With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Strong Dollar, Falling Oil Prices Send Stocks Down; Homebuilders' Confidence Dips; IMF Improves U.S. Outlook; Obama Tells Doctors Health Care Changes Needed; Six Flags Bankrupt
- A stronger dollar and falling oil prices helped U.S. stocks to suffer a sharp drop yesterday (Monday), as investors continue to find it difficult to see real signs of an economic rebound, Reuters reported. All three major U.S. indices – including the Dow Jones Industrial Average and the Standard& Poor's 500 Index, dropped more than 2%. Hardest hit were the shares of energy companies such as Chevron Corp. (NYSE: CVX), which closed down more than 2% at $71.08. The dollar gained against all 16 of its major counterparts currencies, except for the Japanese yen, after Russian Finance Minister Alexi Kudrin said it was too early to consider an alternative to the greenback following a Group of Eight meeting. Of note, the euro fell versus the dollar following the European Central Bank said commercial banks in the 16-country euro region may lose an additional $283 billion by the end of 2010, Bloomberg News reported.
- Homebuilder confidence has dipped by one point, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. "The outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time homebuyer tax credit and gains in housing affordability," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "However, looking forward, homebuilders are facing a few headwinds, including expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans." The index is based on a monthly survey of 548 homebuilders.
- The International Monetary Fund (IMF) raised its outlook for the United States and called for steps to reduce concern about increasing public debt and inflation, Bloomberg News reported. The IMF forecasts the United States' gross domestic product (GDP) will contract 2.5 % this year before growing 0.75% next year, according to a statementtoday after an annual staff analysis the world's largest economy. Previously, the IMF's World Economic Outlook report, released in April, had the United States' economy contracting 2.8% this year, before stalling in 2010.
- President Barack Obama yesterday (Monday) told the largest doctors group in the country that changes are needed in areas from insurance to payment procedures to lower costs and cover the uninsured, MarketWatch.com reported. "What I am trying to do and what a public option will help do," he said to the American Medical Association, "is put affordable health care within reach for millions of Americans." The group said last week it opposes any public plan that forces doctors to participate or expands Medicare or pays Medicare rates. In his weekly radio address on Saturday, Obama laid out a proposal to cut $313 billion in government health spending, saying the reductions in Medicare and Medicaid payments to health-care providers would increase efficiency and the quality of care, while setting aside about $950 billion for reform over the next 10 years.
- In a sign that more Americans are curbing their discretionary spending, Six Flags Inc. (OTC: SIXF) filed for Chapter 11 bankruptcy protection on Saturday, Reuters reported. The New York-based company said the move will deleverage its balance sheet by $1.8 billion and eliminate $300 billion in redeemable preferred stock obligations. Day-to-day operation of its 20 parks will not be affected, and the filing "paves the way for a full revival of the company," Chief Executive Officer Mark Shapiro said.