The FOMC started their meeting in Washington to discuss the fate of interest rates. Some analysts believe the Fed could cut another half-point. But such expectations were cooled off after a report in the Wall Street Journal that said a cut this week is no sure thing and officials are not seriously considering a half-point move. The FOMC interest rate announcement is scheduled for Wednesday afternoon at 2:15 Eastern time.
The International Council of Shopping Centers-UBS Retail Chain Store Sales Index edged up by 0.1% in the week ended Oct. 27 from its level in the week before on a seasonally adjusted, comparable-store basis. On the year, chain store sales were up 2.5%.
U.S. Treasury Secretary Henry Paulson said that the American economy is strong enough to overcome the trouble in the country's housing market although the subprime mortgage crisis may take longer than expected to resolve. And according to the Case-Shiller Price Index, home prices in 20 major U.S. cities were down 4.4% on average in the past year. Prices in 10 cities fell 5% since August 2006, the fastest decline since 1991. Fifteen of the 20 cities have seen prices fall in the past year, led by Tampa with a 10.1% decline, followed by Detroit at a 9.3% loss.
Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression. Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent.
Merrill Lynch & Co Inc (MER) announced that CEO and Chairman Stan O'Neal is retiring from the company less than a week after the venerable Wall Street firm said disastrous positions in mortgage markets generated a more than $2 billion third-quarter loss.
In Forex News Today
The dollar rose against the euro, clawing its way back from its all-time low set a day before even as markets anticipated a likely quarter-percent rate cut by the U.S. Federal Reserve Bank this week. Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.
The euro has been climbing steadily against the dollar, regularly touching new highs since August amid fears over the health of the U.S. economy -- worries stoked by the subprime credit crisis and increasingly disappointing economic reports.
The euro's rise, which makes goods from the U.S. much cheaper to buy, can hurt exports from countries that use the currency, among them Germany and France.
Scheduled Economic Reports (Wednesday)
Gross Domestic Product (Q3), Employment Cost Index (Q3), Construction Spending (Sep), FOMC Announcement
In Earnings News
Procter & Gamble?s (PG) fiscal first-quarter net income rose 14% to $3.08 billion, or 92 cents a share, from $2.7 billion, or 79 cents a share, a year earlier, due in part to higher sales and an improved operating margin. On average, analysts predicted earnings of 89 cents a share on revenue of $20.2 billion.
MGM Mirage?s (MGM) third-quarter earnings rose 18% to $183.9 million, or 62 cents a share, boosted in part by higher revenue and income from Hurricane Katrina insurance recoveries. Analysts, on average, had been expecting the company to earn 50 cents a share.
Sirius Satellite Radio (SIRI) reported a loss of $120.1 million, or 8 cents per share, for the three months ended Sept. 30 compared with a loss of $162.9 million, or 12 cents per share, in the year-ago period. The result was in line with expectations on Wall Street.
Scheduled Earnings Reports (Wednesday)
MasterCard, Brinks, Amerada Hess, Newmont Mining, JDS Uniphase, MetLife, Weyerhaeuser
Stocks in the News
Saks (SKS) shares rose 9% in pre-open trade after an Icelandic investment group said that it may make a joint offer for the luxury retailer.
Hanover Insurance Group (THG) announced that third-quarter net income came in at $53.9 million, or $1.03 a share, up 61% from a year earlier.
Sohu.com's (SOHU) third-quarter net income climbed 47% to $9.69 million, or 25 cents a share.
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