Rally mode early on bank infusion, overseas gains
Small-cap stocks jumped higher on the opening, bolstered by investor hope that yet another government cash infusion into Bank of America will stabilize a shaky situation in the financial arena. Bank stocks, mining companies, chipmakers and automobile manufacturers were up in overseas action, setting the stage for an extension of the bounce in U.S. markets Thursday afternoon. At 9:56 a.m. ET, the Russell 2000 (NYSE:IWM) was up 2.42, or 0.52%, at 465.04.
The Michigan sentiment survey was reported at 61.9%, which was better than the forecast of 59.0. Just ahead of the market open, the industrial production data came in at minus 2%, which was worse than the forecast for a decline of 0.9%. This marked the largest 12-month output drop since 1975, and capacity usage was the lowest since December 2001. Despite the downbeat news, the market didn’t seem to flinch on the industrial production report. Earlier this morning, the consumer price index was pegged at minus 0.7%, which was slightly above the forecast of minus 0.9%. Meanwhile, the “core” rate, which excludes volatile food and energy prices was unchanged, close to the forecast of plus 0.1%. Inflation data has very little immediate trading impact right now as investors simply aren’t worried about inflation in the current stage of the economic cycle.
Bank of America Corp. (NYSE:BAC) and Citigroup Inc. (NYSE:C) released earnings ahead of today’s open, with BAC generating their first quarterly loss in some 17 years and Citigroup reporting a staggering loss of $8.2 billion. However, the big supportive news for banks was that the U.S. government will provide a direct $20 billion injection into BAC and will guarantee another $118 billion for underlying assets. BAC shares were up 10% early, while C was up 16%.
Crude oil was lower in European trading ahead of the stock market open, but rallied about $1 a barrel by the opening, supported by expectations for higher equities and a weak tone in the U.S. dollar. Shortly after the open, the greenback was down about 1.4% against the euro, which should help not only crude oil, but a host of . . .
The Michigan sentiment survey was reported at 61.9%, which was better than the forecast of 59.0. Just ahead of the market open, the industrial production data came in at minus 2%, which was worse than the forecast for a decline of 0.9%. This marked the largest 12-month output drop since 1975, and capacity usage was the lowest since December 2001. Despite the downbeat news, the market didn’t seem to flinch on the industrial production report. Earlier this morning, the consumer price index was pegged at minus 0.7%, which was slightly above the forecast of minus 0.9%. Meanwhile, the “core” rate, which excludes volatile food and energy prices was unchanged, close to the forecast of plus 0.1%. Inflation data has very little immediate trading impact right now as investors simply aren’t worried about inflation in the current stage of the economic cycle.
Bank of America Corp. (NYSE:BAC) and Citigroup Inc. (NYSE:C) released earnings ahead of today’s open, with BAC generating their first quarterly loss in some 17 years and Citigroup reporting a staggering loss of $8.2 billion. However, the big supportive news for banks was that the U.S. government will provide a direct $20 billion injection into BAC and will guarantee another $118 billion for underlying assets. BAC shares were up 10% early, while C was up 16%.
Crude oil was lower in European trading ahead of the stock market open, but rallied about $1 a barrel by the opening, supported by expectations for higher equities and a weak tone in the U.S. dollar. Shortly after the open, the greenback was down about 1.4% against the euro, which should help not only crude oil, but a host of . . .
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