stock market crash today
Nothing goes up forever. Not the Federal Reserve's balance sheet, not global debt levels, and not stock markets... even when governments don't shut down.
Precisely because the Fed's balance sheet ballooned from $869 billion in August 2007 to over $3.6 trillion (and counting) today, and in spite of ballooning U.S. and global debt levels, U.S. equity benchmarks have been inflated to precarious heights.
"Houston, we have a bubble."
While the sky-high Fed balance sheet and rising global debt levels are their own bubbles, when they diverge - meaning, when the Fed starts to taper as global debt inflates - look out.
If the Fed-induced pump priming of financial assets isn't backstopped by strong and real global GDP growth, the increasing debt burden of the world's citizens will act as the ultimate pinprick that explodes the United States' inflated financial assets bubble... and other global bubbles.So here's what's really happening, how to prepare for the eventual correction (or possible crash), and - more importantly - how to make money from it...
Stock Market News Today: Dow Up 160 Points Midday
Your stock market news today: Equities are higher across the board this morning after Larry Summers withdrew his name from the candidates to replace Ben Bernanke as head of the U.S. Federal Reserve. Summers told President Barack Obama on Sunday that he believes his appointment would be too controversial.
The Dow is up 1% at 15,536, Nasdaq is up 0.3% at 3,732, and the S&P 500 is up 0.8% at 1,701.To continue reading, please click here...
Stocks are holding their gains even as new manufacturing data on the New York region reflects an unexpected decline in manufacturing activity there. Investors also received data on industrial production and capacity utilization in August this morning that revealed the biggest monthly gain in six months last month.
Stock Market Today: This Stock Wins With or Without QE3
The major headlines in the stock market today include the Fed's decision to implement QE3, increased producer prices, and higher jobless claims.
- QE3 a 99% certainty?... Not quite- When the Federal Open Market Committee makes its statement at 12:30 p.m. EDT every investor will be waiting to hear if QE3 has finally arrived. After what seems like two years of speculation since QE2 was announced will we finally get QE3? According to Citigroup Inc. (NYSE: C) a gauge of indicators of market expectations for additional central bank stimulus rose to a record 99% in August. Yet many economists do not expect QE3 to be announced today for many reasons. If the Fed takes action it will be viewed as highly political coming just months before Election 2012. Even if the Fed announces QE3 but says it will delay QE3 purchases until after the election as it did with QE2, the political implications will still be there. Other reasons are the lack of progress the previous rounds of QE have had in turning around the economy - and not just the stock market. "The Fed continues to want the economy to grow faster and specifically, to grow more jobs, but the ability of QE to do that is extraordinarily limited," Catherine Mann, a finance professor at Brandeis and former Federal Reserve economist told CNN. "We know that QE reduced interest rates, but we also know that has not led to more construction, more mortgages, more business investment, or more lending. Since it hasn't done any of that, it probably hasn't created jobs either."
- Producer prices rise most in three years- Wholesale prices, measured by the producer price index, climbed 1.7% in August - the most since June 2009 - due to higher gasoline and natural gas prices. This was a faster increase than the 0.3% reported in July and ahead of the median forecast for a gain of 1.3%. Food prices rose 0.9% due to a rise in dairy and egg prices. The core producer price index which excludes food and energy rose 0.2%, which was in line with expectations. Tomorrow's consumer price index will be a good indicator if higher wholesale prices have translated into increased consumer prices.
Stock Market Today: This Tech Stock Rallies to All-Time High
The major headlines in the stock market today include Europe's latest rescue effort, cautious optimism on U.S. jobs, and these big-name stocks leading the rally:
- ECB unveils unlimited bond buying plan- European Central Bank (ECB) President Mario Draghi announced in Frankfurt today (Thursday) that the ECB will embark on a drastic new bond-buying plan. The new program, called "Outright Monetary Transactions," allows the ECB to buy bonds with maturities between one and three years without announcing any limits in advance, as long as the government in question is under a program approved by the Eurozone. The plan is aimed at stabilizing interest rates in the euro area and will require countries such as Spain and Italy to request aid from the ECB to activate the bond purchases.
"Under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area," Draghi said at a press conference. "Governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial-market circumstances and risks to financial stability exist -- with strict and effective conditionality. The ECB reserves the right to terminate bond purchases if governments don't fulfill their part of the bargain." The ECB held its benchmark rate at its record low level of 0.75%. Draghi announced that the ECB won't claim the status of a senior creditor if the bonds it buys have to be restructured and that the purchases will be "sterilized" meaning there will be no impact on the monetary supply.
Stock Market Today: Two Big Winners in Another Quiet Day
Here are the main headlines in the stock market today.
- Home prices show strong improvement- The S&P/Case-Shiller National Home Price Index increased for the fifth month in a row as prices in June on a non-seasonally adjusted basis were up 2.3% from the previous year and ahead of expectations for a 2.2% increase. Home prices rose 6.9% in the three months ended June 30 compared to the first three months of 2012. The index, which measures single-family homes and covers more than 80% of the housing market in the United States, continues to back up the belief that the housing market has finally turned a corner. "We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change," said David Blitzer, a spokesman for Standard & Poor's, in a statement. "The market may have finally turned around."
- Consumer confidence falls to nine-month low- As worries over the economy escalate and more Americans are unemployed consumer confidence slipped to its lowest level since last November. In August, consumer confidence, measured by the Conference Board's Confidence Index, fell to 60.6 from 65.4. Economists had hoped the index would rise slightly to 66. The board's future expectations sub-index dropped to 70.7 from 78.4, while the present-conditions index was basically unchanged at 45.
- Mario Draghi to skip Jackson Hole- President of the European Central Bank Mario Draghi was expected to be the keynote speaker Saturday September 1 in the second day of the Jackson Hole, WY Symposium. Draghi will not attend due to his heavy workload regarding the strategy of the ECB's new bond-buying plan. Details regarding the European Stability Mechanism and other measures to improve the Eurozone debt crisis are expected to be announced at the ECB's next meeting Sept. 6.
Stock Market Today: Stocks Edge Higher To End the Week
Here are the major headlines in the stock market today.
- Capital goods orders declines most in 8 months- Orders for core capital goods which excludes transportation and defense dropped 3.4% in July, the biggest decline since November. Capital goods such as computers, engines, and communication equipment are thought to be key indicator of business spending and this drop certainly does not inspire any confidence in the economy. "There's uncertainty domestically about the tax environment, and there's uncertainty globally about the outcome of the European crisis," Millan Mulraine, a senior U.S. strategist at TD Securities in New York told Bloomberg. "This is not engendering business investment and hiring." Economists had expected this category to rise 0.7% after a previously reported 1.7% decline in June.
- Durable goods orders rise- Manufactured goods which are expected to last at least three years, increased 4.3% in July fueled by airline and auto sales. Economists had expected on average a 2.5% increase. Overall orders last month were lifted by a 14.1 % jump in transportation equipment as demand for civilian aircraft surged 53.9%. This was led by Boeing Co. (NSYE: BA) which had a strong performance at the Farnborough Air Show and received orders for 260 aircraft, up from 24 planes in June. Motor vehicle sales increased 12.8%, the largest increase since last July. Yet omitting the transportation sector, orders fell 0.4% and declined for the second month in a row.
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Stock Market Today: Poor Labor and Manufacturing Data Sends the Markets South
Here's what's making headlines in the stock market today.
- Jobless claims rise again- A higher number of people filed for their first week of unemployment benefits last week, a sign that the job market is not improving as hoped. For the week ended August 18 372,000 filed for unemployment, up 4,000 from the previous week, the Department of Labor said Thursday. Economists had expected initial claims to be 368,000. As of the July jobs report, 12.8 million people were counted as unemployed and about 5.59 million people received some kind of state or federal benefit in the week ended Aug. 4. "Jobless claims continue to indicate ... a sluggish labor market," Peter Cardillo, an economist at Rockwell Global Capital in New York told Reuters. "The numbers also strengthen the hand of the Fed to aid the economy with more stimulus."
- Global manufacturing slumps- The flash manufacturing Purchasing Managers Index for the U.S. edged slightly higher to a 51.9 reading in August from 51.4 in July, according to Markit. The August reading marked the first monthly increase in five months, but it was the third weakest result since the manufacturing sector stopped shrinking in October 2009. New export orders continue to be below the 50 mark, indicating contraction, but output and new orders rose. Also causing concerns is the HSBC Flash China manufacturing PMI which fell to 47.8 for August, its lowest level since November and well down from July's final figure of 49.3.
Stock Market Today: Waiting On Clues From the Fed
Here's what's making the headlines in the stock market today.
- The FOMC will release minutes from its July meeting at 2 p.m. EDT- Even though further additional stimulus measures were not announced at the last meeting investors will try to decipher what was said for clues that QE3 could be on the way. Many economists think that the Federal Reserve could announce the measure at the Jackson Hole, WY symposium which takes place next Friday and Saturday Aug 31- Sep 1.
Bernanke announced QE2 in Jackson Hole in 2010 but investors may be disappointed this time around. "There's not going to be enough data for him to say anything new," Catherine Mann, a finance professor at Brandeis University and former Fed economist who has attended the meeting twice told CNN. "It's possible he will make some reference to slowing global growth, increasing headwinds from Europe, and the slowing of the economy as the consequence of uncertainty related to fiscal cliff."
Investors Look to Fed to Stimulate Stock Market Today
After another round of mixed economic indicators was released this morning, investors are looking towards the Federal Reserve to rally the stock market today (Wednesday).
Private-sector jobs increased by 163,000 ahead of economists' expectations of 125,000, but down from last month's 172,000. If you remember, last month's number was thought to be a precursor to a great nonfarm payroll report but that number can in at an underwhelming 80,000 jobs.
Investors hope for 100,000 jobs added when July's U.S. jobs report is issued Friday.
Manufacturing continues to slow across the U.S. and overseas, with the latest data slipping from previous months:
- The U.S Markit PMI index fell to 51.4 from 52.5 in June and the ISM reading was again below 50 with a July level of 49.8. This was the first time the ISM index has been below 50 since the end of the recession in mid-2009.
- The United Kingdom's measure of manufacturing, Markit/CIPS Manufacturing PMI index, declined at its fastest rate in more than three years falling from 48.4 in June to 45.4 in July.
- Manufacturing in the Eurozone fell to a three-year low of 44 and two different levels of China's manufacturing hovered around 50. Any reading below 50 signals contraction.
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