Tag - ACLI

Small-cap stocks staged a solid recovery rally Tuesday, climbing more than 4% off the morning low as investors turned off the panic switch on financial worries, while bargain hunters took a dive back into the market and short-sellers took profits. While that might not be the optimal scenario for stock market stability, it was still a welcome sign for a market that seemed to be teetering on the edge. For the day, the Russell 2000 (NYSE:IWM) was up 20.89, or 3.03%, at 710.65. Just one day after the worst performance of the year, the Russell mounted the best one-day gain since July 16, which underscores the manic volatility in play in equities right now.

After posting the largest one-day slide since the 9/11 attacks, the Dow pushed higher Tuesday, rising 1.30% and the S&P 500 was up 1.75%. For the year, the Dow is down 16.6%, the S&P 500 off 17.3% and the Russell down 7.2%.

The Federal Reserve decided not to cut short-term interest rates, even though the market gave the policy makers a green light to do so, pricing in overwhelming odds for a rate cut (via Fed funds futures) ahead of today’s FOMC policy meeting. Even though some might have been disappointed that the Fed didn’t come charging to the rescue with easier money, the market overall seemed satisfied that the policy body was ready to keep bullets in the holster for later should they be needed.

“The FOMC’s decision reflected their belief that it is not the cost of credit that is causing the current financial turmoil, but the availability of credit and liquidity,” Steven Wood, chief economist with Insight Economics, said in an email. “The Fed is trying to address this availability problem through the variety of liquidity facilities that they have put in place over the past 10 months. The Committee is clearly keeping a watchful eye on both the current financial turmoil and the increased downside risks to economic growth. Although inflation remains uncomfortably high, it has moved to the back burner given the immediacy of the financial and growth concerns. With inflation beginning to ease, and the economy in some difficulty, the Fed is now more likely to cut rates than raise them. We expect at least one rate reduction before . . .

Following the worst one-day point drop since the terrorist attacks of Sept. 11 and a lower opening, small caps are flickering in and out of the green, after news that the government might extend a lifeline to troubled insurance company AIG and ahead of the Fed’s policy decision this afternoon.

At 11:45 a.m. ET, the Russell 2000 (NYSE:IWM) was flat at 692.53, up 2.77, or 0.4%.

After turning AIG (NYSE:AIG) down Monday, the government is now reconsidering extending financial aid to the company, according to CNBC. Markets are watching the insurance juggernaut closely, as its fate remains uncertain and any potential failure would severely rock the financial system. The company must raise $75 billion today to remain afloat, which is on top of the $14.5 billion raised overnight to cover obligations in the wake of fresh rating agency credit downgrades. Shares remain down 50% midday. 

“My gut tells me that AIG will be rescued as it's not Lehman: $1 trillion in assets versus $629 billion,” Andy Busch, global foreign exchange strategist, said in an email. “More importantly, the insurance angle (lots of problems with an unwind) should be enough to get a package together.” 

Just one day after Lehman Brothers (NYSE:LEH) declared bankruptcy, the demolished U.S. investment bank is reportedly close to a deal with British bank Barclays, in which Barclays would acquire its U.S. broker-dealer unit for roughly $2 billion. Barclays, which initially walked away from a takeover deal over the weekend, has been looking to increase its exposure in the U.S. market.

Following the intense selling pressure Monday, the Federal Reserve aided liquidity levels in the market today by pumping $50 billion into the system. This is on top of the $20 billion the Federal Reserve Bank of New York was already slated . . .

After the worst one day point drop since the terrorist attacks of Sept. 11, small caps are lower this morning, as AIG’s (NYSE:AIG) fate remained uncertain and as investors surveyed the wreckage from Monday’s session.

At 9:45 a.m. ET, the Russell 2000 (NYSE:IWM) had fallen 5.85, or 0.85%, to 683.91.

Following one of the most cataclysmic days Wall Street has seen, investors’ focus has shifted to AIG from Merrill Lynch’s emergency sale to Bank of America (NYSE:BAC) and Lehman’s (NYSE:LEH) declaration of bankruptcy on Monday. The insurance juggernaut, which saw its stock plummet 61% on Monday on liquidity concerns, was forced to scramble to raise $14.5 billion overnight to cover obligations in the wake of fresh rating agency credit downgrades. The firm is seeking to raise $75 billion. Shares plunged 42%.

Just one day after Lehman Brothers declared bankruptcy, English bank Barclays’ interest has reemerged in the washed up bank’s core investment banking unit. Barclays, which initially walked away from a takeover deal over the weekend, has been looking to increase its exposure in the U.S. market.

In an effort to inject liquidity back into the markets, the Federal Reserve pumped $50 billion into the system. This is on top of the $20 billion the Federal Reserve Bank of New York was already slated to infuse the system with.

The Federal Reserve will meet today for a policy meeting, as the credit crisis has reached a climax. The central bank is expected to leave rates on hold, despite the market’s cries for a quarter point rate cut. The policy decision is . . .

Marine transportation and service company American Commercial Lines Inc. (Nasdaq: ACLI) this morning issued a third-quarter earnings estimate above the consensus on Wall Street and said that it will have enough insurance to cover the cost of cleanup for an oil spill on July 23.

Shares gained 8%, or $0.76, to $9.75 in the first half hour of trading. For detailed price information and news stories on American Commercial, click ACLI.

Small-cap stocks plunged on the opening, pulled down by worries about the credit crisis, which are taking a toll on financial stocks. A fresh batch of economic data this morning did nothing to ease the pain as the labor market continues to struggle against a backdrop of worry about global growth slowing. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) was down 15.27, or 2.13%, at 701.90.

Financial shares have continually been dogged by the credit crunch over the last year, and as soon as things seem to cool down on that front, a new crisis emerges. The latest poster child for the debt debacle is Lehman Brothers Holdings Inc. (NYSE:LEH), as the firm appears to be getting snowballed under losses, is struggling to raise capital via finding investors and has seen its debt swaps widen dramatically, which makes it more difficult to fund borrowing efforts. LEH debt is now trading near distressed levels and the stock was off a whopping 38% shortly after the opening, trading near $4.30, a far cry from the $66 level it was trading at back in February. Another firm reeling from the mortgage-tied credit crisis is Washington Mutual Inc. (NYSE:WM), which was off 21% early today. Also, American International Group Inc. (NYSE:AIG) was down 12%, as was Merrill Lynch & Co. Inc. (NYSE:MER).

On the data front this morning, the weekly unemployment claims release came in at 445,000, which was above the consensus forecast of 438,000. Perhaps more importantly than the headline figure was the continuing claims number, which was 3.52 million, near a 5-year peak. At the same time that the claims number came out, data on international trade showed a jump in the U.S. trade deficit to $62.2 billion, well above the forecast for a deficit of $58 billion. The dreary data simply added to an already bleak morning picture for equities. Even before this morning’s claims report, analysts at Goldman Sachs said earlier this week that the slumping U.S. labor market reflected an economy that was in recession, regardless of how the “official” . . .

Small-cap stocks had an up and down session, grappling with the promise of an upbeat private employment survey versus the reality of a sudden updraft in energy prices. In the end, the Russell 2000 (NYSE:IWM) closed up 4.31, or 0.60%, at 718.86.

Small-cap stocks and tech stocks noticeably lagged the Dow and S&P 500, both of which benefited more from a jump in financial and consumer product large caps as well as money moving into big energy names. Exxon Mobil Corp. (NYSE:XOM) rallied 4% as energy markets staged a sharp recovery rally.

Crude oil prices shot some $4 dollars a barrel higher today, reversing course from recent sharp declines. The buying frenzy was set off when the weekly inventory tally showed a surprising drop in gasoline stocks. While a boon to some energy stocks, the jump in crude prices sent a chill through the overall stock market.

On the financial side of things, large caps embraced news that the Federal Reserve would extend access to its primary dealer credit facility window through Jan. 30, which helps to access cheap money needed to combat the credit crunch and raise low-cost capital amid debt write-downs. In addition, President Bush inked the rescue plan for mortgage financing firms, which will support Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), as the two firms own or guarantee nearly 50% of the country’s $12 billion in home mortgage debt. While both FNM and FRE posted solid gains today, they finished well off the morning highs. The SEC also extended a short-selling curb through Aug. 12, so when you combine that with the Fed extending the credit facility and the White House stamping approval on GSE funding measures, it sends a pretty clear message that government officials want to stabilize the financial landscape. Investors could easily see through that message and as a result, several large-cap financial firms were attractive to buyers today. Merrill Lynch (NYSE:MER) was up 2%, Bank of America (NYSE:BAC) up 3% and Citigroup (NYSE:C) up nearly 2%.

The day started off with an unexpected bullish surprise as the ADP Employment Report showed a stunning increase in non-farm payrolls of 9,000 jobs in July, which . . .