While you were sleeping: Hope for help
(BusinessDesk) August 23 - Investors found some value among beaten-down stocks on Wall Street as they picked up shares
of Apple and IBM amid hope the Federal Reserve will announce measures to help shore up the world’s largest economy.
Investors are eyeing the Fed’s annual conference in Wyoming later this week and the keynote speech by Chairman Ben
Bernanke.
“People are of the belief that there’s an increasing likelihood of a new quantitative easing program,” Mark Luschini,
the chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, told Bloomberg News.
“We hold no expectation that we’re going to see that. The hurdle remains pretty high. I’m a little concerned that if
[we] get some rally on that expectation and it doesn’t come through, that the equity market would be set for a decline.”
In late trading, the Dow Jones industrial average rose 0.85%, the Standard & Poor's 500 Index gained 0.60% while the Nasdaq Composite Index climbed 0.50%.
"The rebound is pretty much focused on buying into some of the safer issues," Marc Pado, U.S. market strategist at
Cantor Fitzgerald & Co in San Francisco, told Reuters.
"There's value in the market, but very little faith in the government in dealing with the [U.S.] debt problem," he said.
"People are sticking to the big names. No one is taking on added risk."
Financial companies are considered risky because of concern about their exposure to the debt and economic crisis, both
at home and in Europe.
A report in the Wall Street Journal on Monday said that U.S. federal and state officials are clashing with banks over
how wide-ranging their legal settlements over mortgages should be.
Among the largest decliners today was Bank of America Corp, which sank more than 6%, after announcing plans for job cuts
late last week. Meanwhile, China Construction Bank Corp said Bank of America will keep at least half its stake, fuelling
new debate on the U.S. firm’s capital plans, according to Bloomberg.
"The ground zero of all worries is financials," Charlie Smith, chief investment officer of Pittsburgh-based Fort Pitt
Capital Group, told Reuters.
Another area of concern for investors as the week begins is the future demand for oil, while gold is deemed a safe place
to park some money.
Today, Brent crude dropped US$1.47 to US$107.15. Brent also slipped in the wake of signs that Libya’s rebel forces were
on the verge of winning the civil war and on expectations the country’s oil supplies will resume sooner than later.
Spot gold was 1.6% stronger at US$1,888.90 an ounce. It rose to a record US$1,894.10 earlier in the session.
In Europe, the Stoxx Europe 600 Index ended the day 0.8% higher.
The euro fell 0.2 % to US$1.4374, after gaining as much as 0.3% earlier in the day. German Chancellor Angela Merkel
repeated her resistance against common euro bonds, an idea that had gained traction recently among some investors.
The yen shed 0.3% to 76.77 per U.S. dollar, after reaching a post-World War II high of 75.95 on August 19, according to
Reuters.
(BusinessDesk)