Financial Market Update-Mon., Nov. 3
- Nov 03, 2008
It’s been an unusually relaxed day on Wall Street so far–but maybe everyone’s holding off until the election, at long last, will be over tomorrow. We hope. As of mid-day, the DJIA, after a meandering morning, was down slightly: 8.6 points, or 0.09 percent. The S&P 500 and the Nasdaq likewise moved slightly: down 0.33 percent and up 0.42 percent, respectively. Minneapolis-based U.S. Bancorp, known for its conservative lending practices and relatively good balance sheet, is reported to be selling the government $6.6 billion in preferred stock and warrants, thus participating in the bailout. In a statement, the bank says that it will use the dough “to engage in increased lending activity and invest for future growth, and will enhance the company’s capability to assist in stimulating the United States economy,” which sounds like mission statement boilerplate, but carefully leaves open the possibility of feasting on smaller banks. Construction spending was down in September–which should be as no surprise–but only by 0.3 percent, according to the U.S. Department of Commerce. The drop wasn’t as much as various economists had predicted. Housing construction led the decline, down by 1.3 percent. That wasn’t a surprise, either, since the amount spent on housing construction has contracted every month except two for more than two years now. The Institute for Supply Management, which tracks industrial output in the United States, saw its factory index drop to 38.9 percent in October, the lowest level since September 1982. At below 50 percent, the index indicates that more manufacturing firms are contracting than growing. To compile the index, the ISM asks purchasing managers if business is better or worse than in the previous month. “Worse” was the answer of choice in the wake of the credit panic, and the fact that demand for manufactured goods is down not only in this country but worldwide. Retailers are already decorating and merchandising for Christmas, but few expect it to be merry in terms of sales. Circuit City Stores Inc. for one, is preparing for the holidays by closing 155 stores nationwide today, and liquidating their merchandise starting tomorrow. Besides lousy sales, the Richmond, Va.-based said that some of its vendors have taken “restrictive actions with respect to payment terms and the credit they make available to the company.” Until today, the electronics chain had 721 locations in the United States. The move may only be a delaying action in face of bankruptcy next year.