Wednesday’s US Stock Market Recap: Markets End Lower On Fears Credit Card Bill Will Hamper Lending

The markets ended the day down after some large gains earlier due to the banks who fell after key credit card legislation made it’s way through the House. The Dow down 0.6% while the S&P 500 and NASDAQ finished the day down 0.51% and 0.39% respectively. The 10 year finally saw its yields decrease to 3.19% after the government hinted about speeding up their repurchase program.

Gold and oil settled up to close at $937.90 and $61.68 respectively.The market ended down as American Express (AXP) stated that the new credit card bill passed by the House will require credit card issuers to curb lending to those who may require it. It appears that credit card companies will respond in their own fashion to regulation by tightening lending standards as they see fit. In other financial sector news, Treasury Secretary Geithner was on Capitol Hill today and made comments that the TARP pay back process is of utmost importance to him. In addition to packing back the government, the companies have to handle the sticky issue of buying back warrants.

Geithner said that the process will ensure that both sides agree to a fair price, if the banks feel they are being overcharged, the Treasury will auction off the warrants to names like Goldman Sachs (GS) and JPMorgan Chase (JPM) to a third party. This should bring some solace to capitalists as the Fed and Treasury understand that it must remove itself from the capital structure of the nation’s large financial institutions.

Energy has seen quite some action lately as oil rallies on speculation of an economic rebound that will drive up demand. In addition to speculation, the current worries in Nigeria have led to higher crude prices the last few days. America is headed into a peak travel season between Memorial Day and Labor Day that could see the depletion of US stockpiles. The rise in oil has led many big commodity names such as US Steel (X) and Rio Tinto (RTP). Many have speculated that Materials would lead us out of this recession with the Chinese stimulus and the natural proclivity for materials to take off with the economy.

It was announced after the bell yesterday that Microsoft (MSFT) is released a new search engine next week. This release comes after a long battle for Yahoo!’s (YHOO) assets as Google (GOOG) continues to advance in the search business. It will be interesting to see where Microsoft is taking it’s struggling online division and whether Yahoo! has any part in it. Investors should be looking to see if Microsoft will make any acquisitions to boost this unit with its newly issued debt.

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