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USA stock market daily report by Millenium Traders (October 3, 2008, Friday, 10.30 p.m. GMT) 3 October 2008 Source: www.millennium-traders.com
U.S. House votes 263 - 171 to approve Financial Rescue Bill. Federal Chief Bernanke applauded House of Representatives passing of the Bill. President George W. Bush signed the Bill into law just before 3:00 pm Eastern Time today. The Bill allows the Treasury Department to buy up to $700 Billion in bad assets from banks and other financial institutions. Full details remain yet unknown but should be made public some time in the future. Treasury Secretary Henry Paulson voiced that he was grateful that the House passed the Bill. It may take Secretary Paulson at least 4 weeks until he initiates the first action with funds from the Bill. Expectations are for the Federal Open Market Committee to lower federal funds rates from 2 percent to 1.5 percent in an additional attempt to boost the economy. The anticipated drop is expected to take place at the Fed's next meeting on October 29. And the markets reaction to the passing of the Rescue Bill - well, after a substantial time period of moving in a flat lined trading range, the DOW moved forward to hit a new 3-year low and the S&P 500 hit a new 4-year low. The rally in place prior to the vote deteriorated slowly at first then, picked up some red steam with the major indices closing near their session lows, in negative territory. Possibly investors and traders finally realized in order for the Rescue Bill to be passed, the financial condition of the U.S.A. is very bad, and it is. Unemployment data released earlier this morning provides proof of how very bad the economy is (full details of the data available lower in this Daily Commentary). The early morning rally appeared to revolve around the potential merger between Wells Fargo and Wachovia. Citigroup indicated their sincere hostility over the proposed merger by threatening to sue. Paulson Statement on Emergency Economic Stabilization Act Washington- By acting this week, Congress has proven that our Nation's leaders are capable of coming together at a time of crisis, even at a critical stage of the political calendar, to do what is necessary to stabilize our financial system and protect the economic security of all Americans. The American people will appreciate the leadership of their elected representatives and senators who took bold action to help stem a severe credit crunch that threatens to cost many jobs and undermine access to credit for working Americans. This bill contains a broad set of tools that can be deployed to strengthen financial institutions, large and small, that serve businesses and families. Our financial institutions are varied, from large banks headquartered in New York, to regional banks that serve multi-state areas, to community banks and credit unions that are vital to the lives of our citizens and their towns and communities. Each institution has its own unique benefits, and their collective strength makes our financial system more resilient, and more innovative. The challenges our institutions face are just as varied, from holding illiquid mortgage backed securities, to illiquid whole loans, to raising needed capital, to simply facing a crisis of confidence. This diversity of institutions and challenges requires that we deploy the tools in this rescue package, in combination with the tools the Fed, the Treasury, the FDIC and other bank regulators already have, in a variety of ways that addresses each of these needs and restores the ability of our financial system to fuel our broader economy. There is no one-size-fits-all solution to alleviating the stress in our financial system. Each situation will be different and we must implement these new programs with a strategy that allows us to adapt to changing circumstances and conditions, and attract private capital. The broad authorities in this legislation, when combined with existing regulatory authorities and resources, gives us the ability to protect and recapitalize our financial system as we work through the stresses in our credit markets. We will move rapidly to implement the new authorities, but we will also move methodically. In the coming days we will work with the Federal Reserve and the FDIC to develop strategies that deploy these tools in an expedited and methodical way to maximize effectiveness in strengthening the financial system, so it can continue to play its necessary and vital role supporting the U.S. economy and American jobs. Transparency throughout this process will be important, and I look forward to providing regular updates as we move ahead to implement this strategy. Economic data released today: Employment Situation: U.S. September Nonfarm Payrolls fell by 159K as compared to consensus of an anticipated drop by 105K; U.S. September Unemployment Rate came in at 6.1 percent as compared to consensus of 6.1 percent; September Manufacturing Payrolls fell by 51K; September Service-Producing Payrolls fell by 82K; U.S. September Overall Workweek fell by 0.1 Hour to 33.6 Hours; U.S. August Payrolls Revised to a drop by 73K from a drop by 84K; U.S. August Unemployment Left Unrevised at 6.1 percent; U.S. September Payroll posted largest drop since March 2003; Labor Department stated that Hurricane Ike did not affect Payrolls in September. Institute for Supply Management (ISM) Non-Manufacturing Survey: U.S. ISM September Non-Manufacturing Composite Index came in at 50.2; U.S. ISM September Non-Manufacturing Composite Index expected to come in at 50.0; U.S. ISM September Non-Manufacturing Business Index came in at 52.1; U.S. ISM September Non-Manufacturing Composite Index came in at 50.2 versus August reading of 50.6; U.S. ISM September Non-Manufacturing Business Index came in at 52.1 versus August reading of 51.6; U.S. ISM September Non-Manufacturing Employment Index came in at 44.2 versus August reading of 45.4; U.S. ISM September Non-Manufacturing Prices Index came in at 70.0 versus August reading of 72.9; U.S. ISM September Non-Manufacturing New Orders Index came in at 50.8 versus August reading of 49.7. At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U.S. stock indices ended the session on the world market as well as the emerging markets including the stock market closing bell price: DOW (Dow Jones Industrial Average) triple digit loss of 157.47 points on the day to end the trading session at 10,325.38 NYSE (New York Stock Exchange) loss of 66.47 points to end the trading session at 7,088.94 National Association of Securities Dealers Automated Quotations (NASDAQ) loss of 29.33 points to end the trading session at 1,947.39 S&P 500 loss of 15.05 points to end the trading session at 1,099.23 FTSE All-World excluding U.S. loss of 0.79 points to end the trading session at 185.92 FTSE RAFI 1000 loss of 88.79 points to end the trading session at 4,378.78 BEL 20 (BEL20) gain of 15.93 points to end the trading session at 2,757.01 CAC 40 (CAC40) triple digit gain of 117.47 points to end the trading session at 4,080.75 FTSE100 (UKX100) triple digit gain of 109.91 points to end the trading session at 4,980.25 NIKKEI 225 (NIK/O) triple digit loss of 216.62 points to end the trading session at 10,938.14 |
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