Stock Market News for September 22, 2011 - Market News
September 22 2011 - 5:06AM
Zacks
The Federal Reserve lived up to market expectations, delivering the
economic stimulus package termed ‘Operation Twist.’ But its
acknowledgement of “significant downside risks” to the economy
pulled the benchmarks down to their biggest drop this month. It was
during the final 45 minutes of trading that the markets plunged
sharply with the Dow losing almost 200 points. Traders also
attributed the final-hours fall to investors exiting bets they made
last week and looking for new short positions.
The Dow Jones Industrial
Average (DJIA) slid 283 points or 2.5% to settle at 11,124.84. The
Standard & Poor 500 (S&P 500) plunged 2.9% to finish the
day at 1,166.76. The Nasdaq Composite Index dropped 2% and settled
at 2,538.19. It was a relatively busy day for the Street as
consolidated volumes on the New York Stock Exchange, Amex and
Nasdaq clocked in at 9.12 billion shares, well above the daily
average of 7.91 billion. On the NYSE, decliners outnumbered
advancing stocks by a ratio of 5:1.
As expected, the central
bank announced its plan to swap the short-term debt in its
portfolio with long-term Treasury bonds, mirroring similar measures
in the 1960s. The move that is aimed to cut down on borrowing costs
will have the central bank purchasing $400 billion of Treasury
bonds that range between 6 and 30 years and selling an equal amount
of short-term maturities. Additionally, in a bid to boost the
housing sector, the Fed announced that it would not modify the size
of its mortgage-backed securities portfolio.
However, investors seemed to
have little faith in these plans and believe they will hardly have
an effect on borrowing in a flagging economy. The economy has not
yet been able to recover completely from 2008’s economic collapse
and with domestic and global economies looming large; investor
fears of difficult times ahead seem justified. The Federal Reserve
itself acknowledged the economic weakness saying that is working in
view of “significant downside risks to the economic outlook,
including strains in global financial markets”.
Banking stocks were among
the ones to feel most of the pinch and the Financial Select Sector
SPDR (XLF) fund slid 5.0%. Among the bellwethers, Bank of America
Corporation (NYSE:BAC), The Goldman Sachs Group, Inc. (NYSE:GS),
Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM),
Citigroup, Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC) and
U.S. Bancorp (NYSE:USB) plunged 7.5%, 4.6%, 8.6%, 5.9%, 5.2%, 3.9%
and 5.1%, respectively. Amidst these tensions, Moody's Corp.
(NYSE:MCO) downgraded Bank of America, Wells Fargo and Citigroup’s
debt ratings. On the European front, Italian banks also faced
trouble after Standard & Poor’s downgraded seven Italian banks’
credit rating on Wednesday.
Insurers also received a
battering yesterday, as the historically low interest rate is
likely to hurt their investment portfolios. Among the decliners
were Lincoln National Corp. (NYSE:LNC), National Western Life
Insurance Company (NASDAQ:NWLI), StanCorp Financial Group Inc.
(NYSE:SFG) and Protective Life Corp. (NYSE:PL) and they declined by
8.4%, 2.3%, 5.4% and 4.1%, respectively.
While all eyes remained
fixed on the Federal Reserve’s announcement, data about a surge in
the existing-home sales in August was hardly factored in. According
to the National Association of Realtors: “Total existing-home
sales1, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, rose 7.7 percent
to a seasonally adjusted annual rate of 5.03 million in August from
an upwardly revised 4.67 million in July, and are 18.6 percent
higher than the 4.24 million unit level in August 2010”. “Some of
the improvement in August may result from sales that were delayed
in preceding months, but favorable affordability conditions and
rising rents are underlying motivations,” noted Lawrence Yun, NAR
chief economist.
BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
LINCOLN NATL-IN (LNC): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
PROTECTIVE LIFE (PL): Free Stock Analysis Report
STANCORP FNL CP (SFG): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
Zacks Investment Research
Planet Labs PBC (NYSE:PL)
Historical Stock Chart
From May 2024 to Jun 2024
Planet Labs PBC (NYSE:PL)
Historical Stock Chart
From Jun 2023 to Jun 2024