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

Oil & gold pulled back slightly, not much happening here.

CLH10.NYM...Crude Oil Mar 10...78.88 ...Down 0.15


Gold Super Cycle! Click Here

Photo: Bloomberg

The Federal Reserve moved to calm speculation that a surprise increase in its emergency lending rate could bring forward broader policy tightening. They said borrowing costs in the economy will remain low. But the FED also said it wants to widen the spread between its main policy rate that remains pegged near zero & the discount rate at which banks can borrow from the FED. Bank stocks fell after the FED raised the discount rate 25 basis points to 0.75%.

Fed Discount-Rate Increase Signals Recovery on Track

Consumer prices rose less than expected in Jan while prices excluding food & energy fell. That hasn't happened in more than a quarter-century. The Labor Dept said consumer prices edged up 0.2% in Jan while prices excluding food & energy slipped 0.1%, the first monthly decline since Dec 1982. The benign inflation news gives the Federal Reserve more time to keep interest rates at record-low levels to shore up the economy & should ease worries in financial markets that a FED rate hike is more imminent.

U.S. Consumer Prices Rose 0.2% in January, Less Than Economists Forecast

Photo: Bloomberg

Dell reported lower profits but modestly beat estimates. It said sales of its notebook computers were strong, though its gross margin was slightly below forecasts. EPS was 17¢ a share in Q4 (ending Jan 31), down a penny from last year. Excluding one-time items, the world's #3 maker of personal computers earned 28¢ a share, down from 29¢ last year. Sales in Q4 rose 11% to $14.9B. The stock dropped 1.05 (7%).

Dell Drops as Price Cuts, Component Costs Hurt Profit

Dell --- 2 years

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Markets absorbed the news about increased lending rates quite well. Meanwhile dismal reality of Greek debt problems, Toyota troubles & a US economy struggling to show recovery are holding back many stock buyers.

Dow Jones Industrials --- 2 weeks

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