Friday’s Stock Market Recap: Second Day Of Gains As Investors Await Senate Vote On Stimulus Plan

A second consecutive upswing in the market today occurred as investors awaited a Senate vote on its version of an economic stimulus plan that would include a mix of spending and tax cuts.  The Dow Jones Industrial Average (^DJI) swung by 2.70% to a close of 8,280.59 while the Nasdaq (^IXIC) and S&P (^GSPC) moved 2.94% and 2.69% respectively to levels of 1,591.71 and 868.60.  To the contrary, crude oil lost -$1.17 to settle at $40.00 while copper increased $0.0120 to a close of $1.62.  During the trading day, investors were able to look past the newly reported unemployment rate, which came in at 7.6% compared to estimates of 7.5%.  The Labor Department reported that United States employers cut 598,00 jobs during the month of January, which is the most since 1974.

American Eagle Outfitters Inc. (AEO) sued Citigroup (C) accusing it of fraudulently inducing it to buy $258 million worth of auction rate securities that it now can sell only at a significant loss, if at all.

Toyota Motor Corp. (TM) warned of earnings today, continuing the significant losses seen by automakers.  The industry slump continued as Toyota projected a $4.9 billion deficit for the twelve months to March, and advised that it would also fall into a net loss.  The last time the Japanese giant reported a net loss was 1950.  Today they scaled back their forecast for global vehicle sales for the year by a further 220,000 units to 7.32 million, 18% below last year’s level.

With a deepening deterioration of the housing market condition, Weyerhaeuser (WY) predicts a grave first quarter loss, noting new-housing starts which are down 37% in the year ending 2008.  In response to a increasing slump in the housing market, Weyerhaeuser is cutting 3,000 employees to reduce its capacity and cost.  Weyerhaeuser said its loss in the fourth quarter grew to -$1.21 billion, or -$5.73 a share, compared to a loss of -$63 million, or -$0.30 cents a share, in the same period last year.  Net sales in the period plunged more than 50% to $1.78 billion from $3.94 billion.

Fitch Ratings downgraded the preferred stock of Bank of America Corp. (BAC) and Citigroup Inc. (C) to junk territory while affirming other key ratings amid the support given to the banking giants by the federal government.  The reasons for the reductions include significant performance pressures expected this year at Bank of America, the companies’ fourth-quarter losses, and the potential for the two to defer.  Bank of America said they might possibly put off paying preferred dividends to preserve capital.

Disclosure: None.

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