Stocks struggle as Fed policymakers meet

Central bankers begin 2 days of talks that could lead to new stimulus measures. US consumer confidence, home prices and personal incomes rise, but spending is unchanged.

By TheStreet Staff Jul 31, 2012 8:55AM
Wall StreetUpdated at 12:25 p.m. ET

By Andrea Tse


Stocks wavered Tuesday as investors weighed data on home prices, personal income and spending, and consumer sentiment against the possibility of more monetary easing after the latest two-day Federal Reserve meeting.


The Dow Jones Industrial Average ($INDU) was down 35 points at 13,038. The S&P 500 ($INX) was down 4 points at 1,381. The Nasdaq Composite ($COMPX) was down 2 points at 2,944.

"The Federal Open Market Committee is likely to ease monetary policy . . . in response to the continued weakness of the economic data and the persistent downside risks from the crisis in Europe," said economists at Goldman Sachs. "We expect an extension of the current 'late 2014' interest rate guidance to 'mid-2015.'"

The Commerce Department reported that personal income rose 0.5% in June after increasing by an upwardly revised 0.3% in May. Personal spending was unchanged after a downwardly revised 0.1% dip in May.


Prices of single-family homes rose for a fourth straight month in May, according to S&P/Case-Shiller's index of 20 metropolitan areas. Prices gained 0.9% on a seasonally adjusted basis, topping expectations for 0.5%.

The Conference Board's consumer confidence index rose to 65.9 from a upwardly revised 62.7 in June, topping economists' expectations for a decline to 61.5, Reuters reported. June's level was originally reported as 62.

BP (BP) posted underlying replacement cost profit in the second quarter of $3.7 billion, down from $5.7 billion a year earlier. Including charges, BP reported a loss for the period of $1.4 billion. The company wrote down the value of its assets by $5 billion -- $2.7 billion for U.S. refineries and $2.1 billion for U.S. shale gas assets. It also took an additional provision of $847 million for the Gulf of Mexico oil rig disaster, bringing the total it has set aside to more than $38 billion.


Pfizer (PFE) posted second-quarter profit of 62 cents a share on revenue of $15.1 billion. Analysts had expected 54 cents a share on revenue of $14.87 billion.


Seagate Technology (STX), the hard disk drive maker, on Monday reported a non-GAAP profit of $2.41 a share in its fiscal fourth quarter on revenue of $4.48 billion, falling short of Wall Street's expectations for earnings of $2.51 a share on revenue of $4.56 billion.


Ten jurors were selected Monday in the patent battle between tech giants Apple (AAPL) and Samsung Electronics. The trial is expected to last about four weeks.

More from TheStreet
Jul 31, 2012 9:44AM

The stimulus did not work, QE 1 did not work, QE 2 did not work, but I am sure (really this time) that QE 3 will work... If not, there is always QE 4.  Typical government thinking -- just throw money at the problem and things will get better. However, we all know that you can't change the fruit until you change the root.


Oh no.....


Gasoline is going to top $5 by end of summer -- 40 percent of corn crop has been lost this year.


So much for the theory using corn to make gasoline go further by adding 10 percent ethanol to the gasoline. Quess the idiots at EPA did not realize people eat corn and that some years are like the great depression years total drought.


Also no one is saying how great our grand fathers were to make lakes and canals to save water in good rain fall years to use in bad rain fall years. 80 percent of corn would have been lost this year if not for what they did years ago.



Jul 31, 2012 10:49AM
The less the Fed does the better things will be.
Jul 31, 2012 9:16AM
Good article by David Hogberg over at IBD.  Basically, since the end of 2010, GM Financial has been making a bunch more subprime car loans (+78.5%) and a lot less prime loans (-42%).  Gee, ya think this is making their sales numbers look better?  Also, it appears that GM has every confidence in the world that the federal gov won't allow them to fail, and they are taking full advantage of that fact. 

"Spare the rod and spoil the child" - We've been sparing the rod for far too long, and now we've got a bunch of unruly, spoiled brat, TBTF corps on our hands.  Like any good parent, instead of coddling TBTF and apologizing for them and giving in to their every demand, we should have been letting TBTF know their behavior is unacceptable, teaching them the difference between right and wrong, and making it painfully clear that there are consequences for their actions, including whipping their a$$  when they get too far out of line.

"GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012."

"The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores — below 540 — shot up 79% to more than $2.3 billion. The second worst category, 540-599, rose 28% from about $3.4 billion to $4.3 billion."

"Prime loans, those above 660, dropped 42% to $676 million."

"...GM has seen its subprime loans grow from about 4.8% of sales in Q4 2010 to 8.2% in Q1 2012. The industry average is about 6%."

It looks like GM is due for a good a$$-whipping.
Jul 31, 2012 9:41AM
Who's personal income rose? The CEO's, speculators and politicians most likely.
Jul 31, 2012 11:18AM
We do not need home prices going up! That's how the problem started.  The banks need to take the loss!  WE NEED JOBS FIRST!!!!!  THE UNEMPLOYMENT IN OUR COUNTRY IS OUT OF CONTROL!!
Jul 31, 2012 9:42AM

yeah - imagine trying to dig a Delaware cannal now?  environmental impact reports, some hidden turtle, etc.  glad our fore fathers had the concepts and the balls!


>>>Also no one is saying how great our grand fathers were to make lakes and canals to save water in good rain fall years to use in bad rain fall years. 80 percent of corn would have been lost this year if not for what they did years ago. <<<<

Jul 31, 2012 12:12PM
I guess they have not developed a "Global Warming Fear Easing" flavor of Kool-Aid yet for you liberals.... They have been so busy perfecting the "Economic Meltdown Fear Easing" flavor.
Jul 31, 2012 11:37AM
Would the government bail you out if you over extended? NO !  The banks should have taken the loss! Bad business equals bankruptcy, NOT bailouts! So Obama bailed out the banks, and allowed Americans to go bankrupt!!! No more Obuma in 2012!!!
Jul 31, 2012 9:49AM
"Good article by David Hogberg over at IBD.  Basically, since the end of 2010, GM Financial has been making a bunch more subprime car loans (+78.5%) and a lot less prime loans (-42%)."

Indeed. But somebody has to buy that crap and you likely guessed it... banks are. Close the banks, save the world. I might add that NO ONE who actually lent before the Gramm Leach Bliley Act was passed subversively in 1999 (legalizing collusion in the financial sector), is still lending. If we GUT the banks, reconcile, regulate and re-open minus the alumni... we just might start recovering.
Jul 31, 2012 10:30AM
Quick question totally off topic:  why do people bank at national banks that give a very small return on checking accounts vs. a credit union that will return over 2% on checking accounts?  Are there other services that the national banks have that credit unions don't offer?
Jul 31, 2012 11:05AM
You can be sure that ol' Benny B. will be printing lots and lots of increasingly worthless QE3 dollars and pissing them away down the dark bottomless hole of extreme downward compressive contraction. And the markets will wet all over themselves with yet another 'we're saved' rallies that, like all the others before them, will fizzle into the collapsing economy around us. It simply dumbfounds me that anyone with a free thinking mind thinks this can possibly work. It is no wonder that we are so deeply deeply f***ed.
Jul 31, 2012 10:20AM
"The Fed must remain independent and free from political control."

The most humorous thing I've read on here since delk disappeared.

Thanks VF, I needed a good chuckle this morning.....
Jul 31, 2012 11:36AM
Why don't one of you liberals tell me what is keeping Obama from providing the transparency he promised......... Is it "Bush" or "Tea Party". What is the excuse for that broken promise?
Jul 31, 2012 10:55AM
consumer confidece an personal income rise where ??????  In congressional report , who thought this one up ??????  Why did gas prices increase when crude goes down????  Again please give us the TRUTH in stead of the hype wall street gives you to write about !!!!  ONE WEEK ALL IS DOWN NEXT IT IS BETTER NOW THAN EVER BEFORE NOW THE BANKS ARE IN SECRET MEETINGS !!!!!!!  BULL SH--T !!!!! TRICKLE DOWN DOES NOT WORK!!!!!!
Jul 31, 2012 10:07AM
Nobody is saying that there isn't a legit role for government in building/providing public goods: dams, roads, bridges, military, etc. But, where do they get the money to do those things from? Public goods are different from private goods. If I drive down a mile of road, there is not one less mile available for you to drive down, but, if I buy a mango, there is one less mango available to you. It is obvious most liberals never had an economics 101 class. Most cannot distinguish between private and public goods.
Jul 31, 2012 10:20AM

We have heard relentless comments about banks and how evil they are.  I would like to make a distinction here. A contributing factor in all of the chaos we are seeing is the insurance industry and the mentality and wrong assumptions many of us make about insurance.  AIG for instance packaged and sold contracts ensuring amny different aspects of investments.  This PONZI scheme has been around for eons. They sold policies that when entities were required to recover funds they were not there.  They overpromised and fell short when it was time to deliver.  The Derivitives that are the 1000 lb gorilla that will hold us back for many years to come are also part of this industry.  We need to change the mindset of how we look at, buy, and monitor this Industry.  Fanni Mae and Freddie Mac are also insurance entities and look at the danger they expose each of us to..  Almost all in this Industry have some sort of federal backing.  I think we need to seperate the Insurance Industry apart from Banking and if we do we can see that the real villains in this impolsion are actually part of the Insurance Industry and not the banks.  JMHO

Jul 31, 2012 10:27AM
The FED and the ECB= 2 Criminal enterprises=We will RULE THE WORLD=SCREW THE PEOPLE !
Jul 31, 2012 11:31AM
Mr. Alias.............and just how do you think the people on Obama's wellfare check are going to be able to afford homes........when the prices go up??? HMM Interesting. You can't buy a home with an inflated price on a wellfare check!!! LMAO!
Jul 31, 2012 10:37AM
You are a Liberal if you vote for this potus, his policies and anyone in the DNC -- and that is a bad thing.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More


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