This is JUST the beginning. And this is going to be IMPOSSIBLE to cover up. THIS IS WHY OBAMA TRIED TO MAKE A BIG DEAL OF HIS MEANINGLESS 17 BILLION DOLLAR EXPENSE CUT! He saw that the world is scared of our debt... and he wanted to reasure people with this non-news item.
http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-050709.aspxStocks slump on interest-rate fears
By Charley Blaine and Elizabeth Strott
Lost in the euphoria of the big stock market rally that pushed the Dow Jones Industrial Average ($INDU) up 30% from its lows in March 10 through Wednesday was what was happening in the bond market.
Today, the bond market spoke. It wasn't pretty. It accelerated a retreat in stocks. And it pushed aside the question of banks and the government's stress tests until later today.
At 2:55 p.m. ET, the Dow was down 128 points, or 1.5%, to 8,384. The Standard & Poor's 500 Index ($INX) fell 16 points, or 1.7%, 904, and the Nasdaq Composite Index ($COMPX) dropped 53 points, or 3%, to 1,706.
The problem was that an auction of 30-year Treasury bonds produced a higher-than-expected yield -- 4.288%. Bloomberg News said bond-trading firms had expected a yield of 4.192%.
The auction results pushed rates on all bonds higher and immediately slammed stock prices. At 12:55 p.m. ET, the yield on the 30-year bond was, in fact, 4.19%, with the Dow at 8,454. At 1:30 p.m. ET, the yield was at 4.25%, and the Dow had dropped nearly 60 points.
The unanswered question in the market reaction was whether the yield was a signal of investor unhappiness with the government's plans to stimulate the economy or a signal that investors now see a recovery emerging and, despite today's losses, may start moving money to stocks.
Rates have been rising in recent weeks especially on signals that the economy is starting to find a bottom in the recession. The yield on the 30-year bond ended 2008 at 2.69%.
The market was selling off before the bond auction, with technology stocks leading the market lower. Tech has been the market's strongest sector this year.
The Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, was down 39 points, or 2.8%, to 1,385. Cisco Systems (CSCO, news, msgs), which reported lower fiscal-third quarter earnings after Wednesday's close, was down 4.3% to 18.76. Apple (AAPL, news, msgs) was off 3.3% to $128.10.
The stress tests: Does anybody care?
It doesn't seem like anyone really cares about the stress tests anymore, even though the official results of the government's stress test on the country's 19 biggest banks are due at 5 p.m. ET, after the market closes today.
Most of the results have already been leaked, so most of the banks have an idea of how they fared, and the markets and investors have shrugged off any bad news.
The banks now have guidelines as to how to proceed after hearing the official results.
There are "very significant cushions in these institutions today, and all Americans should be confident that these institutions are going to be viable institutions going forward," Treasury Secretary Tim Geithner said late Wednesday on PBS television's Charlie Rose program. "The results will be, on balance, reassuring."
Banks that need more capital under the stress tests will have a month to present regulators with a plan to raise the funds, and they will have six months to come up with the money, federal officials said late Wednesday.
The Federal Reserve has told at least seven banks to bolster their capital positions by a total of $67 billion, according to published reports, and given six banks the green light.
The banks will also have a month to review their management and board "to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment," according to a joint statement from the Treasury Department, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
Leaks have been reported all week about which banks need more capital, which means the results are "going to be anticlimactic," Rochedale Securities analyst Dick Bove said on Wednesday.
Bank of America (BAC, news, msgs), Citigroup (C, news, msgs), Wells Fargo (WFC, news, msgs), Morgan Stanley (MS, news, msgs), General Motors' (GM, news, msgs) GMAC, Regions Financial (RF, news, msgs) and State Street (STT, news, msgs) are all in need of more funds, reports said.
JPMorgan Chase (JPM, news, msgs), Goldman Sachs (GS, news, msgs), MetLife (MET, news, msgs), American Express (AXP, news, msgs), Bank of New York Mellon (BK, news, msgs) and Capital One Financial (COF, news, msgs) are in the clear, according to The Wall Street Journal.
Shares of Bank of America were up 3.6% to $13.09, but Citigroup shares turned lower, falling 2.1% to $3.76 this afternoon.
Topic: US Treasure Interest Rates higher than expected.. Investors spooked by Debt (Read 811 times)