Stocks rise on stimulus hopes

A Fed official backs an aggressive bond-buying program. The S&P 500 tops 1,400, and the Nasdaq is above 3,000. Standard Chartered shares plunge on money-laundering allegations.

By TheStreet Staff Aug 7, 2012 9:19AM
Image: Arrow Up (© Nicholas MonuiStock ExclusiveGetty Images)Updated at 12:12 p.m. ET


By Andrea Tse


Stocks were rising Tuesday as investors latched on to calls by a Federal Reserve official to launch an aggressive bond-buying program.

 

The Dow Jones Industrial Average ($INDU) was up 84 points at 13,201. The S&P 500 ($INX) was up 11 points at 1,406. The Nasdaq Composite ($COMPX) was up 33 points at 3,023.

 

Eric Rosengren, the president of the Federal Reserve Bank of Boston, said in an interview with The Wall Street Journal that the Fed should launch an aggressive, open-ended stimulus program that the central bank would continue until economic growth picked up and unemployment started falling again.

 

Rosengren said the Fed should buy more mortgage-backed securities and possibly U.S. Treasury securies and make it clear that it will continue to buy bonds "until we start seeing some pretty significant improvements in growth and income," the newspaper reported.

 

The economic calendar in the U.S. Tuesday includes consumer credit for June, due at 3 p.m. ET. Economists expect a $10 billion increase on the heels of May's surprise $17.1 billion jump. In Europe, Italy's national statistics office reported that the economy shrank for a fourth consecutive quarter and saw a bigger-than-expected drop in June industrial production. German manufacturing orders declined in June. The Office for National Statistics reported a less-than-expected fall in industrial output in the United Kingdom for June.  

 

British bank Standard Chartered saw its shares drop sharply Tuesday on charges from the U.S. that the bank was involved in laundering money for Iran. The New York Department of Financial Services alleges that Standard Chartered "schemed with the Government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees" over a nearly 10-year period. Standard Chartered said it "strongly rejects" the allegations. The New York State financial regulator has threatened to revoke the license of Standard Chartered to operate in the state, pending a formal hearing.

 

Chevron (CVX) said early Tuesday that a fire that struck its large refinery in Richmond, Calif., was contained but not yet extinguished. The fire hit the sole crude unit at the 245,000-barrel-per-day plant, which accounts for one-eighth of California's refining capacity, according to Reuters.

 

Walt Disney (DIS) reports fiscal-third-quarter results after the close, and analysts are calling for earnings of 93 cents a share on revenue of $11.30 billion.

 

Sirius XM Radio (SIRI) reported better-than-expected  second-quarter revenue of $837.5 million. Analysts were expecting revenue of $834.38 million. Earnings per share were in line with estimates at 2 cents.

 

413Comments
Aug 7, 2012 10:21AM
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Thumbs up if you don't hate rich people

Thumbs down if you do hate rich people.

Aug 7, 2012 10:43AM
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Stimulate until the jobs come back?  You got to be kidding.  I hate to be the one to tell them but the jobs are not coming back.  Trying to create a paper shuffling economy does not create anything except more paper.    
Aug 7, 2012 10:39AM
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This is the same logic as, "The beatings will continue until the morale improves".  These people are obviously manipulating the markets.  They can't be serious enough to believe what they are doing will help anything other than line pockets of their cronies.
Aug 7, 2012 10:19AM
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Pretty gosh darn simple, you can't pay for it you can't live in it - what the hell is wrong with that??
Aug 7, 2012 10:50AM
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The top 5% of American earners paid over 50% of the total income taxes.

 

Thumbs up if you think that is a fair share

Thumbs down if you think it is still not enough

Aug 7, 2012 10:04AM
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It just never ceases to astond me that the 'markets' have an orgasmic response to just the talk of the Fed printing more worthless paper to 'buy bonds' as a good thing. It is just more kicking the can down the road and will not not do one thing to fix the intrinsic sickness of the economy. ECONOMIC GROWTH IS NOT GOIN TO 'PICK UP'....EVER.... NO MATTER HOW MUCH FAKE "STIMULUS" THE FED PRINTS!!!! GROWTH IS OVER AND WE ARE IN A PHASE OF PERMANENT DEFLATIONARY CONTRACTION!!!! What are you people thinking???
Aug 7, 2012 10:28AM
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If a bank doesn't pay property taxes on their houses, no one says S**T.

If a guy making $12 / hr doesn't pay his property taxes, his house is taken from him and auctioned off and they don't think twice about the consequences.
Aug 7, 2012 10:28AM
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Hmmm....   Printing money to stimulate demand?   LOL.... Debasement does not create demand.

TAXING to SPEND to create demand, must first DESTROY an equal or greater amount of demand, thus increasing unemployment.

Borrowing just robs future demand, slowing any possible recovery.  Plus it destroys future demand when it must be repaid.

Thus all these policies destroy demand.  This is why when we have massive stimulus unemployment skyrockets, demand declines, and stagnation takes hold.

These type of big government policies have done much to destroy the middle class.   
Aug 7, 2012 9:31AM
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This is how sad and dumb the global economy has become.  We continue to think, even in the face of example after example that it just isn't working, that the only way to "prime" the economy, whether it be domestic or global, is for the governments and central banks to keep stepping in and spending for us.

When we we finally learn?  What is it going to take?  It's like a bad movie that's always on no matter what day or time you turn on your TV.......  So sad.

"Stock futures were drifting higher Tuesday on a light economic calendar day as investors latched onto calls by a Federal Reserve official to launch an aggressive bond buying program....."
Aug 7, 2012 10:38AM
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So Eric Rosengren wants to use bonds to bail out banks- again ? That's exactly what he's advocating. And do you think any of these funds will 'trickle down'  to you ? Of course not ! More dept is not the solution- but now everyone's salivating on the hope of more cheep money only intended to prop up the banks bad investment decisions. Let the banks share holders hold those running the day to day operations responsible by withholding bonuses/stock options/ when they perform poorly. You should only be rewarded when you perform well.
Aug 7, 2012 10:07AM
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The stock market really wants the cash off the side lines and into mutual funds. The powers to be have it fixed so you can't make any money just saving it in a safe account. The market refuses to move anywhere but up and sideways. Inflation is eating away at us savers too and it is scarry to think about how fast that could accelerate. They want your cash in at their price....... bottom line.

Aug 7, 2012 10:25AM
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"Eric Rosengren, the president of the Federal Reserve Bank of Boston, said in an interview with The Wall Street Journal that the Fed should launch an aggressive, open-ended stimulus program that the central bank would continue until economic growth picked up and unemployment started falling again."

Aggressive.
Open-ended.

Yikes.

Inflation Jimmy Carter style, here we come.
Aug 7, 2012 10:16AM
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All stimulus is going to do is increase inflation, reduce the buying power of the consumer and increase unemployment. Our economic leadership in America is a joke. It will make the bankers happy. They will borrow money from the fed for 0% interest and loan it back to the treasury for 1.4%, making money off printed money.
Aug 7, 2012 9:57AM
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so instead of the banks clearing out the foreclosures, the government continues to spend for "stimulus".

 

this is a hidden second bank-bail out

 

>>>>>The housing mess, which any of you that have read any of my posts know I consider still a TOP 3 issue concerning America today, is a local issue that has effected us Nationally. <<<<<

Aug 7, 2012 11:17AM
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How long that "STIMULUS Package" things will continue and where it ends? We need something constructive and permanent. That is not possible as long as the present incompetent team is in charge of the Reserve Bank. They are not capable, used up all their phony tricks which a complete failure and it is time now for them to pack up and leave or else, they should get fired ASAP. Bunch of jokers indeed! Common people are suffering tremendously. Shame!
Aug 7, 2012 11:21AM
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Stocks rise on stimulus hopes

I hope I win the lottery, I hope the Easter bunny, Sanata, the Tooth Fairy etc are real........

 

I hope there is nothing in the KOOLADE

 

I hope a woodchuck can chuck wood

 

.......f-in bs

Aug 7, 2012 10:34AM
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A lot of people complained about their taxes, because the value of their house dropped. So a lot of cities and towns lowered the value and raised the tax rate to keep the income.
Aug 7, 2012 11:05AM
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Fat Cat: I can't believe you would advocate the government buying distressed properties. Keep the government out of it - What the incentive ? Just to relieve the pressure on the banks balance sheets ? How about having the CEO's, CFO's, all the loan officers, be accountable for their actions and present clear solutions to there stockholders with a plan of action with  a specific time table to enact these solutions. Every bank is different & each plan has to be tailored to their needs. Bottom line is- let the private sector handle it !!
Aug 7, 2012 11:49AM
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Lets see - Congress goes goes away on recess, and the market goes way up. Wonder how much better off we all would all be if they never came back?
Aug 7, 2012 10:45AM
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Some Fed guy in Boston says we should keep printing, and the market reacts to it.
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[BRIEFING.COM] The stock market ended the Wednesday session on a mixed note. The tech-heavy Nasdaq displayed relative strength, climbing 0.4%, while the S&P 500 added 0.2% with five sectors settling in the green. For its part, the Dow Jones Industrial Average (-0.2%) spent the entire session below its flat line.

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