Business

July 3, 2008

Economy sheds jobs for 6th month

WASHINGTON (Reuters) - U.S. employers cut workers from their payrolls for the sixth straight month in June for the longest losing employment streak since 2002, government data on Thursday showed.

A separate report showed new applications for jobless benefits hurdling to 404,000, suggesting further weakness ahead for employment.

U.S. stock futures rallied on the news, while prices on U.S. government debt retreated as investors shifted their attention toward the equities market.

"It shows that the labor market still is very soft. We're not seeing dramatic job cuts, but clearly companies are trying to hold the line on costs," said Gary Thayer, senior economist at Wachovia Securities in St. Louis.

The Labor Department said the unemployment rate held steady at 5.5 percent in June and 62,000 jobs were lost from nonfarm payrolls, bringing jobs shed for the year so far to 438,000 as housing market woes chilled growth.

Analysts polled by Reuters had expected the unemployment rate to edge down to 5.4 percent. Payrolls were forecast to shed 60,000 jobs in June versus a 62,000 loss in May.

Both May and April's count were revised lower, taking their combined job losses to 129,000, compared to an early estimate of 77,000 jobs lost.

TAME WAGES

Average hourly earnings, closely watched by the Federal Reserve as it monitors price pressures to make sure they do not creep into higher wages, edged up six cents, or 0.3 percent in June to $18.01.

This took the year-on-year gain in average hourly earnings to 3.4 percent, the lowest reading since January 2006.

The Fed last week halted an aggressive interest rate cutting campaign, holding rates at 2 percent and warning that inflation risks had risen amid soaring energy and food prices. The central bank had been cutting rates to shield growth from a collapsing housing market.

"It does show that the Fed has to hold policy steady for now. We've now seen job cuts all year long and that suggests that raising interest rates now would probably hurt the economy significantly," said Thayer.

June's decline was also the longest consecutive monthly shrinkage in payrolls since the collapse of the technology stock bubble, when they fell from March 2001 until May 2002 without respite as the economy went through a mild recession.

There were 43,00 job losses in construction in June as the housing slowdown continued to bite, while manufacturing shed 33,000 jobs. Both of these sectors have lost jobs in every month over the past year.

Providers of professional services lost 51,000 jobs as the financial services and real estate industries continued to suffer the country's housing market woes.

Flooding in the Midwest had no impact on June's national employment report, the Labor Department said, holding out the possibility of additional pressure on the jobs market in the coming months as flood-related job losses get counted.

A separate report from the labor department showed that U.S. workers filing new claims for jobless benefits jumped 16,000 last week to 404,000.

The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, increased for the fourth straight week to 390,500, the highest reading since October 2005 in the aftermath of Hurricane Katrina.

(Reporting by Alister Bull, editing by Joanne Morrison)

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Alister Bull - Reuters | Thursday, July 3, 2008

 

June 22, 2008

Oil minister: Saudi Arabia willing to increase oil production if customers request it

JIDDAH, Saudi Arabia (AP) -- Saudi Arabia is willing to produce more oil if customers need it, the kingdom's oil minister said Sunday without citing any specific output increase.

Saudi Arabia, the world's largest oil exporter, has been under intense pressure from the U.S. and other oil consumers to increase its crude output to help slow the soaring price of oil.

The kingdom already announced modest increases and said it would pump 9.7 million barrels a day beginning in July. But those increases have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday.

The high prices are affecting consumers and economies across the United States, Europe and much of the world. Many countries have experienced social unrest as rising fuel prices have driven significant increases in the cost of food and other basic goods.

The cost of gasoline has also become a sore point in the U.S. presidential race, with U.S. President George W. Bush and Republican candidate John McCain calling for lifting of a long-standing ban on offshore oil and gas drilling to increase domestic oil production. But Democratic candidate Barack Obama has said such steps will do nothing in the short term to ease American consumer's pain.

It was unclear if Oil Minister Ali al-Naimi's remarks Sunday at a high-level oil summit in the port city of Jiddah would quell concerns.

Al-Naimi, who was expected to formally make the announcements in a speech later Sunday, reiterated his government's position that the recent run-up in prices has not been caused by a supply shortage. But he said he also believes each country must do what it can "to alleviate these difficult conditions."

For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July, if demand for such quantities materializes and our customers tell us they are needed," al-Naimi said in the speech, a copy of which was obtained by The Associated Press in advance.

Al-Naimi also said that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure.

"In addition, we have identified a series of future crude oil mega-increments totaling another 2.5 million barrels per day of capacity that could be built if and when crude oil demand levels warrant their development," he said.

The U.S. and other Western nations have put increasing pressure on Saudi Arabia to increase production, saying insufficient oil production has not kept pace with growing demand.

Earlier Sunday, King Abdullah also said Saudi Arabia was not to blame for soaring oil prices and instead pointed his finger at speculators, high fuel taxes in consuming countries and increased oil consumption in developing economies.

"There are several factors behind the unjustified, swift rise in oil prices and they are: Speculators who play the market out of selfish interests, increased consumption by several developing economies and additional taxes on oil in several consuming countries," the king said.

Abdullah urged the summit's delegates to "uncover the truth" and dispel rumors to get the "real and full reasons" behind the skyrocketing price of oil.

Saudi Arabia increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July -- for a total of 9.7 million barrels a day.

British Prime Minister Gordon Brown also called for future commitments from producers for increased oil and gas supply but urged that all countries should improve energy efficiency and develop alternative sources of energy, including nuclear power.

Earlier Sunday, U.S. Energy Secretary Samuel Bodman again called on Saudi Arabia to increase production, saying it has not kept pace with growing demand.

Bodman said world oil consumption growth has averaged about 1.8 percent per year since 2003 with the largest share of that growth coming from developing countries like China, India and countries in the Middle East, he said.

But for the past three years, global oil production has remained constant at roughly 85 million barrels a day, and OPEC production has remained largely flat, he said in a written statement.

"I believe that most of us agree on one thing: Prices are too high at present. And unless we act, the situation will remain unsustainable," he said in the statement.

The kingdom called for Sunday's unusual meeting in Jiddah between oil producing and consuming nations as a way to show that it was not deaf to international cries that high oil prices have caused social and economic turmoil.

The Gulf nation also has become increasingly concerned that record oil prices could hinder growth in the U.S. and other major industrialized economies, potentially leading to a decline in oil demand and a sharp drop-off in prices.

Also Sunday, Abdullah called for the creation of a $1 billion energy initiative for poor countries to help them combat the rising cost of fuel. He also said Saudi Arabia would contribute $500 million to help give poor countries loans to finance development and energy projects.

Associated Press Writer Donna Abu Nasr contributed to this report.

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Sebastian Abbot - AP | Sunday, June 22, 2008

 

April 28, 2008

Buffett says recession may be worse than feared

NEW YORK (Reuters) - Warren Buffett, the world's richest person, said on Monday the U.S. economy is in a recession that will be more severe than most people expect.

Buffett made his comments on CNBC television after his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) agreed to invest $6.5 billion in the takeover of chewing gum maker Wm Wrigley Jr Co (WWY.N: Quote, Profile, Research) by Mars Inc in a $23 billion transaction.

"This is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think," Buffett said. "This will not be short and shallow.

"I think consumers are feeling gas and food prices," he added, "and not feeling they've got a lot of money for other things."

He was not immediately available for further comment. Known for his frugality, the 77-year-old Buffett has lived in the same 10-room Omaha, Nebraska, house for a half-century, despite being worth an estimated $62 billion.

On Wednesday, the U.S. Commerce Department is expected to say how fast the economy grew in the first quarter. Economists on average have projected that gross domestic product grew at an annualized 0.2 percent rate in the quarter.

Two quarters of declining GDP is a traditional indicator of recession. That last happened in 2001. Economists expect the U.S. Federal Reserve on Wednesday to cut a key lending rate for a seventh time beginning last September.

Berkshire is a $197 billion conglomerate best known for its insurance holdings, such as auto insurer Geico Corp, but it owns more than 70 businesses.

Many of those businesses are tied to the housing market, including Acme Brick Co, insulation maker Johns Manville, and the real estate brokerage HomeServices of America Inc.

Others depend on consumers to spend more on discretionary items, such as Ben Bridge Jeweler and Borsheims Fine Jewelry.

"In the retail businesses ... if anything, they've gotten a little worse," Buffett said. "Of course, things connected with housing, whether it's in brick or whether it's in carpet, those businesses have shown no uptick at all. Jewelry had a bad Christmas ... and it stayed that way."

Buffett sees no respite from the housing slump.

"I think this is going to be fairly long and fairly deep, but who knows," he said.

In March, Forbes magazine pegged Buffett's net worth at $62 billion, ahead of Mexican tycoon Carlos Slim's $60 billion and Microsoft Corp (MSFT.O: Quote, Profile, Research) Chairman Bill Gates's $58 billion. Gates is a friend of Buffett and a Berkshire director.

(Editing by John Wallace)

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Jonathan Stempel - Reuters | Monday, April 28, 2008

 

March 31, 2008

USA 2008: The Great Depression

We knew things were bad on Wall Street, but on Main Street it may be worse. Startling official statistics show that as a new economic recession stalks the United States, a record number of Americans will shortly be depending on food stamps just to feed themselves and their families. Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.

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David Usborn - The Independent | Monday, March 31, 2008

 

March 24, 2008

"Pay day" loans exacerbate housing crisis

As hundreds of thousands of American home owners fall behind on their mortgage payments, more people are turning to short-term loans with sky-high interest rates just to get by.

While hard figures are hard to come by, evidence from nonprofit credit and mortgage counselors suggests that the number of people using these so-called "pay day loans" is growing as the U.S. housing crisis deepens, a negative sign for economic recovery.

"We're hearing from around the country that many folks are buried deep in pay day loan debts as well as struggling with their mortgage payments," said Uriah King, a policy associate at the Center for Responsible Lending (CRL).

A pay day loan is typically for a few hundred dollars, with a term of two weeks, and an interest rate as high as 800 percent. The average borrower ends up paying back $793 for a $325 loan, according to the Center.

The Center also estimates pay day lenders issued more than $28 billion in loans in 2005, the latest available figures.

In the Union Miles district of Cleveland, which has been hit hard by the housing crisis, all the conventional banks have been replaced by pay day lenders with brightly painted signs offering instant cash for a week or two to poor families.

"When distressed home owners come to us it usually takes a while before we find out if they have pay day loans because they don't mention it at first," said Lindsey Sacher, community relations coordinator at nonprofit East Side Organizing Project on a recent tour of the district. "But by the time they come to us for help, they have nothing left."

The loans on offer have an Annual Percentage Rate (APR) of up to 391 percent -- excluding fees and penalties. All you need for a loan like this is proof of regular income, even government benefits will do.

On top of the exorbitant cost, pay day loans have an even darker side, Sacher notes. "We also have to contend with the fact that pay day lenders are very aggressive when it comes to getting paid."

Ohio is on the front line of the U.S. housing crisis. According to the Mortgage Bankers Association, at the end of the fourth quarter Ohio had 3.88 percent of home loans in the process of foreclosure, the highest of all the 50 U.S. states. The "Rust Belt" state's woes have been further compounded by the loss of 235,900 manufacturing jobs between 2000 and 2007.

But while the state as a whole has not done well in recent years, pay day lenders have proliferated.

Bill Faith, executive director of COHHIO, an umbrella group representing some 600 nonprofit agencies in Ohio, said the state is home to some 1,650 pay day loan lenders -- more than all of Ohio's McDonald's, Burger Kings and Wendy's fast food franchises put together.

"That's saying something, as the people of Ohio really like their fast food," Faith said. "But pay day loans are insidious because people get trapped in a cycle of debt."

It takes the average borrower two years to get out of a pay day loan, he said.

Robert Frank, an economics professor at Cornell University, equates pay day loans with "handing a suicidal person a noose" because many people can't control their finances and end up mired in debt.

"These loans lead to more bankruptcies and wipe out people's savings, which is bad for the economy," he said. "This is a problem that has been caused by deregulation" of the U.S. financial sector in the 1990s.

Because of the astronomical interest rates there is a movement among more states to implement a cap of 36 percent APR that is currently in place in 13 states and the District of Columbia.

"Thirty-six percent is still very high," said Ozell Brooklin, director of Acorn Housing in Atlanta, Georgia where there is a cap in place. "But it's better than 400 percent."

SPRINGING THE TRAP

But even in states like New York where pay day loan caps or bans exist, loopholes allow out-of-state lenders to provide loans over the Internet.

Janet Hudson, 40, ran into pay day loans when she and her fiance broke up, leaving her with a young son and a $1,000 monthly mortgage payment. Short on cash, she took out three small pay day loans online totaling $900 but fell behind with her payments. Soon her monthly interest and fees totaled $800.

"It almost equaled my mortgage and I wasn't even touching the principal of the loans," said Hudson, who works as an administrative assistant.

After falling behind on her mortgage, Hudson asked Rochester, New York-based nonprofit Empire Justice Center for help. A lawyer at Empire, Rebecca Case-Grammatico, advised her to stop paying off the pay day loans because the loans were unsecured debt.

"For months after that the pay day lenders left me voice mails threatening to have me thrown in jail, take everything I owned and destroy my credit rating," Hudson said. After several months, the pay day lenders offered to reach a settlement.

But Hudson was already so far behind on her mortgage that she had to sell her home April 2007 to avoid foreclosure.

"Thanks to the (New York state) ban on pay day loans we've been spared large scale problems, but Internet loans have still cost people their homes," Case-Grammatico said.

A national 36 percent cap on pay day loans to members of the military came into effect last October. The cap was proposed by Republican Senator Jim Talent and Democratic Senator Bill Nelson -- citing APR of up to 800 percent as harmful to the battle readiness and morale of the U.S. Armed Forces.

There are now proposals in other states -- including Ohio, Virginia, Arizona and Colorado -- to bring in a 36 percent cap.

And, in Arkansas, attorney general Dustin McDaniel sent a letter to payday lenders on March 18 asking them to shut down or face a lawsuit, saying they have made a "lot of money on the backs of Arkansas consumers, mostly the working poor."

Alan Fisher, executive director of the said up 2 million Californians have pay day loans. There is a proposed 36 percent cap awaiting debate in California's state assembly.

"We expect pay day loans will make the housing crisis worse," said Alan Fisher, executive director of the California Reinvestment Coalition, an umbrella group of housing counseling agencies. California, a state with an estimated 2 million pay day loans, the assembly is set to debate a bill on introducing a 36 percent cap.

"Thanks to the credit crunch and foreclosure crisis, state and federal policy makers are taking a hard look at the policy of credit at any cost," the CRL's King said. "But more needs to be done, fast."

(Reporting by Nick Carey; Editing by Eddie Evans)

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Nick Carey - Reuters | Monday, March 24, 2008

 

Clinton proposes Greenspan lead foreclosure group

WHITE PLAINS, New York (Reuters) - Former Federal Reserve Chairman Alan Greenspan and other economic experts should determine whether the U.S. government needs to buy up homes to stem the country's housing crisis, Democratic presidential candidate Hillary Clinton will propose on Monday.

Clinton, a presidential candidate and senator from New York, said the Federal Housing Administration should "stand ready" to buy, restructure and resell failed mortgages to strengthen the ailing U.S. economy.

"Just as it has in the past, this kind of temporary measure by the government could give our economy the boost it needs and families the help they need," Clinton will say, according to excerpts of remarks prepared for a speech in Philadelphia.

"It would not require a single new government bureaucracy, and would be designed to be self-financing over time -- so it would cost taxpayers nothing in the long run."

Clinton threw her weight behind legislation proposed by Democrats Rep. Barney Frank of Massachusetts and Senator Chris Dodd of Connecticut that would "expand the government's capacity to stand behind mortgages that are reworked on affordable terms."

But she said a bipartisan group should determine whether that approach was sufficient or whether the U.S. government should step in as a temporary purchaser.

The working group could be led by bipartisan economic heavyweights such as Republican Greenspan, Democratic former Fed Chairman Paul Volcker and Robert Rubin, the treasury secretary under President Bill Clinton.

Under the Frank plan, the government would take failing mortgages off the hands of investors and write new terms that would prevent foreclosure. It would see lenders write down the mortgage amount in exchange for a government guarantee.

The former first lady has argued her experience makes her a stronger candidate than rival Barack Obama, a senator from Illinois, to steer the economy.

A focus on the housing crisis also appeals to the working class constituency that has been a big part of her support base. Clinton proposed last week that a new economic stimulus package be created to focus on the housing slump.

The proposal included a $30 billion emergency housing fund to put cash in the hands of local governments and nonprofit organizations to buy and resell properties to low-income people or turn them into affordable rental housing units.

(editing by Patricia Wilson)

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Jeff Mason - Reuters | Monday, March 24, 2008

 

March 16, 2008

Cheney to Mideast with "rich agenda" on oil, peace

WASHINGTON (Reuters) - Vice President Dick Cheney left on Sunday for the Middle East to raise concerns about high oil prices, push Israeli-Palestinian peace talks, and seek support for Iraq, where war began five years ago this week.

Cheney, who has strong ties with leaders in the Middle East, will visit Oman, Saudi Arabia, Jerusalem, the Palestinian territories, and Turkey during a nine-day trip to the region.

"Clearly, our ongoing efforts in Iraq and Afghanistan will be discussed," John Hannah, national security adviser to Cheney, told reporters. "Middle East peace, Iran, the situation in Syria, Lebanon, the violence in Gaza, energy -- it's a very long list and rich agenda."

Cheney will reinforce the message from visits by President George W. Bush in January and Secretary of State Condoleezza Rice earlier this month, in a stepped-up diplomatic push for Israelis and Palestinians to move forward on peace efforts dealt a blow by violence in Gaza and Israel.

"The mood has deteriorated incredibly in the last six weeks since the president was there," Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies, said.

"From the outside it's very hard to see that Secretary Rice was able to even arrest the slide let alone get things moving forward. My guess is the vice president will be able to arrest the slide if not necessarily put things on track," he said.

In Saudi Arabia, Cheney will discuss energy with King Abdullah as record-high oil prices strain the U.S. economy, but he was not expected to repeat the call by Bush for OPEC to increase production.

"I'm not sure he'll seek anything more than a good and thorough discussion about the current situation in the global energy markets," a senior administration official said.

ARAB ANCHOR

The United States wants Saudi Arabia, and other Arab allies like Egypt, to set up a diplomatic presence in Iraq by appointing an ambassador and opening an embassy in Baghdad.

"The United States can do a lot for Iraq, but we cannot provide Iraq with an anchor in the Arab world, a kind of legitimacy for the new Iraqi project that comes from being fully integrated in its neighborhood," the U.S. official said.

"And I think clearly some of our friends in the Arab world can do more on that score," he said on condition of anonymity.

But analysts were skeptical that Cheney would make any major breakthroughs.

"I don't think that he's going to be able to bring back anything meaningful because he's got nothing to offer," Steven Simon, a senior fellow for Middle Eastern studies at the Council on Foreign Relations, said.

"He represents a lame duck president, a floundering economy, a situation in which the U.S. for all its efforts in Iraq has no leverage on the government in Baghdad," Simon said.

Cheney throughout his trip will discuss the situation in Iraq, where security has improved, but violence persists five years after the U.S.-led invasion.

Bush will soon receive a new assessment from Gen. David Petraeus, the top U.S. commander in Iraq, and U.S. Ambassador Ryan Crocker, that he will weigh in deciding whether any changes to U.S. strategy are needed.

Cheney will tell allies that the United States remains concerned about Iran's nuclear ambitions and would like to see its growing regional influence contained.

"I expect in all of these countries that the challenge we face from Iran will be a very high topic of conversation," the U.S. administration official said.

The message for Turkey, which has been fighting Kurdish rebels known as the PKK in northern Iraq, will be that the United States agrees "the PKK is a terrorist organization that needs to be defeated," and will continue to support Turkey in addressing the problem, the official said.

(Editing by Eric Walsh)

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Tabassum Zakaria - Reuters | Sunday, March 16, 2008

 

Fed acts to protect financial system

The U.S. Federal Reserve on Sunday announced fresh emergency measures to stem a fast-spreading global financial crisis, using tools it has not used since the Great Depression.

The Fed cut the discount rate it charges on direct loans to banks and setting up a new program to provide cash to a wider range of big financial firms.

Senior Fed officials said the extraordinary measures, which follow a sequence of emergency steps over the last ten days, were necessary to ensure the broad spectrum of financial firms have access liquid funds as problems at investment bank Bear Stearns on Thursday and Friday put the broader financial system at risk.

The move will be seen as an attempt to prevent other major investment banks and brokers from suffering the same fate as Bear, the fifth-largest U.S. investment bank, as the pressures on the U.S. financial system from the credit market turmoil reach unprecedented levels.

Bear's major shareholders, including British billionaire Joseph Lewis and Bear Stearns' Chairman Jimmy Cayne, will have their holdings virtually wiped out by the deal, which will see JPMorgan pay only about $2 a share for Bear in JPMorgan stock.

The $236 million value of the deal, which is based on share count at the time of its annual report in January, compares with estimates of more than $1 billion that have been placed on Bear's world headquarters building on Manhattan's Madison Avenue.

Before it faced speculation about liquidity problems, which were quickly followed by a run on the bank last week, Bear's stock had been trading at around $70, and its 52-week high last April was at more than $159, valuing the company at about $24 billion at that time.

The pressures on companies like Bear prompted U.S. Treasury Secretary Henry Paulson on Sunday to say the U.S. government is prepared to do "what it takes" to maintain the stability of the financial system.

(Reporting by Daniel Wilchins, Joseph A. Giannone and Megan Davies; Editing by Tim Dobbyn)

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Mark Felsenthal - Reuters | Sunday, March 16, 2008

 

March 11, 2008

Stocks experience biggest one-day gain in five years as Fed adds liquidity

NEW YORK (Reuters) - Stocks rallied more than 3 percent on Tuesday, giving the S&P 500 its best advance since October 2002, after the Federal Reserve said it would add up to $200 billion to strained credit markets in a coordinated effort with other central banks.

The Dow and Nasdaq rang up their biggest daily percentage gains since March 2003. The Fed said it was expanding a lending program and will accept a broader base of securities as collateral, including mortgage bonds whose value has declined as the housing bubble burst.

Shares of mortgage-related companies and banks led the way, helping the market recover after three days of losses. Stocks had been close to their lows for the year as recession fears mounted.

Shares of Fannie Mae, the largest U.S. mortgage finance company, advanced 11.1 percent to $22.00, and Citigroup Inc, the largest U.S. bank, climbed 9.1 percent to $21.49.

Home builders' shares also rallied, as the Fed's action could help boost mortgage lending and ease the drag of the housing slump on the broader economy.

Analysts said an extended rally hinges on the health of the beleaguered credit markets.

"The key to any sustainable rally is going to be an improvement on the credit side," said Michael Darda, chief economist at MKM Partners LLC, in Greenwich, Connecticut. "The Fed's making a major effort to get liquidity and credit into the cracks and crevices of the financial system that need it the most."

The Dow Jones industrial average soared 416.66 points, or 3.55 percent, to 12,156.81.

The Standard & Poor's 500 Index climbed 47.28 points, or 3.71 percent, to 1,320.65 in its biggest daily percentage gain since October 2002.

The Nasdaq Composite Index gained 86.42 points, or 3.98 percent, to 2,255.76.

On the Nasdaq, shares of Apple Inc rose 6.4 percent to $127.35, leading gainers. Google Inc's shares climbed 6.3 percent to $439.84 as the company closed its $3.1 billion acquisition of DoubleClick Inc.

A TRANQUILIZER FROM THE FED

Shares of Freddie Mac, the No. 2 U.S mortgage company, gained 16 percent to $20.16, while Bank of America Corp shot up 6.8 percent to $37.72.

Bear Stearns, which slid as low as $55.42, its lowest in a little more than five years, recovered to finish up 1.1 percent at $62.97 after U.S. Securities and Exchange Chairman Christopher Cox said the SEC was comfortable with the "capital cushions" at the five largest U.S. investment banks, including Bear Stearns.

Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, said Cox's comments boosted Bear's stock and "carried the rest of the market with it."

Meanwhile, the dollar rose sharply following the Fed's move as concerns about a deepening credit crisis and U.S. recession abated.

Ted Oberhaus, manager of equity trading at Lord Abbett & Co., said, with respect to the Fed's liquidity action, that "if they can stabilize the credit markets without putting undue pressure on the dollar, the Fed will have won this leg of the journey."

The brief surge in U.S. crude oil futures prices to a record high above $109 a barrel helped shares of Exxon Mobil Corp rise 5.1 percent to $86.68, making the oil company's stock the top gainer in the S&P 500.

Among home builders, shares of Centex Corp climbed 11.5 percent to $21.67. The Dow Jones U.S. home construction index jumped 8.7 percent.

Volume was heavy on the New York Stock Exchange, where about 1.95 billion shares changed hands, above last year's estimated daily average of 1.9 billion shares. On the Nasdaq, about 2.45 billion shares traded, above last year's daily average of 2.17 billion.

Advancing shares outnumbered declining shares on the NYSE by a ratio of about 5 to 1 and almost 3 to 1 on the Nasdaq.

(Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)

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Justin Grant - Reuters | Tuesday, March 11, 2008

 

Spitzer's Rise and Fall

One might call it Shakespearian if there were a shred of nobleness in the story of Eliot Spitzer's fall. There is none. Governor Spitzer, who made his career by specializing in not just the prosecution, but the ruin, of other men, is himself almost certainly ruined. Mr. Spitzer's brief statement yesterday about a "private matter" surely involves what are widely reported to be his activities with an expensive prostitution ring discovered by the U.S. Attorney's office for the Southern District of New York. Those who believe Eliot Spitzer is getting his just desserts may be entitled to that view, but it misses the greater lesson for our politics.

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Wall Street Journal | Tuesday, March 11, 2008