Will financial stocks and exchange traded funds (ETFs) get a chance to make gains as the Obama Administration announced they will create banks to absorb the bad assets weighting on the sector?
“Bad Banks.” The S&P 500 has risen four days in a row, something not seen in more than a quarter. The news that the Obama Administration wants to create banks specifically to take on the bad assets created by the real estate market gives investors hope. The banks may soon be able to resume normal lending and possibly boost consumer confidence, while beginning the work of digging us out of the recession, reports Tim Paradis for the Asssociated Press.
Bank stocks that moved upon the news: Wells Fargo & Co. (WFC) gained 22%, Citigroup Inc. (C) jumped 19% and Bank of America (BAC) added 16%.
Homeowner Relief. The Federal Reserve has three ways to give relief to a troubled homeowner:
- Lowering the amount the homeowner owes on the mortgage
- Reducing the interest rate
- Lengthening the term of the loan for more affordable payments
To receive help, a borrower must be at least 60 days delinquent to qualify for help, and it is still unclear how many homeowners would benefit, reports Jeannine Aversa for Associated Press.
Earnings reports were released today from AT&T (T), Boeing (BA) and Wells Fargo (WFC).
- Earnings at the telecommunications company are down 23.6% for the fourth quarter as rising costs within the wireless services are cutting into profit. Revenue rose 2.4%, to $31.1 billion from $30.35 billion a year ago, just short of analysts’ expectations, reports the Associated Press. Apple’s iPhone was the major player in this, adding 1.9 million subscribers, lower then the introduction numbers at 77 million.
- Boeing is hurt by the strike that disrupted deliveries from the world’s second-largest airplane maker. The fourth-quarter losses are worsened by this and the company missed analysts’ expectations, as well. The Chicago-based company reported a loss of $56 million for the last three months of 2008, compared with profit of $1 billion in the same period a year earlier, reports the Associated Press.
- Wells Fargo Corp. is taking a fourth-quarter net loss of $2.6 billion. Thier stock rose 19% in trading after the company reported that they do not need more Federal aid and they also maintained thier dividend, says Ari Levy for Bloomberg.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.