Markets Advance Against More Bad News
After Fridays losses Wall Street began to climb as investors attempt to predict weather a worsening housing market will persuade the Federal Reserve to lower interest rates yet again.”Anticipation of another Fed rate cut is the main magnet in the market today,” said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. Goldman made the statement citing a move of more than 70 points in response a possible rate cut after the Commerce Department reported sales of new homes fell by 4.7 percent in December and 2007 new home sales fell 26.4 percent compared to 2006.
Talks of a possible rate cut come in the shadow of news that Jerome Kerviel, a trader at French bank Societe Generale, may have gone rogue and cost the bank over $7 billion by selling European index futures. If convicted Kerviel faces 7 years in prison.
In Washington the U.S. Senate plans to add to a $150 billion economic stimulus package widening the benefits for social security benefits recipients and the unemployed. This comes against the White House’s proposal for rebates to income earners and families with dependent children.
The dollar fell against all major currencies except the yen causing gold prices to rise. Crude oil rose 19 cents to $90.90 per barrel.
Fast food giant McDonald’s reported that their quarterly profit rose over 3 percent yet December U.S. Sales were the same as they were one year ago.
With the exception to Frankfurt’s DAX all major foreign exchanges saw losses. European markets fell between 0.61 and 1.36 percent. Tokyo’s Nikkei average dropped 4 percent, and Shanghai fell 7.2%.