There was plenty of news to support stocks on Wednesday, and equities responded by rising off their lows until falling late in the session.
1. Fed Chairman Bernanke reiterated the government does not wish to implement full-scale nationalizations for troubled banks. Bernanke told lawmakers in the House that the government would use supervision instead of shareholder control to guide major banks, and warned against dismantling their franchises.
2. Bank of America jumped 14% after CEO Ken Lewis told Bloomberg Television that recently acquired Merrill Lynch and Countrywide Financial have been “stars” so far this year and the bank’s revenue will top $100 billion in 2009.
3. Regulators set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a review of their balance sheets.
The regulators will complete their so-called stress tests by the end of next month, the Treasury said in a statement in Washington. Supervisors will determine what the appropriate capital buffer will be for each of the 19 firms after analyzing potential losses under two economic scenarios.
Continue Reading Below
4. More U.S. companies are adopting pay and hiring freezes to lower their labor costs during what is likely to be a prolonged recession rather than depending on further payroll reductions, according to a survey released today from Watson Wyatt Worldwide, an Arlington, Virginia-based workforce consulting firm.
“With over half of companies reporting that they have already made layoffs, they are now focusing on smaller, more sustainable cost-cutting actions,” Laura Sejen, global director of strategic rewards for Watson Wyatt, said in a statement. “Companies have come to terms with the fact that this recession is going to last and that they can’t slash their way out of it.”
After falling by just over 2% soon after opening, stocks rose to a small gain by 3 p.m., but fell thereafter to finish with a loss. At Wednesday's close of floor trading on the NYSE the DOW was on 7270.65 with a loss of 80.29 points (-1.09%). The S&P finished on 764.89, down 8.25 points (-1.07%). The technology-heavy NASDAQ closed on 1425.43 after falling 16.40 points (-1.14%).
The dollar traded in risk-acceptance mode as stocks rose off their lows but ended up higher on the day, finishing the session with gains of 0.86% on the euro, 0.41% against Australia's dollar, 0.93% on the yen and 1.85% against sterling.
Treasuries fell as stocks rose off their lows. Yield on the 2-year note rose 7.1 basis points to 1.089% while yield on the 10-year note gained 15.1 basis points to 2.948%.
Crude for March delivery was recently trading up $2.55 (6.36%) to $42.50 per barrel.
Gold for April delivery was recently trading lower by $3.70 (-0.38%) to 965.40 per ounce after reaching a high on $1004.90 last Friday.